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shutterstock_96626983-300x300Estate and gift taxes have effects that may vary widely depending on the value of an estate and the place where you live.  When a person engages in estate planning, the tax consequences are always considered.  Like most taxes, estate and gift taxes are imposed by various states and by the Federal government.  Estate lawyers in New York can assist their clients with these matters.

During recent years, most individuals have not had to worry about paying estate or gift taxes.  At present the exemption for Federal estate tax is $11.7 million per individual.  Even in a highly taxed state like New York, the individual exemption is presently $5,930,000.00.  There are various strategies to diminish the impact of these taxes.  Provisions in Last Wills can utilize trusts and other methods to defray taxes.

What is important to realize is that the step-up in basis is really an income tax concept.  Basis, from an accounting standpoint, is the cost of an item.  This cost or basis is used to determine the taxable gain, typically a capital gain, which is incurred when an asset is sold.  As an example, if you purchased a house for $1,000.00 (the basis) (ignoring any additional costs or depreciation), and then sold the house for $2,000.00, the gain would be $1,000.00.  This gain would be the amount subject to tax.

Fiduciary-300x185There are various types of fiduciary appointments granted by the New York State Surrogate’s Court.  The Court may appoint an Executor and issue Letters Testamentary.  This occurs in connection with the probate of a Last Will and Testament.  If the decedent dies intestate, the Court appoints an Administrator and issues Letters of Administration.  The New York Probate Lawyer Blog has published many articles discussing the probate and administration process.

Sometimes when the Court proceedings for the probate of a Will or an intestate administration proceeding is delayed, the Surrogate might appoint a Preliminary Executor or Temporary Administrator.  This may occur where there is a Will Contest or Kinship cannot be determined without a kinship hearing.

An important aspect of any fiduciary appointment is the extent of powers granted to the fiduciary by the Court.  Essentially, the fiduciary can only perform those functions which the Court or the estate laws allow.  Estates, Powers and Trusts Law Section 11-1.1 entitled “Fiduciaries’ powers” lists many types of authority which an Administrator or Executor might possess, such as the power to sell assets, invest assets, pay expenses, collect income and engage in litigation on behalf of an estate.  However, in many instances, the Court Decree appointing the fiduciary may restrict or limit the authority.

shutterstock_635914376-300x144The estate laws in New York are comprised of a variety of statutes which set forth the right of individuals regarding estate inheritance.  Some of these more well-known rules relate to a decedent’s surviving spouse.  For example, as estate lawyers are aware, a surviving spouse cannot be completely disinherited.  Estates, Powers & Trusts Law Section 5-1.1A entitled “Right of election by surviving spouse” mandates that a spouse is entitled to receive essentially one-third (1/3) of a decedent’s net estate.  An interesting aspect of the statute is that it includes assets referred to as testamentary substitutes in the calculation.  Such assets are in the form of joint ownership or pay on death items which are outside of the probate or intestate administration estate.

While a spouse cannot be disinherited, another estate statute allows a spouse to be disqualified entirely from receiving any estate interest.  EPTL Section 5-1.2 entitled “Disqualification as surviving spouse” mandates that a spouse can lose inheritance if, among other provisions, the surviving spouse abandoned the decedent.  It should be recognized that abandonment is not easily proved and that a mere consensual separation of spouses, even if for many years, typically would not result in a disqualification.  The New York Probate Lawyer Blog has posted numerous articles regarding spousal rights and estate inheritance.  Executors and Administrators should be aware of these provisions.

A spouse is not the only family member who may lose rights through disqualification.  EPTL Section 4-1.4 entitled “Disqualification of parent to take intestate share” provides details as to the loss of a parent’s portion of an estate.  It should be remembered that under the laws of intestacy provided by EPTL 4-1.1 (“Descent and distribution of a decedent’s estate”), a parent inherits an estate where there is no surviving spouse or children or their descendants.  The statute states that if a parent does not provide for a child, i.e., support the child, or abandons the child while the child is under age 21, then the parent forfeits the inheritance.  The statute is focused on the intentional actions of a parent rather than a parent where, through no fault, cannot provide support.

shutterstock_74680495-2-300x200Contesting a Last Will in New York is a complex and difficult endeavor.  The problem initially encountered, of course, is that the decedent is not available to explain exactly what occurred in connection with the preparation and execution of a Will.  As a result, the facts and evidence need to be obtained and gleaned from outside sources such as witnesses and various documents and records.  In most cases, the process is cumbersome and very time consuming.  New York estate lawyers assist clients with the relevant Surrogate’s Court procedures and statutes contained in the Estates, Powers and Trusts Law.  The New York Probate Lawyer Blog contains many articles about Will contests.

When a Will is drafted by an attorney and an attorney supervises the signing ceremony, there are certain presumptions of due execution which greatly advance the probate of the document.  A recent decision by Ulster County Surrogate Sara McGinty on January 6, 2021, in a case entitled Estate of Linich, shows that a contestant has a heavy burden to invalidate a Will.

In Linich, the decedent changed his Will to benefit his business agent and friend.  A prior Will had benefited the decedent’s niece who filed objections to the probate of the later Will.  The typical objections to probate are lack of due execution, lack of testamentary capacity and undue influence.  Fraud, duress and forgery sometimes are also asserted.

Probate-300x201Preparing a New York Last Will is essential in order to dispose of assets in an orderly manner.  A Will allows a testator to provide for bequests and devises of his personal property and real estate interests according to his intentions and desires.

Beneficiaries can be named and each one designated with an appropriate estate share.  The beneficiaries can be family members, friends or institutions such as charities.  Also, the dispositions can be outright or through a testamentary trust which may provide long term or specific oversight.  Executors can be selected as well as trustees and guardians for minor children.

Estates, Powers and Trusts Law Section 3-2.1 entitled “Execution and attestation of wills; formal requirements” sets forth the requirements for Will execution.  The legal mandates such as the need for two witnesses and the publication of the document must be followed with precision or the validity of the Will may be placed at risk.  The New York Probate Lawyer Blog contains numerous articles regarding Surrogate’s Court litigation and Will contests.

shutterstock_204507106-300x254Estate planning in New York is important.  It provides an individual with the opportunity to memorialize the manner by which assets can be disposed of upon death.  The creation of a Last Will and sometimes a revocable or irrevocable trust develops provisions designating beneficiaries and the portion of assets they are intended to receive.  The New York Probate Lawyer Blog has published numerous articles regarding estates and trusts.  Estate lawyers are aware of the value of creating appropriate documents.

One aspect of planning often involves life insurance.  This blog post cannot discuss all of the considerations and issues regarding life insurance in such a brief space.  However, a few aspects are worthy of mention.  Life insurance typically takes the form of one of two types.  There is term insurance, which provides only an insurance payment on death without there being any accumulated value to the policy.  Whole life policies not only provide a pay-out of funds but also have an accumulated value over time which may be able to be withdrawn or even used as security for a loan.

Probably the most important item to bear in mind is the designation of beneficiaries.  When a beneficiary is designated (other than a person’s estate), the insurance proceeds are going to be paid directly to such beneficiary.  Since these funds are not paid to the decedent’s estate, the provisions of a Last Will are not going to control the disposition of this asset.  The asset is not included in the probate estate.  Thus, when planning an estate it is important to know which assets are controlled by a Will and which assets pass outside of the testamentary document.  An individual wants to be certain that certain beneficiaries receive only the assets and values intended.

shutterstock_1123004039-300x199Estate planning in New York has always been important.  The New York Probate Lawyer Blog has published numerous articles over the years discussing the need for, and issues involved with, a Last Will, Living Will, Health Care Proxy, Power of Attorney and Living Trust.

However, as estate planning lawyers are aware, concerns about estate taxes have largely taken a back seat.  This is because during recent years, the exemption levels for incurring estate tax liability have been quite high.  Thus, most estates do not need to worry about New York State and Federal estate tax.  During 2021 the Federal estate and gift tax exclusion is $11.7 Million per individual.  As a result, a married couple could pass $23.4 Million without fear of any tax.  On the State level, New York provides an exemption of $5,930,000.00 per individual.  Also, there is no New York gift tax.  When these amounts are coupled with an unlimited deduction for transfers between spouses, there are relatively few estates where estate tax issues may be encountered.

With the advent of the new administration in Washington, D.C., there is renewed consideration by some lawmakers of overall tax increases.  This includes reducing the Federal exemption limits and raising taxable estate rates.  While the specifics of what new laws will be enacted are unknown, the imposition of increased taxes typically results in new models for planning to diminish the effect of potential tax increases.  The use of marital deduction trusts, insurance trusts, transfers of interests in small businesses and other gift structures all may gain renewed popularity.

20200522-Estate-Planning-300x200Any discussion regarding estates and trusts in New York invariably involves the Surrogate’s Court.  To most individuals not involved with the settlement of a decedent’s estate or other Court matters, proceedings in a Court named Surrogate’s Court may seem mysterious and sometimes ominous.  However, this Court and the nature of the matters it handles makes it one of the most people-oriented forums in the judicial system.  After all, most of the proceedings concern the affairs of decedents which affect the humanity at some level of all the participants.

The history of the Court dates back to colonial times.  According to an article written by Dennis Wiley entitled “What’s in a Name?  That Which We Call Surrogate’s Court” which appeared in the New York State Bar Association Journal July/August 2016 publication, the title of Surrogate was first used in New York in 1702.  According to the article, New York and New Jersey are the only two systems of probate in the United States which use this term.  Most other places refer to probate courts.

The New York Probate Lawyer Blog refers to the Surrogate’s Court all the time.  The judge in the Surrogate’s Court is known as the Surrogate.  The primary laws that control the functioning of the Court are contained in the Surrogate’s Court Procedure Act or SCPA.  There is an official website for the New York Court System at www.nycourts.gov .  This site contains a lot of information regarding the New York Surrogate’s Court.  It is pointed out that each county in the state has such a court which handles cases regarding decedents.  In addition, the site is a valuable resource since it lists some of the numerous types of cases which come before the Court.  These include the following:

shutterstock_571088005-300x200Everyone talks about preparing a Last Will or engaging in estate planning.  Particularly now, with the advent of the pandemic, there is the reality of facing the need for post-death and advance directive documents.  It is easy for an individual to view planning as the simple function of disposing of assets to named individuals.  However, the actual process and considerations needed encompass much more thought and preparation.  Estate lawyers in New York City are familiar with this more rigorous examination.

Some of the more fundamental, yet highly important, considerations are listed below:

  1. Designating Beneficiaries: While identifying beneficiaries in a Will or Trust is important, it is equally necessary to consider alternate or contingent designations in the event the primary persons are pre-deceased or even renounce their bequest.  As a Will lawyer, I am constantly surprised when clients have not even considered alternate beneficiaries.  Another aspect of selecting beneficiaries concerns assets that pass outside of the administration estate such as pay on death accounts or life insurance or retirement funds where a beneficiary is named as the pay on death recipient.  The estate planning process necessitates that all of these types of assets must be considered so that there is no conflict with Will provisions or the goal of the plan as to the values each person is to receive.

Probate-300x201It is well known that writing an estate plan is essential to have an effectual distribution of assets at death.  A lot of time and effort can be expended creating a Last Will, Living Will, Health Care Proxy and Power of Attorney that reflect a person’s desires and intentions.  The New York Probate Lawyer Blog has published numerous articles examining the planning of estates.

Additionally, it should be recognized that in order for a Last Will to be put into effect, the Will must be validated through the probate process.  This process requires that the Will be filed with the Surrogate’s Court and subjected to the review and procedures mandated by the Surrogate’s Court Procedure Act and the Estates, Powers and Trusts Law.  One of the most essential aspects involved with probating a Will is the necessity to provide the proper notice to a decedent’s next of kin or distributees.  This requirement has been reviewed on many occasions in this blog and it is important to bear in mind.  A decedent’s next of kin must be given notice because they have a right to contest the Will.  In many cases if the purported Will is found to be invalid, the distributees are entitled to receive an intestate share of the estate which may be much greater than their interest under the Will.

The usual course of a probate case involves the issuance of a Citation by the Surrogate’s Court.  A Citation is like a Summons and informs the parties to whom it is directed to appear in Court on a date certain and provide any Objections to the Will.  The Citation must be served on the distributees in a manner provided by the statutes and Court directions.  Once proper service of the Citation occurs, the Court has jurisdiction to hear and rule regarding probate.

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