Title To Assets Plays An Important Role In New York Estate Planning, Estate Settlement And Guardianship Proceedings

Issues concerning the title and ownership of assets will appear time and again in the areas of estate planning, estate settlement and guardianship.

When evaluating and planning an estate or Last Will, it is essential not only to know the assets that an individual may own, but also the manner in which they are owned or titled. A Last Will essentially controls the disposition of assets that are held by a person in his or her name alone. However, there are numerous alternative types of ownership such as joint tenancies and “In Trust For” accounts also known as Totten Trusts. Other assets such as life insurance policies or retirement accounts (IRA’s, 401K’s) may have designated beneficiaries. These alternative ownership types of assets pass upon death to the other named owner or designated beneficiary. This alternative transfer is typically referred to as having the asset pass by “Operation of Law”. These assets are not controlled by the Last Will.

A person’s estate plan must reflect the actual ownership of the assets. If a provision in a Last Will provides for the disposition of an asset in a certain way and that asset is transferred in a different manner by operation of law, the decedent’s estate plan will be disrupted and estate settlement can be complicated by conflict and litigation. Such was the result in In Re Estate of Flaherty, a case decided by the 3rd Dept Appellate Division (883 NYS2d 812, 2009). In Flaherty, the decedent purchased property and had the deed recite that a one-half interest of the property was owned by one of her daughters and her son-in-law and the other one-half was in the name of the decedent, as joint tenants with rights of survivorship. Upon the death of the decedent the daughter and the son-in-law contended that the decedent’s half interest in the property passed to them by operation of law as the surviving joint tenant. The decedent’s estate contended that the decedent’s one-half interest was not jointly owned with the daughter and son-in-law, but passed separately to the decedent’s estate to be paid to a different beneficiary. Ultimately, the Court found that the property interests were joint and passed to the daughter and son-in-law and not under the decedent’s Last Will.

Property rights and interests are also an important consideration in Article 81 Guardianship Proceedings. A property management Guardian may be faced with issues such as the validity of a joint owner’s interest in property or a beneficiary designation on a life insurance policy or retirement plan. Additionally, in the event joint assets or other assets that would pass upon death by operation of law need to be liquidated during the Guardianship to pay debts or transferred for Medicaid planning purposes, the property interests of the joint owners or beneficiaries need to be considered and accounted for.

I have helped many clients over the past 30 years resolve issues relating to estate planning, estate settlement and Article 81 Guardianship proceedings. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation.

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