New York Probate Lawyer Blog

Estate 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life policies not only provide a pay-out of funds but also have an accumulated value over time which may be able to be withdrawn or even used as security for a loan.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.

Estate 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.

Everyone 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.

Preparing and probating a New York Will is important in order for a testator to effectuate an estate plan.  There are many considerations that an individual needs to consider when planning an estate such as how assets are to be distributed and the identity of the beneficiaries who are to receive dispositions under the Will.  Guidance from an experienced estate lawyer regarding these matters should be sought.

There are many subtle and not generally thought-of issues which may have some impact on a plan and the ultimate probate of a Will.  A few of these matters are discussed in this blog post.  One such issue concerns the proper execution of a Last Will.  Estates, Powers and Trusts Law Section 3-2.1, entitled “Execution and attestation of wills; formal requirements,” provides the basic rules regarding execution.  Among these guidelines is that there must be at least two (2) attesting witnesses.  Nowadays many people prepare a Will from online forms and without the assistance of legal counsel.  An important rule to know is that if an attesting witness receives a disposition in the Will, he may need to forfeit his inheritance unless there are two other witnesses who do not receive a benefit under the Will.  This rule is provided in EPTL 3-3.2 entitled “Competence of attesting witness who is beneficiary; application to nuncupative will.”  The statute provides a number of additional rules and exceptions.  However, in view of the general prohibition, it is always best to have completely disinterested persons act as attesting witnesses so as to avoid any possible problems when it comes time to probate the Will.  The New York Probate Lawyer blog has many articles dealing with probate issues.

Another matter that should be recognized is that sometimes a Will contains what is known as a No Contest Clause or in terrorem clause.  This language in a Will provides that a beneficiary forfeits his disposition if he contests the Will.  Many individuals include this type of provision in a Will in the hope that it would discourage a discontented party from filing a Will Contest due to the prospect of forfeiting their inheritance if they lose the Court case.  The use of a no contest clause is controlled by EPTL 3-3.5 entitled “Conditions qualifying dispositions; conditions against contest; limitations thereon.”  However, the statute provides certain exceptions to the general rule of forfeiture.  For example, if there is probable cause, the condition does not apply if there is a contest based upon forgery or to show that a decedent left a later Will.  Also, a no contest clause does not prevent the initial discovery allowed by Surrogate’s Court Procedure Act Section 1404 which permits the examination of the Will witnesses, the Will draftsperson and the nominated executor and Will proponent.  In view of these and other exceptions to a no contest clause, a testator may want to consider other alternatives to avoid a Will challenge such as setting up asset beneficiary designations or a Living Trust.