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original_1074565532-300x107There are essentially two (2) different paths to follow for the appointment of a fiduciary after someone dies.  In order to administer and settle an estate, there must be an executor or an administrator.  If the decedent left a Last Will and Testament, then a probate proceeding is going to be filed in the Surrogate’s Court.  This involves filing the original Will along with a petition for probate and other supporting papers.

In cases where there is no Will, the decedent is considered to have died intestate.  As a result, a petition for letters of administration is presented to the Surrogate’s Court.  The New York Probate Lawyer Blog contains many informative articles discussing issues concerning probate and intestate estate proceedings.

Unfortunately, the process to obtain full letters testamentary or letters of administration can take a number of months.  Will Contests, kinship disputes, and other matters involving estate litigation may delay the finalization of these proceedings for long periods of time.  The dilemma faced by a potential fiduciary and others interested in an estate is how to deal with current problems which can affect estate assets.  For example, there may be pending proceedings in litigation concerning a decedent, or the need to sell or secure assets before values are compromised.

Guardianship-300x201Article 81 of the Mental Hygiene Law contains the provisions regarding the appointment of a Guardian.  As discussed in many earlier posts in the New York Probate Lawyer Blog, the statutes provide for the appointment of a property management Guardian and also for a personal needs Guardian.

When an application is made to a Court for a Guardianship appointment, the Court is provided with a proposed Order to Show Cause and a verified petition.  The information which is to be included in the petition is described in MHL 81.08.  This information includes details concerning both the alleged incapacitated person and the petitioner.  Also, the name, address and telephone number of any proposed Guardian should be supplied along with reasons why the proposed designee is suitable to act as Guardian.

The primary function of the Court in these matters is first and foremost to determine whether the AIP is incapacitated.  Clear and convincing evidence is needed to show incapacity.  MHL 81.02 entitled “Power to appoint a guardian of the person and/or property; standard for appointment” provides the guidance for these issues.  Typically, a person’s functionality and ability to handle activities of daily living are closely examined.

shutterstock_1123004039-300x199Estate planning in New York involves many different aspects.  Initially, a person needs to consider and develop the manner in which an estate is to be distributed.  Decisions need to be made concerning the various beneficiaries who are to receive distributions.  Also, the amount of payment to each beneficiary under a Last Will and Testament must be decided upon.  Another aspect for review involves whether or not a Will should contain a testamentary trust in which the beneficiaries’ share would be held rather than paid out immediately in one lump sum.  A trust can be established for a spouse, child or a third party beneficiary.  Sometimes a Supplemental Needs Trust is established to preserve governmental benefits for a beneficiary with a disability.

An estate plan should be made with attention to estate settlement.  Executors need to be named.  Contingency provisions should be included such as alternate beneficiary provisions in the event of a change of circumstances such as the death of a beneficiary preceding the decedent.

There are situations when the actual provisions of a Will need to be changed either due to circumstances or preferences by the testator.  In these cases, it is essential to remember that all Wills and alterations that are made on Wills must satisfy the requirements of Estates, Powers and Trusts Law Section 3-2.1 entitled “Execution and attestation of wills; formal requirements.”  This provision sets forth requirements regarding the signing of a Will and the need for two attesting witnesses.  Sometimes a person may prepare and execute a Codicil to a Will.  A Codicil is an amendment to a Will which needs to satisfy the EPTL 3-2.1 execution requirements.  Since the Codicil and the original Will need to be read together, there is the possibility that the language in the two documents may be confusing or ambiguous.  In my view, the better course to follow is to prepare a new original Last Will in the place of the old one, incorporating the new provisions.  This way there is less of a chance of confusion and there is no need to locate two documents at the time of probate.

Fiduciary-300x185The acceptance of an appointment as a New York estate Executor or Administrator requires that an individual carry out responsibilities.  The failure to act in a responsible manner could subject a fiduciary to damages for breach of fiduciary duty.  Provisions contained in the Estates, Powers and Trusts Law and the Surrogate’s Court Procedure Act describe various courses of conduct concerning which an executor or administrator should or could be engaged.  For example, EPTL Section 11-1.1 entitled “Fiduciaries’ powers” lists various powers which a fiduciary can exercise when administering an estate.  When a fiduciary does not use his authority in the best interest of the estate, a duty may be breached.  The New York Probate Lawyer Blog contains many articles describing estate administration and the conduct of administrators, executors and trustees.

One of the jobs of a fiduciary is to protect and collect assets.  Sometimes, the decedent’s property may be held by a third party or even misappropriated prior to the decedent’s death.  In these cases, it is the responsibility of the fiduciary to recover the assets for the benefit of the estate.  SCPA 2103 entitled “Proceeding by fiduciary to discover property withheld or obtain information,” provides a procedure for the recovery of estate assets.  My blog has discussed this estate law in a number of previous articles.  A recent Queens County estate case decided by Queens Surrogate Peter J. Kelly dated September 1, 2022 entitled Matter of Stanka Sucich involved a proceeding for the turnover of assets.  In Sucich, the estate administrator sought to recover assets from respondents who had been the decedent’s home health aide and a driver / chauffer.  The major assets sought to be recovered were funds in excess of $200,000.00 which had been transferred before death from the decedent’s individual bank account into an account in the name of the decedent and the home health aide.  When the decedent died, the entire fund was transferred by the home aide into her own name.

Sucich contains an excellent statement of the legal aspects involved in reviewing such a transfer.  For example, the Court noted that once there was a demonstration that the funds belonged to the decedent and were then transferred to a third party, the burden was on the third party to show that the transfer was a valid gift.  A gift requires a showing of intent.  Also, since there appeared to be a confidential relationship between the decedent and the home health aide, there was a need to show that the transfer was fair and understood and free from undue influence.

There are many different obligations and aspects to the role of an estate executor or administrator.  Their primary duty is to collect assets and satisfy estate obligations.  In most instances, the assets owned by a decedent are easily identified and collected, such as bank accounts, real estate, financial accounts and retirement funds.  Likewise, the identification and satisfaction of obligations is typically uncomplicated with regard to items such as credit card bills, car loans, mortgages and other consumer debt obligations.

A recent Manhattan case decided by Manhattan Surrogate Rita Mella on August 18, 2022 entitled “Estate of Buhannic” involved a number of important aspects regarding estate settlement.

In Buhannic, the Court had issued letters to the fiduciaries which contained restrictions prohibiting the fiduciaries from disposing or selling estate assets without the further order of the Court.  This is a common type of restriction which often appears in letters of administration in intestate cases.  Such language requires that the administrator seek Court approval for a transaction.  Thus, interested parties in the estate would receive notice of the request for approval made to the Court and may review the appropriateness of the matter.  Any Objections can then be dealt with.  In the Buhannic case, the fiduciaries sought to sell shares of stock in order to pay estate obligations.  The parties ended up agreeing on the sale and the Surrogate required that the fiduciaries obtain a surety bond to secure their use of the funds.

Guardianship-300x201The imposition of a Guardianship for incapacity or disability in New York can occur in a number of ways.  Perhaps the most well-known procedure is that provided by Article 81 of the Mental Hygiene Law (MHL).  These provisions set forth the legal standards and procedures for the appointment of a Guardian for the person and/or property of an individual who is incapacitated.  Essentially, MHL 81.02 entitled “Power to appoint a guardian of the person and/or property; standard for appointment” provides that a person is incapacitated if they would suffer harm because they cannot provide for personal or property needs and they fail to understand and appreciated the disability.  The New York Probate Lawyer Blog has published many articles discussing different aspects and issues involved in a Guardianship case.

The appointment of a Guardian requires clear and convincing evidence.  There is a Court hearing and the focus of the inquiry is on the functional abilities of the person alleged to be incapacitated.  Essentially, the Court examines a person’s ability to handle various activities of daily living.  If a Guardian is found to be needed, the Court has the ability to structure or apply Guardianship control in a limited way to suit the needs of the individual.  The imposition of the least restrictive powers is mandated.

In this regard, MHL 81.36 entitled “Discharge or modification of powers of guardian” allows the Court to terminate a Guardianship in a number of circumstances.  These include situations where the incapacitated person becomes able to exercise powers for personal needs or property management or the appointment of a Guardian is no longer necessary.  Thus, there is a statutory and procedural framework to allow a Guardianship under Article 81 to be modified or even terminated.  Once again, the Court has discretion to provide a person with independence and limit control by others.

Estate-Settlement-300x200During the course of the administration of a New York Estate, an executor or administrator may be confronted with various issues.  For example, there may be numerous debts that need to be satisfied, such as credit card bills, medical bills, car loans, mortgages and utility bills.  Each of these items needs to be examined and the estate fiduciary must determine whether and to what extent payment should be made.  Sometimes these bills can be reduced through negotiation.

During life, a decedent may have been a defendant in a pending lawsuit.  In these situations, the administrator or executor needs to be substituted into the Court action so that the estate’s interest can be protected.  Another important area of concern is whether the decedent’s estate is subject to a claim or lien from Medicaid.  If the local Medicaid provider paid for services on behalf of the decedent, there may be claims for reimbursement from the estate, such as for nursing home care.

Dealing with a creditor claim can be a complex and lengthy process and can delay the settlement of an estate since a final distribution may not be made to beneficiaries until the net value of the estate is determined.  These issues may take months or years to resolve.  One type of claim that reoccurs in estates concerns an assertion by a person that the decedent promised to pay the claimant for services that were rendered for the care of the decedent before his death.  In these cases there is usually no written contract or agreement regarding the services or the amount of the compensation to be paid.  As a result, a fiduciary must defend against a claim which is typically supported only by the oral declarations of the claimant.

rendered-300x107The probate process in New York is comprised of a number of stages.  At the outset, the original Last Will and Testament of a decedent must be located.  This is not always as easy as it seems.  In some cases, only a copy of a Will is found.  When this happens, a search is necessary to locate the original document.  This is because a copy of a Last Will must meet a rigorous test to be admitted to probate.  Surrogate’s Court Procedure Act Section 1407 entitled “Proof of lost or destroyed Will” provides the rules regarding admitting a lost or destroyed will to probate.  The main impediment in these cases is that when an original Will is known to have been in the possession of a decedent, and it cannot be found, there is a presumption that it was revoked by the decedent.

The next stage is filing a probate petition and a Will with the Court to commence the probate case.  Once all of the necessary papers are filed, all of the interested parties must be notified about the proceeding.  Typically a Probate Citation is served on parties who do not sign Waiver and Consent forms to probate.  At this stage, interested parties may have a right to object to the probate of the Will.  Issues may arise as to whether an interested party has standing or the right to file objections.

SCPA 1410 entitled “Who may file objections to probate of an alleged will” sets forth the criteria regarding a person’s right to object.  In short, someone must have a pecuniary interest that will be enhanced if a Will is denied probate.  The statute requires that there be an adverse effect due to the probate of a Will.

House-Keys-300x200A New York estate may have many different types of assets.  These may include bank accounts, brokerage accounts, real estate, and retirement funds.  Each of these items can present various issues for an executor or administrator.  The estate fiduciary has an obligation to collect and protect estate assets.  The failure to do so can be a breach of fiduciary duty.  The New York Probate Lawyer Blog has published many articles discussing estate settlement and the responsibilities of administrators and executors.

One asset which may have unique complexities is a cooperative apartment.  A cooperative apartment, particularly in the New York City area, is a very common type of residence owned by a decedent.  A cooperative apartment is not real estate.  The ownership interest is personal property in the form of stock in the cooperative corporation.  This interest allows the owner to become a lessee under a proprietary lease where the cooperative corporation is the lessor or, in other words, the landlord.  As a result, the estate fiduciary, just like the decedent, must comply with the rules and regulations of the co-op with regard to all aspects of the apartment.

One of the main issues that a fiduciary may face is in connection with the sale of an apartment.  Most co-ops require approval of any transfer or sale by the cooperative Board of Directors.  The prospective purchaser must apply to the Board for approval.  In New York, the Courts allow a tremendous amount of discretion to a co-op in approving or rejecting a sale.  The Board is not even required to provide any specific reasons if it decides to reject an application from a prospective purchaser.  In the absence of some type of discrimination, an estate fiduciary is at the mercy of a co-op board in trying to sell an apartment.  This can be very frustrating, particularly when the estate is being charged monthly for maintenance fees and mortgage payments.  The sale of residential real estate or a condominium apartment does not require approval from a third party.

shutterstock_635914376-300x144One of the aspects involved with administering an estate in New York is the identification and collection of estate assets.  A decedent may have owned bank accounts, security investments, real estate or business interests.  In many cases, it is rather easy for an executor or administrator to obtain information regarding assets.  A decedent may have various records at home or at a business office.  Also, bank statements or other information may be received in a decedent’s mail.  Another source of information are items contained in a decedent’s income tax returns such as the names of banks or financial institutions which paid interest income or dividends.  If the decedent had an accountant, this person may be in possession of asset information.

One problem that is faced in many estates is that a decedent may have transferred assets prior to death.  When this occurs, it may be difficult to determine the identity of these assets.  Also, once the assets can be identified, issues arise as to whether such transfers were valid or should be revoked due to lack of capacity or undue influence.

The New York Probate Lawyer Blog has published many articles concerning the discovery of assets belonging to a decedent.  An administrator in an intestate estate or an executor in a probate situation can utilize the process provided by Surrogate’s Court Procedure Act 2103, entitled “Proceeding by fiduciary to discover property withheld or obtain information”.  This statute allows the estate fiduciary to commence a proceeding to discover possible estate assets held by third parties and to have the Surrogate’s Court determine whether the assets should be found to be part of a decedent’s estate.

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