New York Probate Lawyer Blog

July 11, 2012

New York Will Contest Grounds

Contesting a will in New York is an uphill battle. After all, the purpose of a will is to commemorate the wishes of a person after they are deceased. Since the person in question is no longer alive to clear up any potential conflicts, courts tend to give tremendous weight to the provisions contained in the will.

The presumption, however, that wills are impenetrable documents is not absolute. On occasion, a dead person’s decedents are able to convince a court that the will should not be enforced as written, or that it should be thrown out entirely. The reasons why someone might want a will overturned are numerous. Perhaps you have been excluded from a will when you don’t believe the deceased would have wanted you to be. Perhaps you were included, but you feel that someone else should not have been included. Whatever the case, the following common grounds can potentially lead to a successful New York will contest:

The will was not properly executed
New York state law requires that the deceased must have signed the document with a declaration that the document is to be considered his or her will. Two witnesses must have been present during the execution of a will, and both must have signed their names to the document to certify their understanding of the deceased’s intent. If any one of these standards is not met, a will contest action is likely to succeed.

The testator lacked testamentary capacity
In a will, the term “testator” is synonymous with the deceased: the person whose wishes are to be carried out. When the testator executes the document, he or she must generally be of sound mind, demonstrating adequate comprehension of what he or she is doing. In particular, the testator must understand (1) the nature and value of his or her assets, (2) the nature of the people who are to receive his or her assets, and (3) the legal effect of signing a will. If, once the testator is dead, someone contesting the will can demonstrate evidence that the testator was incapable of meeting any of these legal standards, the will contest may succeed. However, lack of testamentary capacity is a very difficult standard to prove.

The testator signed the will because of undue influence
As people age, they can naturally become physically and mentally weakened. In this weakened state, a person can become susceptible to the influence of others who have designs for the testator’s assets. Often, the line is blurry between those who seek to influence a testator for legitimate purposes and those who seek to profit from the testator’s weakened state. The standard for undue influence is one of extreme pressure that causes severe duress. The duress must be so severe as to cause the testator to lose free will in the distribution of their assets. Not surprisingly, this is a difficult standard to prove, as the testator’s stand of mind is impossible to access once they are dead, and much of the evidence of the undue influence may be one person’s word against another’s.

If you believe you have sufficient grounds to contest a will, consider consulting a New York estate lawyer, who can help evaluate the strengths and potential weaknesses of your argument. New York will contests are difficult battles, but worth fighting if you have the proper evidence and a skilled attorney.

July 5, 2012

New York Estates Are Impacted By Marital Status As of a Decedent’s Date of Death

by Jules M. Haas

New York Estate Administration Attorneys are often confronted with questions as to whether a decedent was married at the time of death. The issue of marital status is important since a surviving spouse is a distributee (next of kin) under New York Estate Laws and is afforded certain rights in a decedent’s estate. These rights have been discussed in previous posts in the New York Probate Lawyer Blog including a spousal right of election (Estates, Powers and Trusts Law [EPTL] Section 5-1.1 A) and a spousal right to an intestate share of the estate (EPTL Section 4-1.1).

The determination as to a person being married at the time of death involves investigation as to whether there was a valid marriage and, if so, was the marriage terminated by a valid divorce.

New York Estate Litigation may be necessary to provide an answer to these inquiries. As a New York Trust and Estate Lawyer, I often need to investigate such issues by obtaining and examining relevant documents such as marriage certificates and divorce settlements and divorce decrees to advise clients as to the decedent’s marital status so that proper estate settlement can occur.

A recent case in the Richmond County Surrogate’s Court provides an example of the complicated facts that can be involved in determining marital status. In Estate of Daniel Kelly, decided by Surrogate Robert Gigante on June 18, 2012 and reported in the New York Law Journal on June 29, 2012, the decedent and his spouse entered into a divorce Separation and Settlement Agreement on October 16, 2008. On that same date they appeared in Court and the divorce judge granted the divorce. However, the decedent died on January 7, 2009 and the actual divorce judgment was not signed until March 25, 2009 relating back to the October 16, 2008 Court divorce decision. Based upon the above events, the Surrogate in Kelly found that the decedent was divorced at the time of his death.

As is common in many divorce situations, divorcing parties provide in their settlement or separation Agreements that each waives or relinquishes rights in the others’ assets and property including insurance policies and retirement benefits. Problems arise where, despite the waiver of rights, the name of the divorced spouse is not changed or deleted as a beneficiary on the insurance policy or retirement account. Surrogate’s Court litigation then becomes necessary to determine the rightful payee of the decedent’s benefits.

In Kelly, the decedent’s former spouse remained named as a beneficiary of his federal retirement benefits. However, the parties’ Separation and Settlement Agreement specifically provided that the divorced spouse waived all rights to these benefits. The Court, after reviewing the parties’ divorce agreement and their apparent intentions, determined that the surviving divorced spouse waived all interest in these benefits and that the retirement funds should be paid to the decedent’s estate.

Estate Administration can be very complex and involve the review and analysis of many types of papers concerning the decedent’s affairs such as deeds, business agreements and divorce papers. All of these documents can impact estate settlement, estate taxes and distribution of assets to estate beneficiaries. I have assisted executors and administrators for over 30 years with all aspects of estate administration and the review of various documents required for successful and efficient estate processing.

June 27, 2012

Same-Sex Married Couples Still Need New York Estate Planning Help

by Jules M. Haas

A year ago, the State of New York joined a growing number of states by legalizing same-sex marriage. The LGBT community rejoiced in their victory, claiming equal status in their marriages and all the legal benefits that go along with it.

The legally-minded members of the LGBT community had long argued that sexual orientation discrimination was a considerable problem in medical emergencies and end-of-life scenarios. After all, in a marriage each spouse holds the power to make decisions on behalf of the other when the other is experiencing a medical emergency or is close to death. Absent a living will or alternative health care proxy, the heterosexual spouse is presumed to know what medical directives are appropriate, including whether to terminate life support measures.

It is not surprising that, before the same-sex marriage bill, disputes arose as to whether a same-sex partner could be entrusted with these decisions when no documentation existed. It was not uncommon for life-long partners to be left out of the decision-making process altogether, or even denied hospital visitation privileges because they were not the “spouse.” It is not difficult to imagine a hypothetical scenario in which young heterosexual newlyweds could be entrusted with these decisions for one another, while the 30-year monogamous homosexual partner of another patient could be denied access altogether.

The same-sex marriage bill has alleviated some of this concern. Once the bill was signed, LGBT couples gained the power to decide emergency and end-of-life scenarios for their partner if their partner did not have documentation drafted for that purpose. That being said, New York estate planning attorneys strongly caution against LGBT couples being lulled into a sense of security since the passage of the state marriage law. Living wills and a health care proxy are still essential documents, even if the LGBT couple is married.

Here’s why. Each state has its own stance on same-sex marriage. While New York has been part of the growing minority of same-sex marriage states for a year now, many states have not followed suit. As a result, if a same-sex married couple were to travel to another state in which same-sex marriage is not recognized, the emergency and end-of-life privileges that normally would attach at home may go unrecognized. That means that if there was an emergency situation, the same-sex spouse may be denied the spousal privilege to make the important medical and end-of-life decisions.

For this reason, New York City estate planners strongly encourage same-sex married couples to craft living wills and a health care proxy in spite of any spousal privilege they may enjoy within their own state. The living will can take the uncertainty out of the ailing person’s wishes in the event of a life-threatening medical emergency. The health care proxy can explicitly assign the healthy spouse as the decision-making authority if unforeseen circumstances occur.

Both documents are essential tools for the LGBT couple, even in spite of the civil rights advancements of the last several years. Take the fear and uncertainty out of an emergency or end-of-life scenario, and make sure power to decide remains in the rightful hands.

In addition to these issues, married New York same-sex couples are still denied a myriad of federal benefits. The Defense of Marriage Act defines marriage as between a man and a woman for federal purposes, creating a cascade of estate planning issues for married same-sex couples in our state. A full set of estate planning documents including a Last Will, Durable Power of Attorney and Living Trust should be considered and implemented so that all uncertainty regarding personal and property decisions are eliminated.

A qualified New York Trusts and Estate Lawyer can assist with reviewing and creating these documents as well as examining any additional issues regarding possible estate tax planning and Article 81 Guardianship for incapacity.

June 20, 2012

Time Dwindling for Estate Tax Laws

by Jules M. Haas

Back in 2001, Congress passed legislation that had drastic effects on the estate tax. That year, a decedent could pass up to $675,000 to their heirs tax-free. Any funds in excess of that amount were taxed between 35-55%. Each year after that for the first decade of the new millennium, the tax-free threshold increased in increments, culminating in a tax-free threshold of $3.5 million in 2009.

Then, in 2010, Congress temporarily repealed the estate tax altogether, effective for that year only. At the end of the 2010 session, Congress reinstated the estate tax with a temporary tax-free threshold of $5 million per person, effective through December 31, 2012. As a result of this temporary measure, the vast majority of Americans were, and still are, able to pass the entirety of their estate’s value to their heirs without incurring tax penalties. However, the time in which to take advantage of this expansive tax-free loophole is quickly dwindling.

The consequences could be drastic. A person with a substantial estate (let’s say $3 million) who dies on December 31, 2012 will be able to transfer their entire estate value tax-free. By contrast, someone who has a $3 million estate and dies on January 1, 2013 will have a substantial chunk of their estate wiped out by taxes. On that date, the taxable threshold will fall to $1 million. In the example of our second individual, 2/3 of the estate will therefore be subject to taxation of 35% or more. Our second decedent’s heirs will see substantially less money than our first decedent’s heirs.

This is not to say that people with substantial estates should endeavor to depart this world before the effective date. What it does mean, however, is that someone with a substantial estate who shows no signs of ill health should begin exploring alternative strategies for protecting their estate assets.

A popular option for people in these situations is to create what is called an irrevocable trust. The primary characteristic of an irrevocable trust is that once the trust’s creator transfers the assets into the trust, the creator is effectively unable to withdraw the assets. Instead, the power to withdraw from the trust is wholly that of the beneficiaries.
The reason irrevocable trusts have become popular options is that they are an effective alternative to protect assets and project who will benefit from the assets. The classic case in which an irrevocable trust would work is for a parent with substantial assets who wishes to devise all of his or her assets equally between his or her children. Instead of all assets beyond the $1 million tax-free threshold being heavily taxed at the decedent’s death, the same assets are protected in a trust, which enjoys considerably more tax protections.

New York estate planners strongly urge all persons to consider the implications of the impending expiration of the current estate tax law. Even if you don’t intend to expire before the end of the year, its expiration could drastically affect your distribution of assets to your loved ones. Consider the aid of a New York estate lawyer, who can help you determine how to take care of your loved ones when you are gone.

June 13, 2012

New York Title to Real Estate Often Complicates Estate Administration

by Jules M. Haas

New York estate settlement is not an easy task. While estate lawyers assist their clients with probating New York Wills as well as finding and collecting estate assets, paying estate taxes and other debts and obligations, these procedures can be extremely complex.

The ownership of estate assets such as real estate or bank accounts is often the subject of estate litigation. When drafting a Last Will or beginning estate planning, it is fundamentally important to obtain all information regarding the ownership of the testator’s assets. Without full and complete information, the estate plan and Will and Trust papers that are prepared can turn a simple estate into one filled with litigation in the Surrogate’s Courts.

Real estate ownership typically is the center of many controversies because of its high value and the different ways title can be owned. For example, real estate that is jointly owned with rights of survivorship or by spouses, known as tenants by the entirety, passes automatically from one owner to the other upon death. However, realty that is owned as tenants in common is basically owned in separate shares by the tenant in common owners and does not automatically pass to the other owners upon death. The decedent’s estate is entitled to receive the interest of the deceased tenant in common owner.

After a person dies, it is often startling to discover that real estate that had been assumed to be owned as, tenants in common, was really owned as a joint tenancy and the decedent’s estate and beneficiaries receive no interest in the property which passes automatically to the joint owner. Moreover, the ownership of property can be even more complicated based upon other variables such as real estate contracts, divorces or marriage separations and agreements that relate to the real estate ownership.

Such was the case in The Matter of Scola, which was decided by Surrogate Peter J. Kelly, Queens Surrogate’s Court, on May 9, 2012 and reported in the New York Law Journal on May 18, 2012. In Scola, the decedent and his wife had owned a residence as tenants by the entirety. The parties had signed a Separation Agreement but were still married at the time of the husband’s death. The Court found that the Separation Agreement did not provide an adequate expression of intent to prevent the entire property from passing automatically to the wife upon the husband’s death.

Given an opportunity to fully analyze and understand the results that would transpire upon the death of either party, perhaps the husband and wife in Scola would have changed the title on the property prior to the husband’s death to prevent this automatic transfer.

June 11, 2012

New York Estate Planners Can Help Protect Pets

by Jules M. Haas

Many New Yorkers worry about the possibility that their pets will outlive them. Many more make the mistake of thinking that a standard Last Will is sufficient to look after their pets’ interests when they die. Any New York estate planning attorney would caution that this is not necessarily the case.

Pets & The Standard Will
The assumption that a standard Will is enough to look after Fido once his owner is gone is based on sound legal principle. At common law, pets are treated as chattel, meaning that they are moveable items of property, not unlike livestock, your car, or the computer from which you read this article. Whatever sentimental attachment we give to pets has no bearing on their ability to be treated like any other item of property, whose owners are free to devise to their beneficiaries in a Will.

But when is a Will insufficient to look after your pet? You may have carefully selected which of your friends or relatives was most appropriate for the job. You may even have discussed the care of your pet with this person and drafted a corresponding Will provision to cover the expense of the pet’s care. What you may not have thought about, however, is what might happen to your pet during the probate process. It can take months or even years to effectively administer your Will, especially if the Will is contested. During this lengthy process, your pet may be left in a state of limbo at best or perhaps given away to a shelter at worst.

The Pet Trust
A better alternative is becoming more popular in a growing number of jurisdictions. The majority of states, including New York, allow for the creation of what is commonly termed a “pet trust.” A New York pet trust is a legal instrument in which a pet’s owner sets aside a sum of money exclusively for the pet’s future care. Like in a normal trust, the creator of a pet trust names a trustee or trustees whose responsibility will be to use the funds from the trust to care for the pet.

If you love your pet, selecting a pet trustee should be a solemn consideration for your pet’s well-being. If you own a dog, your pet trustee should be the type of person who has the room and capacity to care for a dog. In selecting a pet trustee, the pet owner should give careful consideration to things like the trustee’s home environment, including their children, their other pets, and any potential allergy issues. You owe it to your furry friend to provide a comfortable and happy environment, and you owe it to your trustees to ensure that the care for your pet is something they are happy to do – not forced to do.

A New York trust and estate lawyer can explain the requirements and limitations of a New York pet trust and help you evaluate whether a pet trust should be your last gift to man’s best friend.

June 6, 2012

How your Longevity May Devalue your Estate

by Jules M. Haas

Most New Yorkers expect to live until a ripe old age. What happens, though, when a person outlives their projected life expectancy? In many cases, the assets that ordinarily would have been passed down in the person’s estate instead become the source from which living expenses are paid. As a result, a person who long outlives their life projections can inadvertently cause considerable financial impact on the beneficiaries of his or her estate.

The Worry
Of course, this is not to say that elders should not endeavor to live the longest and happiest lives they can muster. Medical breakthroughs are enabling people to survive catastrophic medical emergencies at a higher rate, while pharmaceutical research is producing drugs that better control latent medical conditions like heart disease, diabetes, and certain cancers. There is, however, the concern among many New Yorkers that modern medicine may produce the unintended consequence of outliving their assets, thereby depleting their estate.

Longevity Insurance
According to a recent article in Kiplinger Magazine, there is a modern solution to this growing concern. Many financial service companies – citing primarily advances in medicine – have begun to offer policies in what is commonly called “longevity insurance.” According to the article, thirty percent of women and twenty percent of men can expect to survive into their nineties. The purpose of longevity insurance, then, is to insure against the financial strain of such longevity by paying a monthly benefit to cover healthcare and living expenses once the policyholder reaches a predetermined age.

The typical longevity insurance policy requires the payment of a large lump-sum premium. Once the premium is collected, the policy guarantees disbursements of income on a monthly basis in the event the policyholder reaches a certain age (usually 85). If the policyholder lives well beyond the age on the policy, the insurance company must still make the monthly income payments to the policyholder, even if the payment of such income begins to exceed the initial lump-sum premium payment. If, on the other hand, the policyholder fails to reach the agreed-upon age, the insurance company typically pockets the entirety of the lump-sum premium.

New York City estate planning attorneys understand that the value of longevity insurance is exceptionally personal and tied to one’s individual circumstances. For example, persons with major health issues, past and/or present, may wish to forego such coverage, while persons in good health may find such coverage more attractive. Similarly, those with a greater number of estate beneficiaries may be more inclined to insure against longevity than those with comparably fewer estate beneficiaries.

New York Estate Planning
A New York estate planning attorney is best equipped to evaluate one’s estate situation and to determine – in light of New York’s particular laws – whether longevity insurance is a viable and prudent option. After all, what good is an ironclad will if there is a reasonable likelihood that one’s estate assets may not be around for one’s beneficiaries to enjoy? A good estate planner is there to guard your assets against any contingencies that may arise. Don’t overlook the most fortunate of contingencies: that you may far outlive your life expectancy.

May 30, 2012

Family Limited Partnerships Offer Asset Protection

by Jules M. Haas

Estate taxes are costly. New York estate planning attorneys are often consulted for their expertise on how to limit estate taxes when people wish to transfer their wealth to their next of kin. In appropriate cases, this expertise may lead an estate lawyer to suggest the creation of a Family Limited Partnership.

Family limited partnerships exhibit many of the same characteristics of regular limited partnerships. For one, the control of the family limited partnership rests in the hands of one or more general partners. In the case of a family limited partnership, the general partners are typically the elders who possess the bulk of the personal assets: most often mothers and fathers, or sometimes grandparents. The family limited partnership also typically has a number of limited partners: the children or grandchildren of the general partners. The key difference between the general partners and the limited partners is control of the assets invested in the family limited partnership. General partners enjoy their proportional share of the assets plus control over how the assets are used, while limited partners only enjoy their proportional share of the assets without any control over how the assets are used.

In an estate planning context, the creation of a family limited partnership can be quite advantageous in terms of the tax burdens of the partners. Imagine a father and son scenario in which there are no other family members, such as a wife or sister. If the father wishes to transfer his assets to his son, the exchange would be subject to a gift tax. Essentially, the Internal Revenue Service wants to tax the son’s newfound income.

By contrast, imagine the same scenario in a family limited partnership context wherein the father is the general partner and the son is the limited partner. If a family limited partnership is properly established, the father can establish for the son a percentage interest in the value of the partnership. As a limited partner, the son cannot cash in on his interest until the controlling general partner, his father, orders a distribution of the assets. Because the possessor of a non-controlling interest in a partnership cannot liquidate his interest for personal use, the interest has no fair market value. Thus, the Internal Revenue Service cannot tax the limited partner’s interest.

The key advantage of the family limited partnership occurs at the death of the general partner. The entity’s formation and governing papers can provide for the assets of the entity to pass to the limited partner in the event of the general partner’s death. In this way, the father, at his death, has achieved what amounts to a gift in the amount of the assets tied up within the partnership entity.

A word of caution: family limited partnerships cannot be established for the sole purpose of devising assets to one’s heirs. The entity must still operate as if it is a business. Business revenues and costs must flow through the entity, and the general partners must generally pay themselves salaries from the assets tied up in the entity. Purchases must be made through the entity for legitimate business purposes, or in furtherance of another business entity. For this reason, most family limited partnerships are “holding companies” for assets accumulated in other business ventures.

An experienced New York estate planning attorney can help you evaluate whether your estate plan may benefit from the creation of a family limited partnership. Your attorney can best explain the risks and rewards of such creation in light of federal law and of the laws of your jurisdiction.

May 24, 2012

Government Urges Online Media Wills

by Jules M. Haas

According to a recent article in the New York Daily News, the modern New Yorker has one more thing to worry about when creating a Will. The proliferation of social media web sites like Facebook and Twitter, along with the abundance of e-mail and online transaction accounts, is creating a demand for will provisions tied to the administration of a deceased person’s web usage.

Even the federal government is acknowledging the phenomenon. As of April, the federal government’s official personal finance information page includes a recommendation that people leave detailed and specific instructions for the administrators of their Wills as to who will have access to their online accounts after they die. The federal government also urges people to update these Will instructions frequently so as to reflect changes in online usage. Many online accounts require users to change their passwords after a period of time. Other accounts are used less frequently, meaning their users are often forced to reset their passwords. Therefore, it is imperative to record these changes.

The need for such provisions in a Will may not be immediately apparent. However, if you are the type of person that utilizes online billing or online banking, you are typically the only person who can access these applications. Suppose you have opted to receive paperless billing via e-mail. If no one in your life is kept apprised of your e-mail password or billing account password, your executor or administrator may be unable to easily obtain information concerning something like the utilities in your home. Similarly, those who receive paperless credit card statements could accumulate significant interest charges on outstanding debts if their fiduciaries are unable to access the online account to obtain account information or pay the bill. Without a trusted individual empowered with the responsibility for these online accounts – and the login information to access them – a deceased person may unwittingly have imposed considerable confusion and financial strain on their estate.

On the social media front, accounts on sites like Facebook contain a wealth of personal information and private interactions that a deceased person may not want “floating” in cyberspace. Often without realizing it, living users employ a host of defensive measures to safeguard against other people’s access to this private information. However, a deceased’s unmaintained account can be significantly more susceptible to intrusion for identity fraud and other purposes. Modern Wills empower trusted individuals to access these accounts upon the user’s death and to either close the accounts or restrict them to memorial postings about the deceased. Facebook, for example, will deactivate the account of a deceased user upon request and replace it instead with a page to post memories.

If online accounts and social media are ingrained in your life to the point that the inability to access such accounts could potentially harm your beneficiaries, it may be prudent to consult a New York estate attorney. Your attorney can help determine whether such access could affect the administration of your estate, and can help craft and maintain a Will tailored to reflect these modern estate issues.

May 22, 2012

Last Wills in New York Express A Person’s Wishes

by Jules M. Haas

A New York Will is a means by which a person can express his or her desires regarding the final disposition of property and the management of the affairs of his estate. New York Estates, Powers and Trusts (EPTL) section 1-2.19 defines a “Will’ as “an oral declaration or written instrument. . . . whereby a person disposes of property or directs how it shall not be disposed of . . . .”

The New York Probate Lawyer Blog has discussed in previous posts that the execution of a Will must comply with a number of requirements such as the necessity for the testator to sign the Will at the end of the document and that there must be “at least two attesting witnesses”. (EPTL 3-2.1).

The reason for strict Will formalities is to protect the intention of the testator and to establish the sanctity of the document that expresses a person’s final desires. The Surrogate’s Court always wants to be certain that fraudulent or invalid papers are not given judicial validation. Obviously, once a person dies, a Will may be the controlling statement regarding a person’s personal affairs.

Preparing a Will requires a full consideration of a person’s property and beneficiaries so that the proper provisions and directions are clearly set forth. It is a testator’s expectations that his fiduciaries, such as his Executors and Trustees, carry out the terms of the bequests or other dispositions spelled out in the document.

As a New York Estate Lawyer I spend time speaking with clients to understand their desires so that these matters can be fully and accurately set forth in their Will provisions. Of course, it is common that there is Estate Litigation where controversies arise concerning the meaning or interpretation of certain aspects of a Last Will.

Recently, there have been a number of instances where beneficiaries of charitable provisions have sought to modify the terms of bequests and abrogate the expressed desires of the decedent. In 1964 Edward Carter, who had been a Board of Regents Chairman, bequeathed to UCLA, property which was a rare example of a Japanese private garden. The garden was intended to be maintained in perpetuity. As reported by Charles A. Birnbaum on May 25, 2012 in the Huffington Post Los Angeles, UCLA, without advising the decedent’s family, obtained Court approval to allow the University to sell the property.

A similar scenario occurred in Ipswich, Massachusetts, as previously discussed in this Blog, where a colony of homes was the subject of a land trust established by a Last Will in 1660 for the benefit of the local schools with instructions that the property was not to be sold. As reported by Kathy McCabe on May 13, 2012 in the Boston Globe, the local voters appealed a Probate Court decision that allowed the sale despite the Will restrictions.

These two cases show that despite explicit directions and restrictions provided in a Will, beneficiaries and Courts may sometimes act contrary to a testator’s intent. Nevertheless, in most situations, the testator’s desires are followed. It is important to clearly spell out these desires so disputes can be avoided and, hopefully, a Court will abide by the specific terms of the testamentary instructions