New York Probate Lawyer Blog

July 12, 2011

U.S. Supreme Court Rules in Stern v. Marshall Against Anna Nicole Smith’s Estate

In Stern v. Marshall, the U.S. Supreme Court recently ruled against the estate of Anna Nicole Smith, who had married a Texas oil tycoon 63 years her senior a year before he died, The New York Times reports.

What this case illustrates is the importance of hiring an experienced New York Probate Lawyer who can sort out any estate planning and trust issues in New York City or elsewhere that need to be finalized to ensure a smooth process for all involved.According to The Times, Smith, a former Playboy playmate and model whose real name was Vickie Lynn Marshall, had once received a bankruptcy court award of more than $400 million and asserted that J. Howard Marshall II’s son had wrongfully interfered with a gift she had expected from his father.

The majority of justices held unconstitutional a provision of the bankruptcy laws that authorized bankruptcy judges to hear some kinds of claims. The case rested on the idea of separation of powers in the context of bankruptcy.

The case illustrates the need to hire an experienced New York Probate Lawyer who is well-versed in New York Probate Law and who can help you sort through this complex area of law. When bankruptcy court is involved, it can be even more difficult to navigate.

Selecting an executor to handle your New York estate or will may be the most important decision you can make in handling your finances. Being an executor of an estate means being responsible for distributing assets as laid out in a will.

While many people would look at this as an honor to be trusted with a person’s assets once they die, it brings with it a great deal of responsibility and dedication. There are legal obligations to being an executor and executors often can use the advise and counsel of a New York Estate Lawyer in how to handle major issues on behalf of an estate.

Wills may be challenged and other problems may arise, so hiring an experienced law firm can help settle these types of issues. Some issues may be handled outside of court and others require court oversight.

Some people think that handling an estate or executing a Will is as simple as contacting family members and doling out cash and family heirlooms, but there is much more. And one of the things that frustrates and mystifies many people are taxes on an estate.

Estate tax issues arise on both the State and Federal level. There are ways to minimize Federal and New York Estate Tax. One way to save is through a “QTIP” trust, which enables surviving spouses to bypass paying estate taxes through the use of a tax credit. Lifetime gifts and charitable contributions are other ways. Trying to do it alone will leave complications for survivors that can turn family members against each other and leave an estate open to unnecessary tax implications. The New York Probate Lawyer Blog has previously discussed the recent changes that were enacted for the Federal Estate tax.

July 6, 2011

New York Beneficiary Designations Can Impact An Estate Plan

by Jules M. Haas

Planning a New York estate requires that all family beneficiary and asset information be obtained and thoroughly reviewed. Before considering the impact of estate or income taxes, a road-map should be created that provides for the concise disposition of assets to specifically named or identified beneficiaries. The New York Probate Lawyer Blog has previously discussed this issue.

A basic concept to always consider is that a Last Will controls the disposition of assets that are held in the name of a decedent. Thus, if a person dies owning a house or bank account in his or her individual name, the provisions of the Last Will determine how and to whom such asset will be distributed. However, many assets fall outside of this rule and their ultimate ownership will be determined differently. A jointly owned bank account or real property will automatically be owned solely by the surviving joint owner upon the death of the co-owner. Similarly, a designated beneficiary of a life insurance policy or retirement plan will receive these benefits upon the death of the insured or plan participant. In all these instances, the terms of the Last Will generally cannot override the rights of the designated beneficiary. The importance of coordinating Last Will provisions with the transfer provisions of other assets that pass automatically or by operation of law is imperative. The failure to provide for all such asset items can ruin an estate plan and cause hardship for intended beneficiaries during estate settlement.

An example of the perils encountered when not precisely reconciling all asset dispositions was recently shown in the case of Diversified Investment Advisors, Inc., v. Baruch, (EDNY) 09-CV-5377, reported in the New York Law Journal on June 29, 2011. In this Federal District Court case, the decedent died leaving an annuity that designated the decedent’s ex-wife as the beneficiary. The designation was made prior to their divorce. In the divorce proceedings, the ex-wife had signed a separation agreement in which the she had “waived” claims to the annuity. In view of the waiver, the decedent’s son, who was born by another woman, claimed that the annuity was payable to the decedent’s estate, and not to the ex-wife. The Hon. Jack B. Weinstein in a decision dated June 24, 2011, found that the waiver was “sufficiently precise and explicit” to allow it to meet the test of validity and that the annuity funds should be paid to the estate and not to the ex-spouse.

While not applicable to the facts of this case, the Court did comment upon New York Estates, Powers and Trusts Law section 5-1.4 that became effective July 7, 2008 which provides, in part, that “a divorce . . .revokes any revocable . . . disposition or appointment of property made by a divorced individual to . . . the former spouse, including . . . a. . . beneficiary designation . . . in a pension or retirement plan.”

As can be seen, stale or improper beneficiary designatons can disrupt the settlement of an estate that is otherwise well planned for purposes of property distribution and estate taxes. When preparing an estate plan it is always a good idea to review each asset owned, including bank accounts, real estate, life insurance and retirement accounts. Carefully ascertain the name or names in which the assets are held. Also, check to see the names of all designated beneficiaries and contingent beneficiaries. In the event any information is missing or unclear, especially with beneficiary designations, prepare and sign new beneficiary designation forms that state precisely the desired information.

I have represented many clients in preparing their estate plans. More often than not, clients encounter out-dated forms and directions that must be modified and updated to accomplish their planning goals and protect their families from unwanted confusion at the time of probate and estate administration.

June 29, 2011

Probate In New York Can Involve Unusual Circumstances

by Jules M. Haas

The proper execution or signing of a Last Will in New York requires that the formalities provided by statute be followed. The New York Probate Lawyer Blog has previously discussed these rules. The basic “formal requirements” for the signing and witnessing of a Will are set forth in Estates, Powers and Trusts Law section 3-2.1. Among other provisions, subsection (4) of the statute provides that “there shall be at least two attesting witnesses. . . .”

Thus, when a person dies and his or her Will is filed with the Surrogate’s Court for probate, two of the attesting witnesses “must be produced before the Court and examined before a Will is admitted to probate. . . .” Surrogate’s Court Procedure Act Section 1404(1).

In most uncontested matters an affidavit signed by the witnesses at the time of the Will execution will satisfy the requirements for examining the Will witnesses. This is the so-called self-proving Will. However, there are instances where a witness affidavit is not prepared at the Will signing or a Will contest requires actual live testimony of the witnesses.

Recently, Surrogate Edward W. McCarty III, of the Surrogate’s Court, Nassau County, was presented with a Will that was 19 years old and the petitioner was unable to provide witness affidavits or testimony since one witness was deceased and the other witness could not be located. In Will of Jean Santoro, decided on May 3, 2011 and reported in The New York Law Journal on June 3, 2011, the Surrogate noted that the decedent’s Will could not be admitted to probate as an “Ancient Document” since it was “less than 20 years old.”

However, the Court became aware that the attorney who drafted Jean Santoro’s Will, and who was one of the witnesses, had previously died and that his Will had previously been admitted to probate by the Court. Therefore, Surrogate McCarty ruled that since the deceased witness’ signature was already on file with the Court, the petitioner could obtain an expert opinion as to the signature as a witness to the Will in question. The Surrogate also provided that an affidavit from a relative as to the signature of the decedent, Jean Santoro, would help prove the Will’s genuiness.

The Santoro case illustrates that Courts generally favor finding the validity of a Will so as to carry out a person’s estate plan and preferences for the distribution of his or her property. The Santoro case also shows the importance of up-dating a Will so that the persons involved with its execution are available in the event their testimony is required. Additionally, proper estate planning involves a periodic review of Will and trust provisions and beneficiaries and the selection of executors and trustees.

As noted, it is common for Courts to validate Wills to further a person’s apparent testamentary desires. In a recent article by Arden Dale appearing in the Wealth Advisor on June 20, 2011 entitled California Court Gives ‘Rogue’ Wills More Validity, it was reported that a California court up-held a Will that was written by a decedent’s friend while the decedent dictated its term. While courts may tend to overlook minor errors and approve “informal Wills”, the article points out that “financial advisors still urge clients to get professional help if they want to change their estate plan.”

June 22, 2011

Five Biggest Ways to Bungle a Trust in New York and Tips to Prevent Them

by Jules M. Haas

Barron’s recently published an article regarding the five of the most common ways problems arise when establishing a trust, illustrating the importance of hiring an experienced New York Trust and Estates Lawyer.

Estate planning can be intimidating because it is a complex area of law that can bring stress to and cause strife among family members. But because of the financial implications, New York estate planning and wills must be taken seriously and require exceptional detail.While some people only think about the “what am I getting” aspect of a will, much more goes into the preparation and planning. One area that must be addressed is minimizing the taxes that survivors must pay. And for the family member making such preparations, there are many questions to answer, such as whether a living trust or a will would be more beneficial and who should be appointed as executor of a New York estate.

Working with an experienced attorney that has handled countless probate matters is essential. Executors are responsible for collecting and distributing assets, paying taxes, debts and claims and handling other affairs. But the executor has many legal responsibilities and must be clear on how to proceed in accordance with New York law.

Barron’s believes it is easy to mess up the three biggest questions in trust and estate planning: Who gets what, how do you minimize taxes and who is in control of the trust. On to the tips:

Faulty records: Most states require trustees to provide regular accountings to the beneficiaries, which means keeping detailed records of income, assets and distributions. Failing to keep proper records could result in a lawsuit later on by a beneficiary.

Tip: Assemble a reliable team with a money manager, trust lawyer and tax pro.

Failure to diversify: Trustees may be tempted to sit on a big chunk of stock that has served the trust well for years, especially if shares are company owned or run by the dearly departed, but it’s a bad idea, the magazine says. Trustees are obligated to thoroughly diversify investments and it’s a leading cause of litigation against trustees.

Tip: Read and follow the guidelines in your state regarding Prudent Investment Standards.

Biased distributions: Trustees owe a fiduciary duty to all beneficiaries, including remaindermen, the down-the-line relatives who will receive principal once the trust has dissolved. So, making the right financial decisions is crucial.

Tip: Once you have made a distribution decision, set out in writing the reasons, including supporting documentation.

Expecting a pay day: Individual trustees tend to assume they are going to get paid a trustee fee quickly. But it takes a lot of time to be paid, and time is given to beneficiaries to object to the payment.

Tip: Have the fee discussion early on and settle on appropriate payments. Commissions are usually set according to state statutes.

False sense of safety: One may feel honored to be asked to be a trustee, but the job takes on a lot of legal risks and liabilities.

June 14, 2011

Doomsday Profit Gets Inheritance In Queens Woman’s Will

by Jules M. Haas

CNN recently reported about a woman whose aunt gave nearly her entire estate of $300,000 to Family Radio, the non-profit California station that broadcast unsuccessful predictions about the end of the world.

Contested wills in New York probate court can be difficult because they require specific requirements other than a family member feeling slighted by a loved one who passed away. New York Estate and Will Lawyers have handled an untold number of these cases and are well-versed in this area of law. Whether it’s contesting a will or planning an estate, it is a good idea to seek professional guidance.Family Radio’s owner, Harold Camping, has grown to celebrity status in recent months with his predictions that May 21 would mark the return to Earth of Jesus Christ, which would lead to a rapture of believers followed by five months of hell on Earth by non-believers before the world ends. His followers traveled across the country in RVs with large signs plastered on the sides, picketed busy intersections and even purchased billboards in foreign countries proclaiming their predictions. Camping has now said he miscalculated the date, which he now believes is October 21.

As CNN also reported, the non-profit organization is operated largely by donations and brought in $80 million between 2005 and 2009, including $18 million in 2009 alone.

Apparently, $300,000 of these donations came from a Queens woman who died in May 2010. As news of the doomsday prediction made news leading up to May 21, a relative of the woman said she and her sister were each left only $25,000 from her aunt’s estate and the rest went to Family Radio.

While she believes her aunt was comforted by the radio’s discussions about heavenly treasures, she didn’t know it was the same group that was working people into a frenzy about the end of the world. Had her aunt lived to see the prediction fail, the aunt may have had second thoughts and might not have left her money to the organization. While the woman said she wasn’t in need of the money, other family members could have benefited from a larger bequest.

Sometimes family members can successfully challenge whether the loved one had the mental capacity to make the decisions they made in preparing their end-of-life documents. It’s also sometimes possible that executors and others involved in helping a person plan their will can unjustly influence their decisions.

These issues require court action and should only be tackled with an attorney who has the experience necessary to protect your inheritance and the integrity of a loved one’s estate.

June 9, 2011

New York Estate Planning and Probate Should Avoid Family Disputes

by Jules M. Haas

The New York Probate Lawyer Blog has talked about many different situations where disputes and competing interests among family members can arise. For example, when a person prepares his or her estate plan many decisions must be made regarding the details and provisions in documents such as a Last Will, Living Will, Health Care Proxy, Power of Attorney and Living Trust. The selection of beneficiaries, executors, trustees and agents are usually made within the context of family dynamics where the personal preferences of the person creating the documents is mixed with the differing interests and sometimes long-standing antagonism existing between intended beneficiaries or appointees.

In a related situation, a person may become incapacitated due to an accident or medical condition such as dementia or heart ailment. It may be necessary to seek the assistance of the Court by applying for the appointment of an Article 81 Guardian. In many of these cases, particularly where the Alleged Incapacitated Person (“AIP”) was ill prior to the Court application, various family members may have been involved with the AIP’s property management or personal affairs prior to Court intervention. Other family members may believe that decisions previously made by the involved parties were improper. There also may be contested Guardianship proceedings regarding whether the appointment of a Guardian is appropriate or which family member is the proper person to be appointed. Family disputes regarding a loved one’s long term care, property management and other end of life decisions are not uncommon.

For example, the recent death of T.V. star Gary Coleman highlighted some of these problems. Following his death, questions were raised as to whether Gary Coleman’s ex-wife had the authority to remove him from life support and apparently a dispute developed between the actor’s wife and his parents regarding his burial.

Many disputes among family members arise following a person’s death. Will contests and lawsuits regarding improper transfer of assets can fill the Court dockets and make headlines. Just recently, it was reported that a number of lawsuits were filed in a Salem, Massachusetts case where a widow claimed that the decedent’s sons, with the assistance of a retired judge and another lawyer, cheated her out of her inheritance. Many of the postings in the New York Probate Lawyer Blog have discussed similar legal battles.

Avoiding family disputes before and after an individual’s death should be of paramount concern. While all controversies cannot be prevented, there are a number of steps that can be taken to reduce the likelihood of family warfare. A few are listed below.

First and foremost, proper estate planning, including advance directives such as a health care proxy, should be prepared by a New York estate planning attorney. It is important to have a complete understanding of the assets that are to be transferred and the terms of the Last Will, Trust papers and other documents that are to be signed.

I have helped many clients prepare estate plans and directives to fully reflect their wishes and protect their beneficiaries.

The selection of executors, trustees and agents is important. These appointees should be individuals you can trust and who can make appropriate decisions to carry out your plan. It is a good practice to discuss a person’s appointment with them prior to naming them in a document so that it can be determined whether they are agreeable to being appointed and possibly advise them as to the terms of the appointment.

Lastly, continue to review and update an estate plan. Assets, family circumstances and planning goals tend to change over time. All planning documents should be periodically reviewed and updated to ensure that a person’s estate plan and directives reflect current situations. Many problems arise where documents that are decades old need to be updated and no longer reflect present realities.

June 2, 2011

New York Article 81 Guardians Face Complex Issues

by Jules M. Haas

The New York Probate Lawyer Blog has discussed many issues concerning New York Article 81 Guardianship proceedings. These issues included the appointment process for a Guardian and the powers that are given to a Guardian by the Court.

Section 81.02 of the Mental Hygiene Law (MHL) provides that the Court may appoint a Guardian with regard to an individual’s personal needs and/or property management. Once appointed, the Guardian faces an array of issues in carrying out his or her fiduciary duties and obligations.

Initially, a Guardian must follow the directions and limitations provided by the Court Order appointing the Guardian. MHL Section 81.20(a)1 provides that “a guardian shall exercise only those powers that the guardian is authorized to exercise by Court order.” MHL Section 81.21 provides a detailed list of the powers that a Court “may” give to a property management Guardian and MHL Section 81.22 provides a list of powers that “may” be granted to a Guardian for personal needs. The Court can limit or expand these powers as necessary.

When exercising his or her powers, the Guardian owes a fiduciary responsibility to the incapacitated person. As stated in MHL Section 81.20 (a)(3) “a guardian shall exhibit the utmost degree of trust, loyalty and fidelity in relation to the incapacitated person.”

Since a Guardian is accountable for his or her acts, extreme caution and diligence should be exercised by the Guardian, particularly when faced with difficult or complex situations. These situations arise with regard to both personal needs and property management. Ultimately, a Court may approve or disapprove of the Guardian’s conduct.

An example of a complex issue facing a Guardian regarding the personal needs of an incapacitated person arose in the Matter of Northern Manhattan Nursing Home, decided by Justice Laura Visitacion-Lewis (Supreme Court, New York County) on April 26, 2011 and reported in the New York Law Journal on May 26, 2011. In Northern the incapacitated person was a 92 year old man suffering from terminal cancer, dementia and hypothyroidism. The prognosis was that he would not live for more than 6 months. The Guardian had asked the Court for authorization to withhold consent to the insertion of a feeding tube and treatment for the cancer and to sign Orders of Do Not Resuscitate and Do No Intubate. Following a hearing and a review by the Court concerning the incapacitated person’s end-of-life preferences and the provisions of the New York Family Health Care Decisions Action Section 2994-d(5), the Court granted the Guardian the authority to proceed as it had requested and withhold consent to further treatment and to sign the DNR and DNI.

The Northern case shows the seriousness and complexity of decisions that a Guardian may encounter. Having an experienced New York Guardianship attorney is important to provide a Guardian with guidance in exercising powers and obtaining Court directions and appointment. I have represented many family members and Guardians in these matters.

Unlike Northern, where the Court allowed the Guardian to proceed after a review of a request for authorization, a Court can admonish a Guardian who acts without or outside of his or her authority. This was the situation in Matter of Roy W. Lantigua, Jr. decided by Justice Betsy Barros (Supreme Court, Kings County) on March 31, 2011 and reported in the New York Law Journal on April 22, 2011. In Lantigua, after review, the Court denied a Guardian commissions and surcharged him for improper conduct. Among other things, the Court found the Guardian engaged in self-dealing and conflict of interests and expended guardianship funds improvidently. Thus, the outcome in Lantigua is in striking contrast to that in Northern where the Court pre-approved a proper request for a Guardian to pursue a certain course of conduct.

May 31, 2011

Huguette Clark Case Should Get Interesting If Will is Contested in New York Court

by Jules M. Haas

New York Probate Lawyer Blog has already touched on the fascinating case of 104-year-old heiress Huguette Clark, who died recently in New York City.

What makes the situation unique is that Clark, who inherited a giant fortune from her father, a copper baron and one of the richest Americans at the turn of the 20th Century, was a recluse whom people rarely saw. She died at a hospital, where she lived for at least the last two decades, MSNBC.com reports. Now it is likely that her contested will could play out in the news, requiring an experienced New York City probate attorney to sort out the details.News reports of her reclusive lifestyle, despite owning an estate in Santa Barbera, Calif., a country house in New Canaan, Conn., and a 42-room apartment on Fifth Avenue in New York City in total valued at $225 million — none of which she lived in — led to a criminal investigation into how her affairs were being handled by a New York City attorney and accountant. No charges have been filed and both men told news agencies they handled her financial matters according to her wishes.

Last fall, family members went to a New York court asking that a guardian be appointed to look after her assets and well-being after the accountant and attorney banned them from visiting her, MSNBC reports. The attorney has admitted to soliciting a gift of $1.5 million after the Sept. 11 terrorism attacks to safeguard his daughter living in Israel, which may be a violation of New York ethics rules.

Huguette Clark’s father was a Montana senator at the turn of the century, who struck it rich in copper and real estate. Huguette was only briefly married and never had children. Although she inherited her father’s wealth, according to news reports, she rarely used it. Huguette was secluded in hospitals, even when she was healthy. She was guarded by fake names and paid servants.

Many fear the potential for estate fraud and undue influence where an elderly woman who is fabulously rich is being shut off from family members and giving millions of dollars to the people controlling her estate. The probate process is designed, in part, to ensure that an estate is not plundered.

Prior to death in similar cases, Article 81 of the New York State Mental Hygiene Law can come into play. Adult guardianship in New York applies when family members believe an older family member cannot manage his or her personal or property affiairs on their own or is susceptible to being victimized by others.

It’s important to be represented in Article 81 Guardianship matters by an attorney with decades of experience handling these types of cases. This area of probate and guardianship law in Manhattan and throughout the New York City Courts is complex and it is important to consult with an attorney with the knowledge and experience to assist you through the process.

May 24, 2011

Many Options For Protecting Your Family Through New York Estate Planning

by Jules M. Haas

Experts believe the best bet for protecting your family in life and death is a plan of revocable living trusts, pour-over wills, guardianship and power of attorney for health care, property and mental health care.

New York City Trust And Estate Lawyers are available to assist you in any of your planning decisions. Whether you need help planning a trust or estate, choosing an executor or preparing other probate documents, trust the firm with more than 30 years of experience in New York probate law.Many believe a revocable living trust is the first step for someone making arrangements for their assets. The living grantor, or person who creates the trust, can terminate or modify it at any time. Only upon death does it become irrevocable and the trustee can administer the trust’s assets. But unlike a last will and testament, a revocable trust doesn’t have to be probated in court. Upon death, its provisions are immediately put into effect.

Also, you should consider a pour-over will, which instructs a probate court to “pour over” property that wasn’t titled in the trust, or didn’t have a named beneficiary, into the trust for distribution. The will should also make provisions for the care of minor or disabled children in the tragic event both parents or guardians die. That will make sure the custody of the children and their financial future is secure.

Power of attorney for property, health care and mental health care issues should also be planned and executed. This allows for a duly appointed agent to take specific actions on your behalf. Who is chosen to be the power of attorney is an important step and shouldn’t be taken lightly.

All of these matters are important to address as soon as possible to make sure your assets are divided among family, friends, non-profit groups and others in the way you want them to be. Choosing an executor and assigning power of attorney are important tasks. Sadly, executors are sometimes accused of a breach of fiduciary duty, which means they have profited through self-dealing or caused losses.

So, choose an experienced New York City estate law attorney who has spent three decades helping families sort through the property that loved ones have left behind. And, should you happen to be appointed as an executor, contact an experienced probate lawyer to help ensure that an estate is dispersed properly, taxes are paid and other complex issues are handled in accordance with the law.

May 23, 2011

Celebrity No-Nos Help Average Joes in New York Estate Planning

by Jules M. Haas

An improperly planned estate in New York City can cause turmoil in a family that adds to the grief felt from the loss of a loved one. And it’s not just everyday citizens who deal with it. Many celebrities have made mistakes in their wills that cause problems.

That’s why consulting with an experienced New York trust and estate lawyer is crucial to avoiding the kind of problems that can cause harsh words, infighting and lawsuits. Many of these things can be avoided if the right attorney is hired.These are some tips from celebrities that may help if you or a loved one is taking the critical step of planning your estate, courtesy of AOL Real Estate:

Put it in writing

Singer Don Ho, according to his adult children, promised his estranged wife on her deathbed that he would let her six children inherit the family’s eight-bedroom beachfront home in Hawaii where his first wife had lived until her death. He later listed the house for sale and while it was on the market, he died of heart failure. The house sold in 2008, but the children are still fighting over it.

Fund the trust you create

Before death, Michael Jackson created a family trust, but he didn’t transfer any assets into it, which is fairly common. When dealing with a house and other assets, a new deed or other transfer documents must be prepared to transfer ownership into the trust’s name. If unfunded, the trust will not be effective and the survivors will have to go through probate court to effectuate the terms of a Last Will.

Question mental competency before death

A few years ago, heiress Gail Posner left $3 million in cash and an $8 million house to her three dogs and another $27 million to her household staff and caregivers. Her son got about $1 million. While the case is still being fought in court today, it’s unclear whether her son will be successful in claiming that his mother’s staff took advantage of her.

Anticipate disagreements and address them before death

Survivors will sometimes bicker about how much they receive from the death of a family member. But one way to help prevent those disagreements before death is to spell it out correctly in a New York will.

All of these tips apply to you and I — the first step is hiring a New York City estate and trust attorney who can guide you through all of these complex decisions. Whether it’s modifying trusts, choosing an executor for the estate or dealing with New York estate taxes, a solid attorney should be your first step.