New York Probate Lawyer Blog

April 11, 2011

Removal of a New York Fiduciary Requires a Strong Demonstration of Wrongdoing

New York Trusts and Estates attorneys are often asked by clients whether certain circumstances or actions by fiduciaries would require the removal of a fiduciary of the Court. A fiduciary can be an Executor, Preliminary Executor, Trustee, Administrator or Temporary Administrator.

In a typical scenario a beneficiary of an estate may be concerned because the fiduciary has a claim against the decedent’s estate or has received funds from the decedent by gift or through a joint bank account. The estate beneficiary perceives these situations as creating a conflict of interest in Estate Settlement because the fiduciary will not seek to recover funds from gifts or assets transferred to the fiduciary which the beneficiary contends were improper transfers.

Surrogate’s Court Procedure Act (SCPA) Section 711 and Section 719 provide various grounds upon which the Court may suspend, modify or revoke a fiduciary appointment. For example, SCPA Section 711(2) provides for a situation where the fiduciary has “improvidently managed or injured the property committed to his charge or by reason of other misconduct in the execution of his office or dishonesty, druckenness, improvidence or want of understanding, he is unfit for the execution of his office.”

Despite the various instances set forth in the statutes, New York Surrogate’s Courts are very careful and reluctant to remove a fiduciary, such as an Executor, who has been nominated by a decedent. The Court prefers to respect the selection of fiduciaries made by a person in their Last Will or Trust and generally will only remove the fiduciary when the misconduct is egregious or blatant.

Such was the result in a recent decision by Surrogate Nora Anderson, New York Surrogate’s Court, dated April 5, 2011, in Matter of the Application to Revoke Preliminary Letters Testamentary. This case involved the estate of a decedent named Jack E. Maurer. The decedent’s wife sought to remove the preliminary executors who were the decedent’s daughter from a prior marriage and a long-time friend. In refusing to remove the preliminary executors, Surrogate Anderson stated that “Not every breach of fiduciary duty warrants removal. Indeed, even if an executor has a claim against the estate, is involved with litigation against it, is indebted to it, or even has a conflict of interest, such circumstances do not justify removal…Even allegations of wrongdoing against a nominated executor (including conversion and embezzlement), which await judicial determination, are generally insufficient to deprive a nominated executor of the right to receive preliminary letters….”

I have represented both Estate Executors, fiduciaries and beneficiaries in situations where conflicts of interest or alleged acts of misconduct appear. The Surrogate’s Court throughout New York such as Westchester and Bronx are constantly faced with resolving these complicated matters. All parties involved should be represented by an experienced trust and estate attorney.

April 6, 2011

New York Probate Procedure Is Affected By Recognition of Same-Sex Marriage

by Jules M. Haas

The New York Probate Blog has discussed on many occasions the probate procedure in New York. Probate is the legal process by which a Will is validated by the Surrogate’s Court. The procedure to probate a Will encompasses many facets. Initially, a Probate Petition is prepared and filed with the Court.

The Probate Petition contains basic information regarding the petitioner who is usually the proposed Executor. The Petition is usually prepared with the guidance of an experienced New York Trusts and Estate attorney. Details regarding the decedent, the date of the purported Last Will, the names of the attesting witnesses to the Will and the estimated value of the probate estate are also included. An essential section of the petition requires that the names and addresses of the decedent’s distributees, or next of kin, be provided. The reason for requiring this data is because the distributees have a right to receive official notice of the probate proceeding since they have an interest in contesting the Will. In the event the decedent died without a Will or the purported Last Will is deemed to be invalid, the distributees would inherit the estate according to the laws of intestacy. Therefore, a proper kinship determination is essential to the probate process.

In a recent New York decision, H. Kenneth Ranftle v. Craig Leiby, the New York Appellate Division, First Department, decided on February 25, 2011, that a same-sex Canadian marriage between the decedent and his partner would be recognized by the New York Court. Thus, in this Manhattan Probate case, the decedent’s sole distributee was determined by the Court to be his same-sex “spouse”. The decedent’s siblings were found not to be distributees since the New York Statute, EPTL 4-1.1, gives priority to a spouse. The siblings were precluded from challenging the decedent’s Will.

I have helped many clients prepare probate petitions. Obtaining information regarding distributees and giving them the proper Court mandated notice is a paramount objective. The accurate completion of the probate petition greatly helps speed up a successful Will probate.

March 31, 2011

New York Kinship Cases Require Proof To Claim An Inheritance

by Jules M. Haas

The New York Probate Lawyer Blog has discussed the difference between probate proceedings where a decedent has prepared a Last Will and Administration proceedings where a decedent dies without a Last Will or intestate. Whether or not a person has prepared a Will, it is necessary for purposes of the Surrogate’s Court proceedings to determine the decedent’s next of kin or “distributees.”

Distributees are the decedent’s closest surviving relatives who would inherit his or her estate pursuant to the New York laws of intestacy. When a person dies without a Will, it may be easy to determine his or her distributees if there is a surviving spouse or children. However, when a decedent’s closest surviving relatives are cousins or more distant relations, the Court will require that proof of kinship be presented. Kinship proof requires a very detailed and verifiable presentation of a decedent’s heirship history or family tree on both the maternal and paternal side of the decedent’s family. Such proof can include Court testimony from witnesses personally knowledgeable with the decedent and his or her relatives, and the submission to the Court of documents such as death certificates, birth certificates, marriage certificates, obituary notices in newspapers, government census records, cemetery records, probate court records, church and other religious ceremony papers and military records. The types of documentation that may be useful in proving kinship is endless as long it tends to show a connection between the decedent and his or her heirs.

Obtaining the testimony and documents necessary for a kinship hearing in Surrogate’s Court may be complicated if the witnesses or papers are located in countries outside of the United States. It is a common practice in these cases to hire the services of a professional genealogist to assist with the determination of a family tree and locating the necessary proof.

I have helped many clients prove kinship in both probate and intestate administration proceedings. An experienced New York Probate Lawyer can help estate beneficiaries protect their interests in estates where kinship must be proved.

March 29, 2011

Baby Boomers to Inherit Trillions, Protect Your Share With New York Estate Planning

by Jules M. Haas

While we talk frequently about the need to plan your estate, rarely do we mention the need to protect an inheritance. Of course, that brings us back to planning your estate!
Baby boomers are about to hit the life lottery, receiving a combined $8.4 trillion, according to Business Insider.

Protecting your inheritance in New York is one of the keys to securing your financial future.New York estate planning lawyers understand how important it is to protect an inheritance. In some cases, it is the first time a client has dealt with a sizable sum of money. In all cases, the goal is to make that money last and, perhaps, pass it on to the next generation.

Forbes reports that baby boomers have already gotten an estimated $2.4 trillion in inheritances. This means that, on average, each inheriting household should be expecting nearly $300,000.

Forbes.com offers baby boomers these pointers to help plan for your future and maintain financial stability:

-Treat your inheritance as a gift passed on. It’s okay, and probably preferred, to become emotionally attached to it. This can help keep you from overspending and splurging.

-Don’t just blow it, and then regret it; think about it carefully.

-Use it to make an emergency fund if you don’t already have one equal to at least six months of necessary funds. It’s recommended that an emergency fund should be kept in safe and liquid investments.

-Pay off credit cards, car loans or your mortgage. Remember, though, to consider the tax angles. Mortgage interest is deductible for taxpayers who itemize. Just make sure these options work in your favor.

-“I encourage people to look at things in one great big bucket. These are assets to serve you. How are you going to invest them to serve you best and to accomplish what you want?” says Myra Salzer, author of the book Living Richly, a guide for inheritors who are living off generous inheritances.

Making an appointment to sit down and talk to an estate planner in New York could be the best money you spend. Tax savings, real estate transfer considerations, and your own plans for the ultimate distribution of your wealth are all issues you should discuss with a professional.

March 25, 2011

New Estate Tax Law Features Portability or Transfer of Exclusion Amount Between Spouses

by Jules M. Haas

Under the new federal estate tax law, the exclusion amount, or the value of an estate that can pass free of federal estate tax, is increased to $5,000,000. This $5,000,000 exemption will end, unless extended or modified by new legislation, on December 31, 2012. One of the most significant changes brought about by the new law with regard to preparing a Last Will or an estate plan, is the portability or transfer of the unused portion of the $5,000,000.00 exclusion between spouses.

In a simple example, say a husband dies in 2011 and leaves his entire $5,000,000 estate to his wife but does not use any part of this $5,000,000 exclusion for estate tax purposes. If the wife then dies in 2012, she can use both her own $5,000,000 exclusion and the $5,000,000 exclusion that was unused by her husband. Thus, the wife can pass on to others a $10,000,000 estate tax free. In the present law, the death of both spouses must occur between January 1, 2011 and December 31, 2012.

As with all new statutes, particularly involving taxes, novel questions always arise. Suppose a surviving spouse has survived not just one but two (2) predeceased spouses. Could the survivor’s exemption possibly reach $15,000,000 by adding the unused exclusions of both of the two pre-deceased spouses to that of the surviving spouse. The explanation accompanying the law provides that the surviving spouse can only use the exclusion of the last deceased spouse.

In order to utilize the unused exclusion of a deceased spouse, the executor of the first deceased spouse’s estate needs to timely file an estate tax return for the deceased spouse, compute the unused exclusion amount and elect that it can be utilized by the second spouse.

As is true with many aspects of estate settlement and administration, an Executor or estate fiduciary must be aware of his or her options and obligations to secure the maximum benefits for the estate and estate beneficiaries. Preparing and filing estate tax returns is just one of many areas that requires the assistance of a qualified probate lawyer.

March 23, 2011

New York Estate Planning can Reduce Couple’s Tax Exposure

by Jules M. Haas

Market Watch recently published some estate tax tips for married couples. New York City estate planning attorneys have been dealing with the changes to the estate tax and gift tax limits since they were implemented late last year.

As we reported in December on our New York Probate Lawyer Blog, Congress set the estate tax exclusion at $5 million and the lifetime gift-tax limit at $5 million. The tax exemption ends at the end of 2012. But for now, couples enjoy tax-free giving power and the vast majority of the nation’s estates may pass to heirs tax free.Unlimited Marital Deduction: For spouses who are U.S. citizens, there is no limit to the tax-free inheritance they can receive. However, it does not negate the need for estate planning in New York: Leaving your spouse a large estate could mean that he or she exceeds the limits, which would subject the estate to excessive taxation upon his or her death.

Portable Estate Tax Exemption: This year and next (2011 and 2012), you may direct the executor of your estate to leave any unused federal estate tax exemption to your surviving spouse. This includes your $5 million exemption and means a spouse could have a $10 million exemption for estates distributed this year or next. Unless Congress acts, these portable exemptions are set to expire at the end of next year.

Donate to IRS-Approved Charities: Giving to IRS-approved charities as part of a comprehensive estate plan is a great way to get your estate down to the $5 million estate-tax cap — or $10 million for couples with both available exemptions.

Give Gifts to Relatives: The annual gift-tax exclusion is $13,000, which can be given without reducing your lifetime $5 million federal gift-tax exemption. If you had two children and four grandchildren, you and your spouse could each give $13,000 to each one, or $156,000 tax free for 2011. You could do the same thing next year and reduce your taxable estate by $312,0000.

Pay School Expenses or Medical Bills for Relatives: Aside from room and board, you can give unlimited amounts for these purposes,without reducing your gift-tax or estate-tax exemption. Payments must be made directly to the school or medical provider.

Give Away Appreciating Assets: Use your $5 million gift-tax limit to give away appreciating assets now — while they are worth less than they will be at the time of your passing.

Use an Irrevocable Life Insurance Trust: While life insurance proceeds are usually income-tax free, they are included in your estate for estate-tax purposes. Policies held in irrevocable trust are free from estate-tax exposure. This is particularly critical for single people — married people can pass the proceeds to a spouse tax free using the marital deduction privilege (though they may then face taxation upon the death of a spouse). Such trusts are a terrific way to cover estate taxes upon your death.

March 22, 2011

Transfer-on-Death Registration One Option for Planning New York Estate

by Jules M. Haas

As part of our ongoing series on the advantages and disadvantages of avoiding probate in New York, our New York City estate planning attorney publishes this post on naming beneficiaries for stocks and bonds.

Most recently we discussed on our New York Probate Lawyer Blog the importance of naming beneficiaries to retirement accounts. Unfortunately, it not unusual for complications to arise — including instances where the name of an ex-spouse is left on an account — particularly in cases of sudden death during middle age.Avoiding probate has its advantages — as we have discussed, keeping an estate settlement out of court can speed the process and keep it private. Whereas, a probated estate will be subjected to the court’s time frame and the public process inherent in most court cases. However, avoiding probate does not mean you will not need a probate attorney; indeed, an estate planning lawyer may be even more critical in cases where a person desires to structure an estate capable of bypassing the safeguards of the court process.

Like naming beneficiaries on retirement accounts, naming beneficiaries of stocks and bonds is another simple way to transfer assets outside of probate court. The advent of IRAs, 401(k) plans and self-directed brokerage accounts has given rise to laws in 48 states (Louisiana and Texas are the laggards) that deal with transfer-on-death registration. Much like the payable-on-death bank accounts we previously discussed, transfer-on-death registration permits you to own stocks in what is known as “beneficiary form,” which permits their transfer to a named beneficiary at the time of your death.

One potential drawback is that your broker may not permit you to name an alternate beneficiary. In other cases, your broker may not offer the service. Joint stock accounts can have T.O.D. benefits but the co-owner must have rights of survivorship. What that means is that the account will not transfer to the named beneficiary until both account holders are deceased.

There are also rights of spouses under state law, which cannot be bypassed using T.O.D. And complications apply to naming a child under 18 as beneficiary — a guardian and an adult money manager may be needed to be appointed to make sure a minor has sufficient assistance in managing the funds.

In cases where a beneficiary dies before you do, or there is otherwise an absence of named beneficiary, the stocks would typically be distributed under your Will’s “residuary clause,” which names a beneficiary to inherit everything not specifically mentioned in the Will.

Other challenges exist in using T.O.D. registration. And your estate planner is best suited to assist you in determining whether such a transfer is right for you. Instances in which a bond is not easily divisible, or the need exists to name more than one beneficiary, are examples of instances where other arrangements may best serve an estate.

March 21, 2011

New York Decedent’s Burial Can Be Complicated By Conflicts Between Family Members and Guardians

by Jules M. Haas

The New York Probate Lawyer Blog has previously discussed issues regarding the rights of relatives to make burial decisions regarding a decedent. New York Public Health Law Section 4201 entitled “Disposition of remains: responsibility therefore”, provides a framework for this decision-making by essentially giving priority to a decedent’s spouse and closest living relatives in descending order to determine disposal of the remains.

Notwithstanding the statute, a person may put into place his or her desires by pre-paying for a funeral or cremation, purchasing a burial plot or otherwise expressing in a Last Will certain desires or preferences.

Of course, situations constantly arise when survivors, whether relatives or fiduciaries such as guardians, have conflicting ideas as to the disposal of the decedent’s remains. Such was the situation in The Matter of Louis V.P., which was decided by New York State Supreme Court Justice Joel K. Asarch on February 22, 2011. In this case Louis V.P. was determined to be an incapacitated person under Article 81 of the New York Mental Hygiene Law. Guardians for his personal needs and property management were appointed. When Louis died at age 86, his sister, Vita, wanted Louis to be cremated. Vita was also a co-guardian of Louis’ property. However, Louis’ niece, Grace, who was Louis’ personal needs guardian, desired that Louis be buried in the cemetery burial plot that he had purchased approximately 35 years ago.

After considering all of the evidence, the Court noted that the desires of a decedent “regarding the disposition of his or her own remains are paramount….” The Court thus ruled that Louis was to be buried in the burial plot he had purchased since that was the method he apparently intended.

In another recent burial controversy reported in the New York Post on Thursday, March 17, 2011 by William J. Gorta, “Brooklyn heirs burned in cremation flap“, a Court ruled that a decedent’s third wife could not sue a funeral home and cemetery for having a decedent’s remains cremated at the direction of the decedent’s fourth wife. Apparently, the family was unaware of the fourth marriage.

Family conflicts can take many forms following a decedent’s death ranging from burial directions to Will contests and identification of distributees through kinship proceedings. I have represented clients in New York to help them resolve these issues and protect their family’s rights.

March 15, 2011

New York Executors Have Authority to Act on Behalf of the Estate

by Jules M. Haas

An Executor of a New York estate, or other fiduciary such as an Administrator, is the party empowered by law to act on behalf of the estate. The underlying purpose of a Surrogate’s Court probate or administration proceeding is to have the Court officially appoint a person or institution that has the legal authority to handle the decedent’s affairs. Similarly, a Trustee is empowered to represent a Trust.

There are many circumstances in which the authority of an Executor or other fiduciary may arise. The recent case of Friedman v. Clearview Gardens, concerned issues of an Executor’s powers and arose in a landlord-tenant eviction proceeding involving a cooperative apartment.

In Friedman, decided by the Hon. Charles Markey on February 3, 2011, (Supreme Court, Queens County), Ron Friedman (“Ron”) brought a lawsuit against the cooperative corporation essentially to stop an eviction proceeding and to have the cooperative corporation put the coop stock into his name. Although Ron had lived in the apartment for over 50 years, the coop stock ownership was in the name of Ron’s mother who had died in 2006. Ron’s brother, Daniel, was named as the Executor of the mother’s estate by the Queens County Surrogate’s Court.

The Court ruled that Daniel, as Executor, and not Ron, had the legal authority to sue the cooperative corporation. Moreover, the Court found that a power of attorney that Daniel had given to Ron was ineffective since an Executor is not allowed to delegate his or her authority.

The Friedman case demonstrates that a Court appointed fiduciary is necessary to control and oversee the assets and other affairs relating to the settlement of a decedent’s estate.

I have represented many Executors and other fiduciaries in various matters, including landlord-tenant proceedings, that involve a decedent’s interests. A decedent’s estate may need to evict a tenant from estate property if it must be sold or if the tenant is unwanted. Similarly, an estate or trust may require protection from an eviction to protect the decedent’s rights property.

March 10, 2011

Undue Influence In Changing Life Insurance Beneficiary Can Be Difficult to Prove

by Jules M. Haas

The New York Probate Lawyer Blog has previously discussed the naming of a beneficiary on a life insurance policy or other asset such as a pension or retirement account. Upon a person’s death, these assets are paid directly to the named beneficiary (assuming the beneficiary is surviving) and are not part of the probate or intestate administration.

It is of utmost importance that the beneficiary designation clause be completed properly and clearly so that the intended beneficiary can receive the asset proceeds following a death. These designations should be well thought out as part of an overall estate plan.

Unfortunately, controversy and Court litigation often arises when beneficiary selections are changed while a person is elderly, or experiencing medical problems or when the change occurs shortly before death. Such changes are particularly dramatic when the new beneficiary is a person who has not been involved in the decedent’s life until recently such as a new friend, spouse or health aide. The initial reaction to such change, particularly from the now disinherited beneficiary – such as a child, long-time friend or other seemingly natural beneficiary selection – is that the change could only be the result of some kind of undue influence perpetrated upon the decedent at a time when he or she was vulnerable, weakened due to illness or old age or incapacitated.

However, despite the ready appearance of wrongdoing, actually demonstrating that the decedent did not intend the change and that the new designation should be voided is not an easy task. Such was the situation in a recent case entitled Metropolitan Life Insurance v. Felecia Bradway, decided in the Federal District Court, Southern District of New York, 10 Civ. 0254. As reported in the New York Law Journal by Mark Hamblett on February 28, 2011, the decedent, Bradway, had designated his daughter as the beneficiary of a $300,000 life insurance policy in 1998. However, in May, 2008 Bradway changed the beneficiary designation to a co-worker whom he married later that year. Bradway had been taking a narcotic pain medication and was diagnosed with liver cancer shortly before his wedding. Bradway then died in March 2009.

The disinherited daughter claimed that the new spouse, “who was 30 years younger than Mr. Bradway, influenced him by proposing marriage while he was ‘terminally ill’ , by attempting to isolate him from his family following his cancer diagnosis and by failing to provide him with proper medical care after the diagnosis.”

As reported in the article, notwithstanding the daughter’s allegations, the Court found that “there was not enough evidence for a ‘reasonable finder of fact’ to show Mr. Bradway’s mind was subverted when he made the May 27, 2008 designation of beneficiary.”

The Bradway case demonstrates that it is important to make clear beneficiary designations as part of an estate plan. Probate, Guardianship, and other Court proceedings provide avenues to attack designations that may seem particularly improper under the circumstances. Such attacks however, require the proper presentation of proof to succeed.