New York Probate Lawyer Blog

February 2, 2011

Rights Of The New York Surviving Spouse Are Not Clear In Same-Sex Marriages

New York and Federal Laws generally provide many advantages and protections for married individuals. For example, in New York a person may not disinherit his or her spouse. New York Estates, Powers and Trusts Law (EPTL) Section 5-1.1-A provides a spouse with a Right of Election to take a portion of the deceased spouse’s estate. This share is, subject to a complex formula, equal to the greater of $50,000.00 or one-third of the estate.

Similarly, when a spouse dies intestate (without a Last Will), Section 4-1.1 of the EPTL provides for the spouse to obtain the entire estate or at least $50,000.00 and one-half of the residue or balance if the decedent had issue (i.e., children). Also, New York Courts have given spousal status to the surviving spouse of a same-sex marriage performed in a jurisdiction outside of New York.

On the Federal level, the Federal (and New York) estate tax laws provide for a 100% marital deduction for assets passing upon death between spouses. However, the Federal estate tax spousal deduction has been denied to a same-sex couple. As reported in the New York Law Journal on November 12, 2010 by Victor Li, New Challenges To DOMA Filed in Connecticut and New York, the Federal 1996 Defense Of Marriage Act (DOMA) “defines marriage as a legal union between a man and a woman.”

Thus, pursuant to DOMA, and as reported in the Article, the federal estate tax marital deduction was denied to the surviving partner of a same-sex marriage which resulted in a tax liability of $363,053.

As reported, a number of federal lawsuits are pending challenging the constitutionality of DOMA. As can be seen from this controversy, a person’s status as a spouse and as a distributee (next of kin) of a decedent can be the subject of contention and litigation in the New York Surrogate’s Court. The determination of these issues can effect the rights of individuals to inherit from a decedent as well as the tax liability of the decedent’s estate.

January 28, 2011

Guardianship, Special-Needs Trusts In New York Should Be Considered When Caring For Those With Disabilities

by Jules M. Haas

As we begin 2011, we encourage you to take special care in planning for the welfare of a child with special needs. Consulting a New York City guardianship attorney is a great way to bring peace of mind to the issue of caring for a child or adult-child in your absence.

In other cases, a New York Article 81 Guardianship proceeding can assist in caring for an older loved one who is no longer able to manage their affairs.One aspect that is often overlooked is the need to provide for the care of such dependents in your New York estate plans. Leaving an estate to a loved one can prevent them from collecting state or federal aid. Life insurance proceeds can lead to the same unwanted result. Establishing a special-needs trust is one option that will ensure the long-term care of a loved one in your absence.

When a child with disabilities reaches the age of maturity, a parent or loved one may petition for guardianship under Article 17A of the New York Surrogate’s Court Procedure Act. More than 280,000 people in New York are believed to have mental retardation and another 24,000 have cerebral palsy. The New York State Mental Hygiene Law defines mental disability as:

-Attributed to mental retardation, cerebral palsy, epilepsy, neurological impairment, autism or other closely related condition.

-Originates before a person reaches the age of 22 and has continued or is expected to continue indefinitely.

-Constitutes a substantial handicap.

Once such guardianship is established, you will be able to continue to assist an adult child with special needs in whatever capacity is necessary. However, caring for them after your departure will still require sound estate planning, including a special needs trust or a supplemental needs trust. These investment vehicles will permit your estate to go toward the care of a loved one with special needs without jeopardizing government benefits, Medicaid or other assistance.

January 27, 2011

Avoiding Probate Court Process In New York Not For Everyone

by Jules M. Haas

While many seek the advice of a New York City probate lawyer to establish a Will, trusts, or other estate plans, far too many will die intestate, without a Will or other directions for the dispersal of their estate upon their death.

As we wrote recently on our New York Probate Lawyer Blog, trusts can be made to keep your estate out of the probate process, which can be time consuming and unnecessarily public. Yet there are some things that cannot be accomplished by avoiding probate in New York. Avoiding Taxes: Certainly comprehensive estate planning in New York may save thousands in taxes. But the mere fact that an estate avoids probate does not mean that it avoids tax obligations. State and federal estate taxes, capital gains taxes and real estate taxes are just a few of the tax obligations that estates frequently face.

Rights of immediate family: Avoiding the probate process, in general, does not change the fact that your spouse has a right to inherit. A spouse who does not receive a “statutory share” may go to court to claim property you have put in trust. In most cases, you are not obligated to leave your children an inheritance.

Creditors’ Rights: Bypassing probate may not relieve you of your obligation to creditors or their right to collect upon your death. If you do not leave enough assets outside of trust to pay your debts and taxes, those assets may be claimed by creditors after your death.

Creditors have strict time limits for making a probate claim. This is one area where going through probate court has its advantages. A creditor that does not make a claim within the appropriate time limit, may be barred from attempting to collect.

Understanding your rights to probate — as well as the ways to avoid the probate process — can allow you to make informed decisions as part of your estate planning in 2011 and beyond.

January 25, 2011

Many Advantages To Avoiding Probate Court In New York

by Jules M. Haas

There can be many benefits to avoiding the probate court process in the settling of an estate, including more privacy. Contacting an estate planning lawyer in New York City is a good first step toward putting your affairs in order as we begin 2011.

This is the first of several posts to our New York Probate Lawyer Blog that will examine ways to avoid the probate court process and the possible benefits and consequences of doing so.In general, if a decedent has no Will, known as an intestate estate, or if his or her estate is governed by a Will, the estate will go through the probate court process for dispersal to named heirs or living relatives. Some small estates, valued at less than $30,000, may avoid the probate court process.

New York does not follow the uniform probate code, as is in place in some other states, which can make the process longer and more costly in some instances. Establishing a trust in New York or taking other steps to avoid probate, may be to your advantage in many instances.

Other common challenges inherent in the probate process include:

-Identifying and contacting relatives: In cases where spouse and children are present this is not much of an issue. But in cases where a decedent passes away with only distant relatives, tracking down relatives can be an unnecessary headache.

-Lack of privacy: Probate court is a public forum and a family’s private finances and other information will become public for all to see.

By creating trust funds and taking other steps to avoid the probate court process in New York, you can ensure that your heirs receive the inheritance privately, with as little cost, hassle and wait as possible. Probate court does a lot of things right — including ensuring the proper distribution of your assets to your chosen heirs — but the same may be accomplished in a private, expedited manner with a little forethought and some basic estate planning.

January 19, 2011

Life Insurance Can Provide Many Benefits To A New York Estate Plan

by Jules M. Haas

The New York Probate Lawyer Blog has previously discussed the need for estate planning documents including a Last Will, Health Care Proxy, Living Will and Power of Attorney. Life Insurance can also provide a valuable estate planning tool. In its most fundamental function, life insurance can add a tremendous amount of liquidity and value to an estate. The payment upon death of a life insurance policy with a cash value of say $500,000.00 most certainly would provide an immediate benefit to the named beneficiaries.

Life insurance products can be complex and can take various forms such as term life, whole life or universal life. Before purchasing life insurance, a person should fully research and understand the different aspects of each product and obtain advise from professionals including insurance brokers, attorneys and financial advisors.

Additionally, the selection and designation of the insurance beneficiaries must be considered and made so that the life insurance proceeds are paid in a manner that is part of an overall estate plan. Very often people take out life insurance and either forget to name beneficiaries or beneficiaries who were named are no longer alive or perhaps are no longer intended by the policy owner to be the preferred recipients.

While life insurance can provide a huge benefit upon a person’s death, there are also a number of potential advantages that arise during a person’s life. One very interesting advantage is that a policyholder may sell their interest in the policy to another during their life. The investor essentially pays a fee to the owner and invests in the prospect that the person whose life is insured will die sooner rather than later. The insurance proceeds are paid to the investor. This arrangement is called “Stranger-owned life insurance” (“SOLI” or “STOLI”) and was recently found not to violate New York Insurance Law by the New York State Court of Appeals in Kramer v. Phoenix Life Insurance Co., decided on November 17, 2010. Thus, a person can obtain an immediate pre-death benefit from insurance on his or her life by assigning the policy to an investor.

January 12, 2011

Safekeeping of A New York Last Will Is Vital To Protect Beneficiaries

by Jules M. Haas

The New York Probate Law Blog previously talked about the importance of maintaining a Last Will in a safe and secure location. After investing the time and effort to develop an estate plan and finalize a Will and other estate planning documents such as advance directives, it would be unfortunate if the Will could not be located after a person dies.

As previously pointed out, there are a number of alternatives available with regard to safeguarding a Will. The original can be left with an attorney or kept by the person himself. A Will can also be filed with the Surrogate’s Court. Keeping a Will in a safe deposit box can be problematic since a Court Order may be required to open the box after a person’s death, thus delaying estate settlement proceedings. Also, a legal presumption may arise that the Will was revoked if it is kept by the person himself or herself and the Will cannot be located after death. Attempting to probate a photocopy of a misplaced Will can be extremely difficult.

Issues that arise concerning locating a decedent’s Will are evident from a recent lawsuit filed by the sibling’s of Mama Cass, who was a member of the 1960’s group The Mamas and The Papas. As reported in the New York Law Journal on January 11, 2011, from an article appearing in The National Law Journal by Leigh Jones, Mama Cass’ died in 1974. In their lawsuit, the siblings alleged that a law firm which recently located Mama Cass’ 1967 Will in their archives, had told them at the time of her death that a Will could not be found. Since Mama Cass had apparently died without a Will, her estate was distributed pursuant to California’s law of intestacy rather than in accordance with the terms of the just found Will. As a result, the siblings claim that they were damaged by not receiving a part of the estate. “The lawsuit claims malpractice, negligent misrepresentation and fraud.”

January 5, 2011

New York City Estate Leaves Popular Upper East Side Restaurant to Employees

by Jules M. Haas

The Huffington Post reports that the owner of a popular Upper East Side restaurant has left the business to its longtime manager.

New York estate lawyers frequently report here on our New York Probate Lawyer Blog about the challenge of leaving a business to heirs. Without proper estate planning, the results can be tragic. It is not unusual for heirs to be forced to sell a business to pay taxes and satisfy other obligations as a result of an inheritance.State and federal inheritance taxes, capital gains taxes and property taxes are just a few of the issues that can plague the transfer or sale of a family business. In some cases, life insurance is bought to assist with the cost but can have its own implications if not properly purchased and structured.

Business owners should do themselves and their heirs a favor and make visiting an estate planning attorney a resolution in 2011.

In this case, the New York Times reports that Elaine Kaufman’s death in December left many wondering what would become of “Elaine’s” the popular eatery on the Upper East Side. Turns out, the owner has left the restaurant to her longtime manager Diane Becker.

Kaufman also left much of her estate to Becker and to her longtime maitre d’hotel, Giovanni Adamo, known by regulars as Gianni.

The new owners promise to run the restaurant the way it has always run, saying “the only missing link is Elaine.”

January 3, 2011

Drafting New York Power of Attorney Best Left To Experienced Law Firm

by Jules M. Haas

Family gatherings around the holidays can make it clear that a loved one will need assistance to maintain his or her independence, or may even require an assisted living facility or a nursing home.

Frequently, a New York power of attorney will be granted to friend or family member who agrees to help with an aging loved one’s affairs. Too often, neither the grantor (known as the principal), nor the grantee (known as the agent) have a proper understanding of the requirements, limitations and consequences of a power of attorney.A power of attorney can be structured for a single purpose — such as disposing of a piece of property — or can grant broad powers to conduct business on a person’s behalf. It can also be limited to a specific time frame.

Additionally a Living Will is a document detailing a person’s desire as to whether or not to be maintained on life support. New York’s Health Care Proxy law provides a separate document that provides a health-care agent. And a durable power of attorney in New York will remain in effect if you become incapacitated.

In general, it is best to structure a power of attorney in such a way as to be limited beyond the scope of the desired task. Where problems frequently occur, is when a broad power of attorney is granted for a specific task, which can permit far greater uses than the principal intended.

In other cases, a power of attorney is not the best legal avenue to achieve the desired result. In all cases, the best course of action for protecting your rights is to contact a New York City probate attorney to discuss your individual needs and the available options.

December 29, 2010

New York Estates Often Involve Issues Concerning The Transfer of Real Estate

by Jules M. Haas

A New York estate usually contains many different types of assets. These assets can include bank accounts, stocks and bonds, retirement accounts and real estate. A beneficiary’s interest in these assets is determined by the nature or manner in which these assets are owned or titled. For example, a bank account in the sole name of a decedent will be distributed according to the decedent’s Last Will or, if none, the laws of intestacy. However, a bank account held in the name of the decedent “in trust for” a named beneficiary will be distributed directly to the designee upon the decedent’s death regardless of the Last Will or intestacy laws.

Among all of these asset transfer variations, the disposition of real property often presents the most complexity. This is due to the many complex rules regarding the ownership and transfer of real estate.

The New York Probate Lawyer Blog provides a reference to New York issues and problems presented in decedent’s estates and estate settlement. A recent case that dealt with the disposition of a decedent’s real estate was Holder v. Smartt, Index No. 3384/08, Supreme Court Kings County, decided November 11, 2010 and reported in the New York Law Journal on November 29, 2010. In Holder, real property had been tranfered by the executor of an estate by an executor’s deed to “Arthur Holder and Shirley Holder a/k/a Shirley Stewart, his wife, …. and Lydia Smartt ….”

After Arthur Holder died, his surviving spouse Shirley, commenced a partition action against Lydia Smartt to have the real property sold and the proceeds of sale distributed between them. A partition action is a court proceeding whereby a co-owner of real property can have a Court direct the sale of the property and the distribution of the sales proceeds.

In enforcing its determination as to partition, the Honorable David I. Schmidt was asked to rule on the interest of an alleged son of Arthur Holder who claimed that as a distributee of Arthur’s estate, he had an interest in the real property. The Court found that under New York law, “when real property is conveyed to a husband and wife and a third party, the husband and wife have one moiety as tenants by the entirety, and the third person is a tenant in common with them of the other ….” Thus, since Arthur was married to Shirley when he died, his entire interest in the property passed to Shirley upon his death who then owned the property with Lydia Smartt. Since the son had no interest in the property, the Court directed that the sale of the property continue and the sales proceeds be distributed between Shirley and Lydia.

December 22, 2010

New York Individual Retirement Account Designations Must be Scrutinized To Avoid Beneficiary Conflict

by Jules M. Haas

On December 14, 2010, the New York Probate Lawyer Blog discussed the problems created when beneficiary designations are incomplete, confusing or ambiguous. These beneficiary designations can appear on many different types of assets such as annuities, life insurance, Individual Retirement Accounts, 401K benefit plans and other types of pension plans.

Designations that are confusing and changes made to the named beneficiaries, particularly changes made when a decedent is ill, incapacitated or shortly before death, create issues that can result in extensive and expensive estate litigation. In Mury v. Allen, Index No. 105439/2010 (Supreme Court, New York County) the Court was asked to determine a procedural issue regarding the standing or right of the plaintiff to challenge a beneficiary change made to an IRA account by a decedent shortly before his death.
In its decision dated November 22, 2010 and reported in the New York Law Journal on December 1, 2010, the Court found that the defendant failed to present sufficient facts to challenge the plaintiff’s standing. The details of the Mury case provide yet another insight into the need to provide clarity and diligence in preparing an estate plan that includes a Last Will and assets that pass directly to specifically named beneficiaries. In Mury, the decedent was an 86 year old widower at his death. He was survived by one daughter whom he disinherited in his Last Will in which he left his entire estate to his “former French mistress”.

The decedent had originally designated his wife as the beneficiary of his IRA. However, since his wife had predeceased him an issue arose as to who was the successor or alternate beneficiary of the IRA. Shortly after his death, a beneficiary change had been made to the IRA naming a home health aide who had been helping care for the decedent during the five (5) months prior to his death. Complicating matters further, was an issue as to the IRA contract terms and whether the decedent’s estate (i.e. his mistress) or his daughter would be deemed the IRA beneficiary if the beneficiary designation to the home health aide was voided by the Court.

Since the Court allowed the mistress, plaintiff, to continue with her lawsuit, the dispute over the IRA account will be ongoing with the obvious cost and upset to all involved.