Articles Posted in Estate Planning

It is apparent that the preparation of New York estate planning documents is important.  A lot of time and effort can be expected in connection with reviewing assets and financial interests, figuring out the manner in which dispositions are to be made to beneficiaries and implementing the papers and documents to formalize the plan.  In view of the commitment to start and finish this procedure, it is equally important to make certain that the documents that are prepared are correctly and properly created and also executed.

While there are many considerations involved in the above process, these three (3) areas should be at the top of the list.

Expressing Creator’s Intentions:  The whole point of planning an estate is to insure that a testator or creator of a document can memorialize his intentions regarding the disposition of assets.  Thus, the papers that are prepared, whether a Last Will and Testament or Living Trust or even advance directives, such as a power of attorney or health care proxy, should contain clear and unambiguous provisions and directions.  It makes sense to consult with an estate lawyer who is familiar with drafting clauses which effectuate intentions regarding bequests and contain appropriate dispositive language.  Even the simplest of documents may require clauses dealing with alternative or contingency dispositions.  Also, it may be necessary to include specialized language concerning estate tax matters or the payment of estate debts or expenses.  A well drafted, unambiguous Will or Trust is essential for the creator’s intentions to be accomplished.

Estate planning is very important and may be accomplished by the creation of a number of documents.  These papers include a Last Will and Testament and a lifetime trust which may be revocable or irrevocable.  Advance directives in the nature of a Living Will, Power of Attorney and Health Care Proxy may also be considered as part of an overall plan.  The New York Probate Lawyer Blog contains numerous posts dealing with planning an estate in New York.

Due to changing circumstances, a Will or a trust may need to be modified.  Such circumstances may include the death or incapacity of either a beneficiary or a nominated fiduciary such as an Executor or Trustee.  Additionally, a person’s intentions regarding beneficiaries may require a change in dispositions or a person’s assets may have declined, increased or changed requiring new Will or trust provisions.

In any event, when the time comes to revise a document, there are a few important points to consider.  To begin with, a Will can be modified simply by preparing a new Will and having it executed and witnessed in accordance with the New York laws contained in Estates, Powers and Trusts Law Section 3-2.1 entitled “Execution and attestation of wills;  formal requirements.”  It is generally insufficient to just place corrections, markings or cross-outs on the original.  The Courts most likely are going to ignore these attempted corrections on the face of a Will unless they happen to be done in accordance with the above statute; i.e., duly executed and witnessed.  Therefore, it is best to have an experienced estate lawyer assist with any contemplated revisions.

The settlement of an estate in New York involves many facets.  Of course, in its initial phase, the appointment of a fiduciary such as an executor or administrator needs to occur.  Thereafter, the fiduciary engages in the process of identifying and collecting assets, paying or resolving claims, debts or other estate obligations, and then, ultimately, making distributions to the estate beneficiaries.  If a decedent had a Last Will and Testament, then the distribution of estate assets is made according to the terms of the Will.  When there is no Will and a decedent dies intestate, distribution is made in accordance with Estates, Powers and Trusts Law Section 4-1.1 entitled “Descent and distribution of a decedent’s estate.”  The New York Probate Lawyer Blog contains many articles regarding the settlement of a decedent’s estate.

One type of asset which is sometimes overlooked in the estate planning process is tangible personal property.  This asset can be comprised of all sorts of items such as furniture, jewelry, artwork and similar items.  When preparing an estate plan, an estate planning attorney can include provisions in a Will whereby items of property can be specifically bequeathed to named individuals.  For example, a diamond ring can be given to a named child or friend.

It should be noted that EPTL Section 5-3.1 entitled “Exemption for benefit of family,” provides that some of these property items are set aside for a surviving spouse or children under age 21 such as household furniture, musical instruments and appliances, as well as a motor vehicle having a value not exceeding $25,000.00.  These items are not considered to be estate assets.

Disputes regarding estates occur all the time.  These matters play out in the New York Surrogate’s Courts which is the primary forum where a decedent’s estate issues are determined.  Estate lawyers in New York are familiar with all types of cases ranging from Will contests to the appointment of an administrator in the event of intestacy.  A recent internet search disclosed that a prevalent area of dispute involves siblings.  In fact, according to a reference to research performed by Ameriprise, 70% of the conflicts between siblings are related to their parents.

When it comes to estates, siblings may have conflicts over many things.  For example, a brother or sister may feel that they were treated unfairly in a parent’s Last Will especially if their bequest was small or they were disinherited.  In these types of cases a parent may have had good reasons to treat their children differently – one child may be well-off and another may need the extra support to survive.  It is not uncommon for a child to be estranged.  I represented a named executor in upholding the validity of a Will where a disinherited child filed objections to probate even though the child had virtually no contact with the decedent for decades.

On the other hand, a sibling may have very legitimate complaints where another sibling appears to have taken advantage of an older and ill parent to unduly influence the creation of a new estate plan in his favor.  Undue influence is always difficult to prove but facts which show a decedent’s susceptibility and opportunity for wrongdoing often lead to estate litigation.  Sometimes a sibling may arrange for a transfer of a parent’s assets even before death.  These situations often result in the commencement of an Article 81 Guardianship proceeding to have a Court supervise the parent’s assets during his lifetime and prevent improper transfers or dissipation.  The New York Probate Lawyer Blog contains many articles discussing Guardianships.

Estate and gift taxes have effects that may vary widely depending on the value of an estate and the place where you live.  When a person engages in estate planning, the tax consequences are always considered.  Like most taxes, estate and gift taxes are imposed by various states and by the Federal government.  Estate lawyers in New York can assist their clients with these matters.

During recent years, most individuals have not had to worry about paying estate or gift taxes.  At present the exemption for Federal estate tax is $11.7 million per individual.  Even in a highly taxed state like New York, the individual exemption is presently $5,930,000.00.  There are various strategies to diminish the impact of these taxes.  Provisions in Last Wills can utilize trusts and other methods to defray taxes.

What is important to realize is that the step-up in basis is really an income tax concept.  Basis, from an accounting standpoint, is the cost of an item.  This cost or basis is used to determine the taxable gain, typically a capital gain, which is incurred when an asset is sold.  As an example, if you purchased a house for $1,000.00 (the basis) (ignoring any additional costs or depreciation), and then sold the house for $2,000.00, the gain would be $1,000.00.  This gain would be the amount subject to tax.

Estate planning in New York is important.  It provides an individual with the opportunity to memorialize the manner by which assets can be disposed of upon death.  The creation of a Last Will and sometimes a revocable or irrevocable trust develops provisions designating beneficiaries and the portion of assets they are intended to receive.  The New York Probate Lawyer Blog has published numerous articles regarding estates and trusts.  Estate lawyers are aware of the value of creating appropriate documents.

One aspect of planning often involves life insurance.  This blog post cannot discuss all of the considerations and issues regarding life insurance in such a brief space.  However, a few aspects are worthy of mention.  Life insurance typically takes the form of one of two types.  There is term insurance, which provides only an insurance payment on death without there being any accumulated value to the policy.  Whole life policies not only provide a pay-out of funds but also have an accumulated value over time which may be able to be withdrawn or even used as security for a loan.

Probably the most important item to bear in mind is the designation of beneficiaries.  When a beneficiary is designated (other than a person’s estate), the insurance proceeds are going to be paid directly to such beneficiary.  Since these funds are not paid to the decedent’s estate, the provisions of a Last Will are not going to control the disposition of this asset.  The asset is not included in the probate estate.  Thus, when planning an estate it is important to know which assets are controlled by a Will and which assets pass outside of the testamentary document.  An individual wants to be certain that certain beneficiaries receive only the assets and values intended.

Estate planning in New York has always been important.  The New York Probate Lawyer Blog has published numerous articles over the years discussing the need for, and issues involved with, a Last Will, Living Will, Health Care Proxy, Power of Attorney and Living Trust.

However, as estate planning lawyers are aware, concerns about estate taxes have largely taken a back seat.  This is because during recent years, the exemption levels for incurring estate tax liability have been quite high.  Thus, most estates do not need to worry about New York State and Federal estate tax.  During 2021 the Federal estate and gift tax exclusion is $11.7 Million per individual.  As a result, a married couple could pass $23.4 Million without fear of any tax.  On the State level, New York provides an exemption of $5,930,000.00 per individual.  Also, there is no New York gift tax.  When these amounts are coupled with an unlimited deduction for transfers between spouses, there are relatively few estates where estate tax issues may be encountered.

With the advent of the new administration in Washington, D.C., there is renewed consideration by some lawmakers of overall tax increases.  This includes reducing the Federal exemption limits and raising taxable estate rates.  While the specifics of what new laws will be enacted are unknown, the imposition of increased taxes typically results in new models for planning to diminish the effect of potential tax increases.  The use of marital deduction trusts, insurance trusts, transfers of interests in small businesses and other gift structures all may gain renewed popularity.

Everyone talks about preparing a Last Will or engaging in estate planning.  Particularly now, with the advent of the pandemic, there is the reality of facing the need for post-death and advance directive documents.  It is easy for an individual to view planning as the simple function of disposing of assets to named individuals.  However, the actual process and considerations needed encompass much more thought and preparation.  Estate lawyers in New York City are familiar with this more rigorous examination.

Some of the more fundamental, yet highly important, considerations are listed below:

1. Designating Beneficiaries: While identifying beneficiaries in a Will or Trust is important, it is equally necessary to consider alternate or contingent designations in the event the primary persons are pre-deceased or even renounce their bequest.  As a Will lawyer, I am constantly surprised when clients have not even considered alternate beneficiaries.  Another aspect of selecting beneficiaries concerns assets that pass outside of the administration estate such as pay on death accounts or life insurance or retirement funds where a beneficiary is named as the pay on death recipient.  The estate planning process necessitates that all of these types of assets must be considered so that there is no conflict with Will provisions or the goal of the plan as to the values each person is to receive.

Preparing and probating a New York Will is important in order for a testator to effectuate an estate plan.  There are many considerations that an individual needs to consider when planning an estate such as how assets are to be distributed and the identity of the beneficiaries who are to receive dispositions under the Will.  Guidance from an experienced estate lawyer regarding these matters should be sought.

There are many subtle and not generally thought-of issues which may have some impact on a plan and the ultimate probate of a Will.  A few of these matters are discussed in this blog post.  One such issue concerns the proper execution of a Last Will.  Estates, Powers and Trusts Law Section 3-2.1, entitled “Execution and attestation of wills; formal requirements,” provides the basic rules regarding execution.  Among these guidelines is that there must be at least two (2) attesting witnesses.  Nowadays many people prepare a Will from online forms and without the assistance of legal counsel.  An important rule to know is that if an attesting witness receives a disposition in the Will, he may need to forfeit his inheritance unless there are two other witnesses who do not receive a benefit under the Will.  This rule is provided in EPTL 3-3.2 entitled “Competence of attesting witness who is beneficiary; application to nuncupative will.”  The statute provides a number of additional rules and exceptions.  However, in view of the general prohibition, it is always best to have completely disinterested persons act as attesting witnesses so as to avoid any possible problems when it comes time to probate the Will.  The New York Probate Lawyer blog has many articles dealing with probate issues.

Another matter that should be recognized is that sometimes a Will contains what is known as a No Contest Clause or in terrorem clause.  This language in a Will provides that a beneficiary forfeits his disposition if he contests the Will.  Many individuals include this type of provision in a Will in the hope that it would discourage a discontented party from filing a Will Contest due to the prospect of forfeiting their inheritance if they lose the Court case.  The use of a no contest clause is controlled by EPTL 3-3.5 entitled “Conditions qualifying dispositions; conditions against contest; limitations thereon.”  However, the statute provides certain exceptions to the general rule of forfeiture.  For example, if there is probable cause, the condition does not apply if there is a contest based upon forgery or to show that a decedent left a later Will.  Also, a no contest clause does not prevent the initial discovery allowed by Surrogate’s Court Procedure Act Section 1404 which permits the examination of the Will witnesses, the Will draftsperson and the nominated executor and Will proponent.  In view of these and other exceptions to a no contest clause, a testator may want to consider other alternatives to avoid a Will challenge such as setting up asset beneficiary designations or a Living Trust.

The consideration of estate matters in New York always involves a number of variables.  New York, as well as the country as a whole, is comprised of a diversity of personal relationships controlled by numerous laws that are evolving all of the time.  A recent article written by Sarah O’Brien entitled “If you live with your partner and are unmarried, this is what happens when you die,” which appeared at CNBC.com on February 27, 2020, highlights just one of many problematic areas of personal concern.

In New York, as elsewhere, the formalization of a partnership through marriage creates certain spousal rights that have a direct impact on inheritance.  The New York Probate Lawyer Blog has published numerous posts talking about these matters.  For example, if a person dies intestate without a Last Will, his administration estate is, according to estate laws, (Estates Powers and Trusts Law section 4-1.1), going to be distributed to his next of kin.  An unmarried partner is not included in this class.  As an estate lawyer, I have seen many situations where upon the death of an unmarried partner, the surviving partner cannot share in the estate despite the longevity of the relationship.

Ms. O’Brien’s article discusses these types of issues.  Of course, there are some relatively simple solutions which require some thought and time and effort to complete.  First and foremost, each partner should complete a Last Will which names the other as primary beneficiary and executor.  It is also important to designate alternate beneficiaries and fiduciaries so that the creator’s intentions and desires can be fully carried out.  Living Trusts can also serve the purpose of having a valid document delineating the individuals who are to receive benefits upon death.