Intestate Estate

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.

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 7, 2010

New York Estate Fiduciary Accountings Involve Issues Regarding Estate Administration

by Jules M. Haas

New York Executors and Administrators are appointed by the Surrogate’s Court to administer a decedent’s estate. Typically, there are many aspects to estate settlement including the identification and collection of a decedent’s assets, the payment of debts and estate expenses and the payment of income and estate taxes. The final phase of estate administration requires the distribution of the decedent’s net estate to beneficiaries either according to the terms of the decedent’s Last Will or pursuant to the laws of intestacy.

In this final phase the estate fiduciary is required to provide an accounting of his or her activities so that the beneficiaries can see that the distributions to be made to them are accurate and are in accordance with the terms of the decedent’s Last Will and statutory rules. In estate accounting proceedings a beneficiary can examine and object to the conduct of the Executor or Administrator that occurred during the course of estate settlement. Beneficiaries can also dispute proposed distributions based upon differing interpretations or construction of the Last Will or statutory language.

A typical contested Accounting proceeding occurred in Matter of Marianne C. Gourary reported in the New York Law Journal on November 16, 2010. Matter of Gourary involved a 17 million dollar estate where the decedent’s wife, Marianne, was the executor and objections to her accounting were filed by their son, John. In deciding motions for summary judgment, Surrogate Kristin Booth Glen of the New York County Surrogate’s Court faced a number of issues.

One issue involved a dispute regarding the proper distribution of the decedent’s collection of rare books. The parties disputed which provision of the Last Will was intended to dispose of this book collection. The Court found that this dispute should be resolved after a trial.

Another issue involved John’s objection to Marianne’s use of estate funds for secretarial services. The Court found that Marianne’s payment for these services from estate funds was improper and required that she reimburse the estate from her executor’s commissions.

As can be seen from Matter of Gourary, Executor and Administrator accounting proceedings can be contentious and complex and can involve many diverse issues. The actual accountings are often lengthy and must be prepared in specific financial schedules as required by the New York Surrogate’s Court Procedure Act and Court guidelines.

November 24, 2010

Thanksgiving May Offer Families Time to Discuss Estate Planning Issues

by Jules M. Haas

By some measure, more than half of all adults will die without a will. In some cases, the consequences for those left behind can be quite severe. Proper planning can ensure your estate goes to your loved ones, that you are protected from excess taxation, and that you can enjoy life with the peace of mind that comes with knowing your affairs are in order.

New York City Probate Attorney Jules Martin Haas and the staff at his law office wish each of you a safe and enjoyable Thanksgiving weekend with friends and family. These gatherings may be the perfect opportunity to open a general dialogue with relatives about such planning.These conversations do not have to be morbid. Nor do they need to be prying or invasive. By starting a conversation that includes younger relatives, our older loved ones will feel more comfortable and may be more apt to share. It will become apparent rather quickly whether they have done the proper planning, and whether the issue has been on their mind in a way that such a conversation provides the necessary outlet and relief.

At the very least, it can help put a loved one’s wishes on the record in front of the whole family. And it may be the catalyst necessary to prompt more thorough and proper estate planning. Here are some basic issues and talking points.

Intestate Estate: This is what happens to an estate without a will. It is distributed by probate court in accordance with state law, which means your estate will pass to your spouse and/or other close relatives in outward concentric circles (children, parents, siblings, etc.) The drawbacks are many and include an inability to choose heirs or to divide your estate in a manner of your choosing. Those omitted from an estate typically include step-children, former spouses, friends or domestic partners.

Trusts and Living Trusts: Trusts are not just for the rich and famous. Establishing a trust may allow your estate to bypass the probate court process. If your Will is probated it will become a public record for all to see. Establishing a trust may also have certain tax advantages.

Powers of Attorney: Powers of Attorney can serve a purpose but can also be ripe for abuse and are best narrowly tailored for a specific circumstance.

Living Will: Advanced Directives, Health Care Proxies and other similar documents allow you to make your wishes known and designate a person to carry them out in the event that you become incapacitated.

Guardianship: May be established to assist a person with managing their personal and/or financial affairs.

Special Needs Trust: Can be established to care for a loved one with special needs after your passing. Establishing such a trust can be critical to ensuring that an inheritance does not disqualify them from receiving government health care or other assistance to which they are entitled.

November 19, 2010

New York Pre-Nuptial Agreements Can Avoid Rights of Spouse To Share In Estate

by Jules M. Haas

New York estate laws provide many protections for husbands and wives with regard to their spouse’s estate. For example, if a spouse dies intestate (i.e. without a Last Will), Estates, Powers and Trusts Law section 4-1.1 provides that the surviving spouse will receive the entire estate if no issue (i.e., children) survive or $50,000.00. and one-half of the estate if issue do survive.

Where a spouse dies and leaves a Last Will and Testament, New York Law prevents one spouse from disinheriting the other. New York Estates, Powers and Trusts Law Section 5-1.1-A provides a rather complex set of guidelines that attempt to ensure that a surviving spouse receives at least the greater of $50,000.00 or one-third of the decedent’s estate.

Because of the provisions guaranteeing a spouse an interest in the others estate, concerns may arise where one spouse has substantial family assets and the other spouse has little or no personal estate. The inheritance of a family fortune over successive generations may be an important pre-marital consideration.

In such instances, and also with possible matrimonial divorce concerns in mind, a pre-nuptial agreement may be a consideration. These agreements can limit and delineate spousal rights in the case of death or a divorce. The upcoming royal wedding of William and Kate is a perfect case-in-point. Pre-nuptial agreements, like all estate and financial planning documents, involve much consideration and extensive preparation. They can be very helpful but also the source of dispute and litigation.

November 11, 2010

New York Kinship Proceedings Can Involve Deposit of Estate Funds With New York State Comptroller

by Jules M. Haas

A New York Administration Proceeding is typically required when a person dies intestate without leaving a Last Will and Testament. New York Estates, Powers and Trusts Law Section 4-1.1 provides the statutory guide for the intestate distribution of estate assets beginning with the decedent’s spouse and issue (i.e. children and their decedents). If no spouse or child survives then the property goes to the next class of living heirs such as parents, siblings and so on.

In many Administration proceedings, the identity and whereabouts of a decedent’s next of kin or distributees are unknown or only partially identifiable. This situation is more prevelant where the decedent never married or never had any children. So-called “cousin cases”, i.e: where the next of kin are cousins or even more distant heirs, usually require a kinship proceeding whereby the Surrogate’s Court can be satisfied as to the proper individuals to receive the decedent’s estate. New York Public Administrators are typically appointed to handle the estate administration in these cases. Generally, a kinship proceeding is the Court process whereby evidence in the form of documents, such as birth and death records, and the testimony of the decedent’s family and acquaintances is submitted to show relationship to the decedent. Very often professional genealogists are needed to testify as to the nature and extent of diligent searches that have been performed, sometimes in many different countries, to eliminate the possibility that unknown heirs exist. Kinship proceedings are complex and involve numerous rules of evidence and presumptions in law. For example, a person who would have been more than 100 years old when the decedent died is presumed to have predeceased the decedent.

There are also technical procedural requirements. When kinship cannot be proved to the Court’s satisfaction, the estate property is paid to the state comptroller. New York Surrogate’s Court Procedure Act (SCPA) Section 2222. However, pursuant to SCPA Section 2225, when three (3) years have passed after the decedent’s death, an application can be made to the Court to withdraw the estate funds from the state and have them paid to the known distributees by demonstrating that a diligent and exhausting search was made for all unknown heirs.

October 19, 2010

New York Non-Marital Children Can Inherit Under Estate Laws

by Jules M. Haas

New York estate attorneys are routinely faced with many different factual situations where clients seek to obtain an inheritance from a decedent’s estate. These situations include the probate of a Last Will or the Administration of an estate where the decedent died intestate or without a Will.

On occasion, a person seeking an inheritance may have the status of being a Non-Marital child of the decedent. Difficulties in obtaining an inheritance are commonly faced by a non-marital child in New York estate administration or intestate estates. Section 4-1.2 of the New York Estates Powers and Trusts Law provides specific guidelines regarding the rights of non-marital children. Paragraph (a)(1) of the statute states that “a non-marital child is the legitimate child of his mother…” Therefore, such an individual has the right to inherit from his mother and her next of kin.

However, inheritance by a non-marital child from his father is not as simple and the statute sets forth certain requirements that must be met before such inheritance will be allowed. Thus, under paragraph (a)(2)(A) a non-marital child can inherit from his father if there is a Court Order or parental acknowledgment of paternity that has been properly filed. Paragraph (a)(2)(B) provides for an acknowledgment of paternity signed by the father. Perhaps the most familiar and often used standard of proof is provided under paragraph (a)(2)(C) which provides that inheritance will be allowed where “paternity has been established by clear and convincing evidence.” In this regard paragraph (a)(2)(C) was recently amended so that a non-marital child can inherit from his or her father if:

Paternity has been established by clear and convincing evidence, which may include, but is not limited to: (i) evidence derived from a genetic marker test, or (ii) evidence that the father openly and notoriously acknowledged the child as his own.

Paragraph 4-1.2 (a)(2)(D) was entirely eliminated.

It is not uncommon for a non-marital child to have a long and close relationship with his or her father only to be confronted with the necessity of proving paternity after the father has died intestate. Good estate planning, including the preparation of a Last Will and maybe a Living Trust, can avoid such unintended and unwelcomed after death paternity proceedings.

September 22, 2010

A New York Spouse May Inherit Despite Being Separated For Decades

by Jules M. Haas

The application of New York inheritance and estate laws and procedure are often seen within the variety of circumstances that effect individual lives. A recent article posted at MSNBC.com on September 22, 2010 talked about the World’s Oldest Man who just celebrated his 114th birthday. The article stated that Walter Breuning lives in a retirement home in Great Falls, Montana and that his wife died in 1957 and that he had no children. Given Mr. Breuning’s longevity, a similarly situated New Yorker without a Last Will might subject his estate to hardship in order locate surviving next of kin, (“distributees”), that would inherit the intestate estate. Kinship proceedings and the application of New York intestate statutes often result in long and costly legal proceedings before estate settlement.

The effect of the lapse of time had an interesting impact on intestate inheritance in a New York case entitled, In Re Morris, 893 NYS 2d 161 (A.D. 2nd Dept. 2010). In Morris, the decedent, Phyllis Morris, had married in 1971 and the couple separated in 1974 but never divorced. When Phyllis died in 2006, her husband petitioned the Court to be appointed as Administrator of her estate. Phyllis’ two daughters objected to his appointment and claimed that the husband was disqualified as surviving spouse under Estates, Powers and Trusts Law Section 5-1.2(a)(5) for abandoning Phyllis and Section 5-1.2 (a)(6) for failing to support her. The Appellate Court upheld the Surrogate’s decision that there was no abandonment since the daughters did not show that the separation was not consensual and that the daughters did not demonstrate an obligation by the husband to support the decedent. Thus, the husband who had been separated from the decedent over 30 years, was still entitled to be appointed as Administrator and was not disqualified as surviving spouse.

Situations such as those involving Mr. Breuning and Mrs. Morris demonstrate how estate laws and Surrogate’s Court procedure can eventually impact a person’s estate and the inheritance rights of beneficiaries following decades of inattention to potential consequences.

September 3, 2010

New York Last Will Endures for Half Century, Leaves Second Wife out of Estate

by Jules M. Haas

A New York Appeal’s Court ruling offers a stark reminder of the power of a Will or other estate planning document and the need to seek the advice of a New York City probate lawyer when settling estate issues.

A New York physician left an estate of $28 million dollars upon his death in June 2006, which relatives thought would be divided in accordance with New York law governing intestate estates. Intestate estates are estates which have no Last Will to govern their disbursement and are, therefore, divided in accordance with New York law. As we reported in our New York Probate Lawyer Blog, intestate law would divide the estate among a decedent’s closest living relatives, beginning with a wife who would receive half the estate.

In this case, the physician’s first wife died in 1981. His daughters sought to probate a purported Will executed in 1958. The document was witnessed by the physician’s attorney and two employees of his medical office. The Will left the vast majority of the estate to the decedent’s children and also to his first wife who had predeceased him.

The Court could find no material issue of fact that would exclude the Will and, therefore, admitted it to probate. The second wife appealed. The appeals Court upheld the ruling of the lower Court and the Will was admitted to probate despite being written more than a quarter-century before the physician’s second marriage.

This case is an example of the complications that can arise form the failure to update a Last Will and properly plan for the division of an estate. Here, the decedent had an estate valued at $28 million and had outlived his first wife by 25 years. Yet, he had apparently done little or no estate planning in the past half century that would have provided for the death of his first wife and his remarriage. An estate plan can provide peace of mind, tax savings and the knowledge that your estate will be distributed in accordance with your wishes and that your loved ones will be cared for in your absence. A Last Will should be reviewed and updated to reflect the current status of a person’s relationships and plan.

July 26, 2010

New York Intestate Estates Leave Families without a Voice in Settling your Estate

by Jules M. Haas

The New York Times reports that the number of people who are dying intestate — without a Will — is growing, possibly leaving counties to manage everything from house trailers to horse farms and sometimes putting estates at the mercy of government bureaucracy instead of in the hands of loved ones.

A New York City probate lawyer can assist residents with Wills or estate planning and can help ensure that a person’s estate is properly distributed at the time of their death. Leaving behind an unplanned estate can subject your assets to excessive taxation, a lengthy probate process, additional fees and other consequences. Also, your estate will be divided in accordance with New York law, regardless of your wishes.

Those who die without a Will, under New York law, will typically have their estate divided as follows:

-The first $50,000 to the spouse and one-half of the remainder. The balance will be split among the children.

-In the absence of a spouse, the estate will pass to the children.

-To the parents, if no surviving spouse or children.

-To siblings if no spouse, children or parents.

-In the absence of the above relatives, the estate would pass to grandparents, aunts or uncles, or other relatives in outward concentric circles.

Without proper planning, the estate may be administered by a government official called a Public Administrator. A kinship hearing may also be needed to determine the decedent’s heirs.

An estimated 65 percent of American adults do not have a Will. As one person in the Times article put it, “Baby boomers don’t think they’re going to die until they are 90.”

The truth of the matter is that dying without a Will, or without any sort of estate planning, can be a tremendous burden for surviving relatives. Conversely, many who take the time to consult with a New York City probate attorney experience tremendous relief at having their affairs in order. They can enjoy life with the security and peace of mind that comes with knowing that their affairs are in order.