Trusts and Estates

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 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 7, 2011

The New York Probate Process Involves Numerous Documents

by Jules M. Haas

The Probate of a Last Will in New York can appear to be a complicated and mysterious procedure. While the rules and procedures of the Surrogate’s Court are complex, certain fundamental requirements for Probate are fairly easy to set forth.

Among the essential aspects to a Probate proceeding is providing the parties interested in the proceeding with proper notice that the Court case has been commenced. In particular, the decedent’s “distributees” or closest next of kin are required to be served with a “Citation”. A “Citation” is like a summons in a regular civil action. The Citation will advise the parties who receive it as to the Court date and that they need to appear if they desire to object to the Probate of the Will. The necessity of having to serve a Citation and wait for a Court date, which may not be scheduled for a month or more after the Will is filed with the Court, results in a delay in the administration of the decedent’s estate.

In most estates where close family members, such as spouse or children, have no objection to the Probate of the Will, a form entitled “Waiver of Issuance and Service of Process and Consent to Probate” can be signed by the interested party. This form once signed and notarized, dispenses with the need to serve a Citation on such person. In fact, if all the necessary parties sign such a form, there is no need to serve a Citation at all and the Probate process and estate administration can be expedited.

Surrogate’s Court Procedure Act Section 401(4) provides, in part, that the Waiver Form “shall state the date of the will to which it relates and that a copy has been furnished or examined.”

In most instances when a client has requested that I represent them in Probate proceedings, efforts are made to obtain signed Waiver forms from all necessary parties as quickly as possible. While there are many aspects to and requirements for Probate, obtaining Waivers is always a first essential step, where possible.

March 2, 2011

New York Article 81 Guardians Are Bound By The Court To Act Properly

by Jules M. Haas

The New York Probate Lawyer Blog has discussed the powers and obligations of a property management and personal needs Guardian. When a person is found to be incapacitated and a Guardian is appointed, the Court maintains scrutiny over the actions of the Guardian.

One of the safeguards provided by Article 81 of the Mental Hygiene Law (MHL) is that the Court may require the posting of a bond (MHL Sec. 81.25). A bond is essentially an insurance policy issued by a surety company that insures payment to creditors and others entitled to receive the incapacitated person’s funds in the event the Guardian misappropriates those funds. The Court will set the amount of the bond based upon the value of and income from the assets of the incapacitated person. Since the Court appointed Guardian must qualify for the bond, the surety will check the Guardian’s credit and financial history. A poor credit history may result in the denial of a bond and, thereby, prevent a person from qualifying as a Guardian.

It is a good practice, which I follow, to have the bonding company review a client’s credit before he or she files a petition for appointment as a Guardian so that we can be certain the client can qualify if appointed.

Another safeguard provided by the law is contained in MHL Section 81.31 which requires that the Guardian file an Annual Report with the Court every May. The Annual Report contains information concerning the Guardianship financial transactions that occurred during the prior year along with information regarding the incapacitated person’s physical and mental condition. This information is typically reviewed by a Court Examiner. In the event the Court Examiner finds information that shows improper conduct on the part of the Guardian, the findings will be reported to the Court.

A recent case where a Guardian’s actions were found to be improper was reported by Daniel Wise in the New York Law Journal on January 6, 2011. The Article entitled Guardian Must Return Funds Paid to Family For Ward’s Care, described a case where a lawyer-guardian was required by the Court to repay to the incapacitated person’s estate over $100,000.00 that the Guardian had paid to a company that provided care to the Incapacitated Person. It was found that the company was controlled by the Guardian’s spouse. Judge Charles J. Thomas also ruled that the Guardian had to forfeit commissions and legal fees.

Guardians are required to be diligent in the performance of their duties. Both Guardians and the families of the Incapacitated Person often require legal representation to fully understand and protect their interests.

February 17, 2011

New York Estate Fiduciaries and Guardians Must Consider Internet Information and Assets

by Jules M. Haas

New York Executors, Administrators and Guardians have the responsibility of ascertaining, protecting and collecting the assets, documents and other effects of the estate or incapacitated person they are appointed to oversee. The New York Probate Lawyer Blog has previously discussed fiduciary responsibility concerning asset determination and protection.

An interesting aspect in this area of responsibility concerns assets, information and accounts that are internet or web-based. A fairly basic question is what becomes of a website or Facebook account or other internet based information after a person dies or becomes incapacitated. An insightful article by Ken Strutin entitled What Happens to Your Digital Life When You Die? appeared in Law Technology News on January 26, 2011. As noted in the article “the majority of state laws make no specific provisions for information assets such as those stored in the cloud.”

An Article 81 Guardian or a New York Executor faces issues not only with collecting and preserving these internet items, but may need to be able to value them for tax purposes or possibly for disposal by sale. For the most part, the estate settlement process will be in unchartered waters when dealing with such matters. As a New York Guardianship and Probate attorney, I have assisted clients in resolving many different and complex issues regarding asset identification, collection and disposal. Fiduciaries that are appointed by the Court bear a lot of responsibility in resolving the diverse issues they encounter in administering an estate. It is important for them to consider all matters thoroughly and make decisions that avoid Court criticism.