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Estate planning in New York is important to preserve assets and insure a proper distribution after death.  The New York Probate Lawyer Blog has published many articles concerning planning an estate.  These articles have included discussions about Last Wills, Living Trusts, Health Care Proxies, Living Wills and Powers of Attorney.  It would seem that preparing a plan is fundamental.  There are also many articles in the Blog concerning Article 81 Guardianships.

Many individuals assume that if they are not considered to be wealthy that engaging in estate planning is a waste of time.  Nothing could be further from the truth.  In fact, as we have seen, even individuals who accumulate a fortune sometimes fail to adequately provide any planning.  As a result, their estates and families suffer tremendous post-death consequences.

A recent post at Kiplinger.com entitled “Prince’s Estate is a Royal Mess:  5 Ways You Can do Better”, dated February 5, 2022 and written by Jack R. Hales, Jr., J.D., describes the problems faced by the late pop star’s estate.  Apparently, Prince did not have a Will.  In New York, if you do not have a Will, the distribution of your assets is controlled by the laws of intestacy.  An intestate estate is distributed to a decedent’s next of kin in the order of priority set forth in Estates, Powers and Trusts Law Section 4-1.1 entitled “Descent and distribution of a decedent’s estate.”  As pointed out in the article, a Will allows a person to determine their testamentary plan.  Additional considerations include dealing with minor children and the creation of trusts.  Of course, creating a Will allows a testator to specifically identify particular aspects of estate distribution and create detailed directions to deal with these matters.

After a person dies, there is a need to settle the estate of the decedent.  If the decedent prepared a Last Will and Testament, then the Will needs to be probated.

The New York probate process can be complicated, especially if there is a Will Contest.  One of the most important initial steps in Will probating is determining the identity of the decedent’s next of kin, who are also known as distributees.  Surrogates’ Court Procedure Act (SCPA) section 103(14) defines “Distributee” as “any person entitled to take or share in the property of a decedent under the statutes governing descent and distribution.”  The probate petition must contain information as to the names and addresses of the distributees since they are among the persons entitled to receive notice regarding the commencement of the case.  They also have a right to contest the Will since the distributees receive an intestate share of an estate if there is no Will. Service of process is important because the probate of a Will is not valid against interested persons who were not properly notified about the case.  The New York Probate Lawyer Blog has extensively discussed probate and Will contests in earlier posts.

A person filing a probate petition with the Surrogate’s Court needs to refer to SCPA section 1410 entitled “Who may file objections to probate of an alleged will”. Under this statute, if a person who is interested in an estate would be “adversely affected” if a Will is probated, such person may be entitled to file objections to the Will.  The statute must be examined carefully in each case to ascertain the identity of interested parties.  Estate litigation is complicated.  In addition to distributees, persons who may have received bequests in earlier Wills, but who are now disinherited in a later Will being offered for probate, may be necessary parties who must receive notice (a citation) in the proceeding.

Manhattan Guardianship of an incapacitated person, as well as proceedings throughout New York, requires a Court hearing and a determination that clear and convincing evidence has been presented that a Guardian is necessary. Article 81 of the New York Mental Hygiene Law (“MHL”), sets forth the substantive and procedural guidelines for the appointment of a property management guardian and a personal needs guardian.

Among the many considerations and determinations that the Court must make in these proceedings is the selection of the proper person or entity to act as Guardian. MHL Section 81.19, entitled “Eligibility as guardian,” provides the Court with some direction in selecting an appropriate Guardian.

As a general matter, appointment of family members of the incapacitated person is usually preferred. In many cases, the Petitioner in the proceeding is a close relative such as a child or a spouse. Typically there is a long history of family closeness and caring that the Court will recognize in making its selection.

However, despite this preferential treatment, family members can face obstacles to appointment. In many cases the Court may require that the Guardian file a Bond with the Court. A Bond is similar to an insurance policy. It is obtained from a surety company that insures that if the Guardian misappropriates any of the incapacitated person’s funds, the surety company will cover the loss. Unfortunately, sometimes a family member may not qualify to obtain a bond due to a poor credit history or criminal background.

Also, a Court may refuse to appoint a family member as a Guardian where there is a conflict of interest between the family member’s interests and those of the incapacitated person or other family members.

Another instance where a family member may not be appointed is where some family conflict or hard feelings exist between competing family members or between the prospective appointee and the incapacitated person. In a recent case entitled Matter of Ella C., decided by the Honorable Betsy Barros on December 14, 2011 (Supreme Court, Kings County) and reported in the New York Law Journal on January 12, 2012, the Court was presented with a petition filed by three of the four children of the alleged incapacitated person. Following a hearing the Court found that the appointment of a Guardian was necessary but did not appoint any of the children, each for various reasons, including improper handling of their mother’s financial affairs, animosity between them and their mother, and “mixed loyalties.”

Queens Guardianship attorneys and lawyers representing petitioners and families in Guardianship cases throughout New York, must be aware of the requirements to have a Guardian appointed and also the qualifications that are needed for someone to be selected by the Court. As discussed above, just being a family member may not be enough in all situations to be named by the Court as a property management or personal needs Guardian.

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The proper execution or signing of a Last Will in New York requires that the formalities provided by statute be followed. The New York Probate Lawyer Blog has previously discussed these rules. The basic “formal requirements” for the signing and witnessing of a Will are set forth in Estates, Powers and Trusts Law section 3-2.1. Among other provisions, subsection (4) of the statute provides that “there shall be at least two attesting witnesses. . . .”

Thus, when a person dies and his or her Will is filed with the Surrogate’s Court for probate, two of the attesting witnesses “must be produced before the Court and examined before a Will is admitted to probate. . . .” Surrogate’s Court Procedure Act Section 1404(1).

In most uncontested matters an affidavit signed by the witnesses at the time of the Will execution will satisfy the requirements for examining the Will witnesses. This is the so-called self-proving Will. However, there are instances where a witness affidavit is not prepared at the Will signing or a Will contest requires actual live testimony of the witnesses.

Recently, Surrogate Edward W. McCarty III, of the Surrogate’s Court, Nassau County, was presented with a Will that was 19 years old and the petitioner was unable to provide witness affidavits or testimony since one witness was deceased and the other witness could not be located. In Will of Jean Santoro, decided on May 3, 2011 and reported in The New York Law Journal on June 3, 2011, the Surrogate noted that the decedent’s Will could not be admitted to probate as an “Ancient Document” since it was “less than 20 years old.”

However, the Court became aware that the attorney who drafted Jean Santoro’s Will, and who was one of the witnesses, had previously died and that his Will had previously been admitted to probate by the Court. Therefore, Surrogate McCarty ruled that since the deceased witness’ signature was already on file with the Court, the petitioner could obtain an expert opinion as to the signature as a witness to the Will in question. The Surrogate also provided that an affidavit from a relative as to the signature of the decedent, Jean Santoro, would help prove the Will’s genuiness.

The Santoro case illustrates that Courts generally favor finding the validity of a Will so as to carry out a person’s estate plan and preferences for the distribution of his or her property. The Santoro case also shows the importance of up-dating a Will so that the persons involved with its execution are available in the event their testimony is required. Additionally, proper estate planning involves a periodic review of Will and trust provisions and beneficiaries and the selection of executors and trustees.

As noted, it is common for Courts to validate Wills to further a person’s apparent testamentary desires. In a recent article by Arden Dale appearing in the Wealth Advisor on June 20, 2011 entitled California Court Gives ‘Rogue’ Wills More Validity, it was reported that a California court up-held a Will that was written by a decedent’s friend while the decedent dictated its term. While courts may tend to overlook minor errors and approve “informal Wills”, the article points out that “financial advisors still urge clients to get professional help if they want to change their estate plan.”

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The appointment of a Guardian for an incapacitated person is provided by the guidelines enacted in Article 81 of the Mental Hygiene Law (MHL). The New York Probate Lawyer Blog has discussed many of the aspects involved in New York City Guardianship cases such as Guardianship powers and the petition that is filed with the Court requesting appointment.

A couple of recent Court decisions in which a Guardian was appointed are typical examples of the many factors and issues that are considered before an appointment is actually made.

In Matter of C.T., reported in the New York Law Journal on June 23, 2011, Justice Alexander W. Hunter of the Bronx Supreme Court issued a decision dated June 10, 2011, in which he appointed the sister of the alleged incapacitated person (“AIP”) as Guardian of his person and property. The Court noted at the outset of the decision that the AIP and other parties were properly served with the Order to Show Cause and petition. As referred to by the Court, section 81.07 of the MHL provides for very specific requirements regarding notice and the service of papers on interested parties. If these requirements are not complied with the Court would lack proper jurisdiction to conduct a hearing.

The AIP in Matter of C.T. had assets in excess of $2 million dollars. It appears that as part of the sister’s petition to the Court she requested that as Guardian she be allowed to provide for Medicaid planning. Such planning typically involves the transfer of the AIP’s assets to a family member so that the AIP can qualify for government benefits. Since the Court found that the plan presented by the sister for preserving the AIP’s assets was “vague”, the Court decided that such plan would require further Court approval before implementation. MHL section 81.21 provides for the granting of power to a Guardian to transfer assets. However, as was recognized by Judge Hunter, there is always a concern that notwithstanding benefits that may be obtained by a family by preserving assets through transfers, assets also need to be retained and used for the care and comfort of the AIP.

In a different case, there was an interesting issue regarding the potential conflict of interest between an AIP and the proposed Guardian. In Matter of A.M., a case reported in the New York Law Journal on May 12, 2011 and also decided by Judge Hunter on April 25, 2011, the petitioner was the brother of the AIP. It appears that the parents of the AIP left her over $1 million dollars in a testamentary trust and that the brother was the trustee. In the Guardianship proceeding, the brother was seeking only to be appointed as Guardian for his sister’s personal needs. The Court found that the brother was not eligible to be appointed pursuant to the requirements of MHL section 81.19 (“Eligibility as guardian”), because of the potential monetary conflict of interest. Among other problems, the Court was concerned that the potential of the Guardian selling the AIP’s house “creates financial gain” for the brother. Also, the Court stated that “Another motivation that cannot be ignored is that Mr. M [the brother] may no longer desire to directly care for his sister as he is currently doing. Placement in a facility and sale of the home will allow him to return to Florida where he lives. This also constitutes a conflict of interest in that Mr. M may choose his own well-being over that of his potential ward.”

As is shown by these recent Court decisions, Guardianship proceedings can be quite complex and involve issues of incapacity, transfers of assets and potential conflicts of interest that may impact on the appointment of a Guardian. Guidance from an experienced attorney is essential in these matters.

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As part of our ongoing series on Avoiding Probate in New York, we examine the issue of retirement accounts and beneficiaries.

As always, we preface the discussion by saying that avoiding probate does not mean you do not need a New York City probate lawyer. In fact, investing in professional estate planning services in New York is the best way to ensure your assets are protected, and that your estate is distributed in accordance with your wishes after your passing.Previously on our New York Probate Lawyer Blog, we reported on why avoiding probate in New York might not be for you, as well as the complications that may arise from bypassing probate in New York.

One of the most common issues — and certainly the most easily corrected– is the failure of a decedent to properly name beneficiaries on retirement accounts. When we say easily corrected, we are of course speaking about corrections made prior to death. After death, the naming of an incorrect beneficiary on a retirement account is much more complicated. Still, ex-wives and ex-husbands routinely remain on retirement accounts, which are often the most valuable asset of a deceased. This is particularly true in cases of sudden death in middle age.

As a general rule, however, properly naming a beneficiary on a retirement account can bypass the probate process in many cases. Even after the market meltdown, 401 (k) plans and similar retirement vehicles held a total of $14 trillion in 2008. A potential complication of such inheritance is income tax, which may be due on withdraws made even after a person dies.

Properly naming the beneficiary is critical, particularly in divorce situations as we have already discussed. In cases where a current spouse inherits, he or she may have more flexibility (including leaving the money in the account) than in those instances where someone else is the named beneficiary. Typically, unless a spouse inherits, the beneficiary will be required to begin withdrawing money and will therefore incur the associated tax consequences.

Additional considerations should be made when naming a minor child. A large inheritance to a minor child could result in court supervision. Another common complication is the naming of more than one beneficiary, which can result in a spouse’s forfeiture of the ability to leave the money in the account and will result in mandatory withdraws based on the age of the oldest beneficiary.

We see there are many benefits to properly naming beneficiaries to a retirement account. And, of course, a few complications. But with a little diligence and planning, significant assets can be left to the beneficiary of a retirement account without the intrusion inherent in the probate court process.

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