New York Probate Lawyer Blog

May 5, 2011

New York Estate Planning Has Benefits and Pitfalls From Life Insurance

New York estate planning requires the consideration of many different facts and circumstances. Paramount in importance is a person’s planning desires which require identifying the beneficiaries, such as relatives, friends and charities, who are to share in the plan. Also, the various types of assets such as real estate , securities, retirement funds and bank accounts must be examined. One such asset that is very popular and helpful in planning is life insurance.

Life insurance is a contract between the owner or person who buys the policy and the insurance company. The contract or policy obligates the company to pay a certain amount of money upon the occurrence of a certain event such as the death of the person who is insured. Depending upon factors such as age, health and type of policy, the ultimate insurance pay-out may be many times greater than the premiums paid to purchase the insurance. Therefore, when contemplating the use of life insurance as part of an estate plan, an individual should consult with experienced professionals such as a New York estate planning attorney and a qualified insurance agent or financial planner.

In addition to determining the appropriate type and amount of insurance to purchase, close attention should be given to the naming of primary and alternate beneficiaries. Designated beneficiaries of insurance receive these benefits outside of a probate estate. Thus, the provisions of a Last Will must be coordinated with the naming of the insurance beneficiaries to preserve the intentions of the estate plan pay-out.

Due diligence in investigating the bona-fides of the insurance company is also advisable. In a recent post by Philip Moeller on May 2, 2011 in The Best Life, it was reported that many insurance company practices are being investigated relating to life insurance policies. The article noted an audit by the California State controller that showed “an industry-wide practice of companies failing to pay death benefits to the beneficiaries of life insurance policies.”

The article also provided a number of suggestions that one should follow regarding their life insurance policies, which are summarized as follows: (i) clearly identify your beneficiaries; (ii) maintain good records of the insurance; (iii) advise your beneficiary concerning the insurance; and (iv) use the assistance of an attorney or financial planner who can assist with the collection of insurance proceeds.

May 2, 2011

Selecting New York Beneficiaries and Executors or Trustees in Important in Estate Planning

by Jules M. Haas

New York Estate Planning requires the consideration of many different topics. To begin with, knowing the nature and value of one’s assets is imperative. Some assets such as joint bank accounts will pass to the joint owner by operation of law. Assets held in the name of the decedent or creator of a trust may be available for distribution pursuant to the terms of the Will or Trust instrument.

Great consideration should also be given to the beneficiaries who are to benefit from the estate plan. Not only is the identity of the primary beneficiaries important, the allocation of shares among the beneficiaries, as well as the selection of alternate beneficiaries, should be reviewed.

The New York Probate Lawyer Blog has previously discussed that a spouse cannot be disinherited and is entitled to obtain a share of the other spouse’s estate. However, there is no prohibition in New York law from disinheriting any other family member, such as children. It was recently reported in Entertainment News that film star Jackie Chan intends to disinherit his son and donate his assets to charity.

Another consideration is the selection of a fiduciary such as an Executor or Trustee. The selection of a fiduciary involves placing long-term confidence in someone who is expected to carry out a person’s wishes and intentions. Alternative or successor fiduciaries should also be designated. The selection of fiduciaries who are not trustworthy can ruin the best estate plan. As recently reported by Paul Lamoureux in The Docket on March 28, 2011, trust funds donated by founding father John Adams were negligently managed by the city of Quincy, Massachusetts.

April 27, 2011

A New York Will Contest May be Based Upon The Duress Of The Testator

by Jules M. Haas

The New York probate of a Last Will essentially requires the determination by the Surrogate’s Court that the Will is a valid document to provide for the transfer of the decedent’s estate. When a Will is admitted to probate, the Will becomes effective and estate assets are distributed as specified by the Will provisions.

The New York Probate Lawyer Blog has discussed that the decedent’s distributees or next of kin have the right to object to the probate of the Will. The common grounds relied upon in contests are: (i) lack of proper execution of the Will; (ii) lack of testamentary capacity; (iii) undue influence; and (iv) fraud. Each of these grounds has its particular requirements of proof.

In a recent case concerning the Estate of Mildred Rosasco, decided by Manhattan Surrogate Kristin Booth Glen on April 5, 2011 and reported in the New York Law Journal on April 14, 2011, the Court recognized that an additional ground for a Will contest can be based upon “duress”. Duress differs from undue influence in that duress involves more of a threat or performance of a wrongful act that coerced the testator. In Rosasco the Court found that the basis for a finding of duress was present due primarily to physical violence that the estate beneficiary had displayed and the possible fear by the decedent that such violence would re-occur if she changed her Will. Therefore, the Court allowed the case to move forward toward a trial.

Instances of Will contests based upon more typical acts of undue influence are frequently presented to the Court. I have represented clients in these New York City probate matters in counties such as Brooklyn and the Bronx. In another recent case, Brooklyn Surrogate Diane A. Johnson allowed the proceedings to move toward trial where a 92-year old decedent had left his substantial estate to two administrators of the assisted living facility where he had lived during the final years of his life. The case of Estate of Ralph Besdansky, decided on April 12, 2011 and reported in the New York Law Journal on April 15, 2011, seems to present a more classic example of a Will procured through undue influence and abuse of a confidential relationship.

April 25, 2011

Divorce Complicates Estate Planning in New York

by Jules M. Haas

As Forbes reports this week, nothing can turn your New York estate plans upside down like divorce.

New York City trust attorneys understand divorce can be an emotional time. Unfortunately, a lack of planning means some will never regain the financial ground and standard of living lost in a divorce. For others, who ignore the need to update an estate plan, outdated beneficiaries can cause a real headache for heirs and can even result in assets being transferred to a former spouse.Changing the beneficiaries on life insurance, 401k plans and IRAs is just the beginning, and even that is often overlooked. Failure to make the proper changes — whether to your Will or to the designation on various accounts — can result in leaving an inheritance to your former spouse, particularly if a death occurs before a divorce is final. For long, contested divorces, a separation agreement may be considered, one of the benefits of which is to keep such an inheritance from occurring.

In most states, you cannot completely disinherit your spouse until the divorce is final — just as you cannot use various trusts and other investment vehicles to withhold a spouse’s rightful share of inheritance while you are married. In New York, the spouse is presumed to get at least one-third of an estate with children and one half of an estate without children.

Once a divorce is finalized, you should immediately update your Will and other estate plans if you have not already done so. In fact, in an ideal world, you should update such documents before even filing for divorce. This includes updating medical directives and a financial power of attorney. Selecting new beneficiaries for life insurance policies and retirement accounts can also be done at this time — though some require the consent of a spouse and will have to wait until after a divorce is finalized.

After divorce proceedings have begun, it may be impossible to make such changes. Restraining Orders may be in place to make sure both parties assets and ownership interests don’t change until the final divorce decree.

April 20, 2011

New York Article 81 Guardianship Can Involve the Settlement Of Property Rights Between Spouses

by Jules M. Haas

The New York Probate Lawyer Blog has discussed many issues regarding Guardianship of the person and property of an incapacitated person. These issues can include, among other things, a determination of the assets owned by the incapacitated person and the powers granted to a Guardian with regard to the management of such property. Section 81.21 of the New York Mental Hygiene Law (MHL) sets forth various property management powers that a Guardian may be given by the Court.

In the many guardianship proceedings in which I have been involved, it was always essential to have a full understanding of the incapacitated person’s property so that the Court could be requested to provide proper authority for the management and/or disposition of the property in a final order. For example, it may be desired that property be transferred to a spouse or special needs trust so that the incapacitated person may qualify for governmental benefits such as Medicaid. Another consideration may be the long term support of the incapacitated person’s family. Section 81.21(a) 2 of the MHL allows the Court to provide an order directing that guardianship funds be used for such support.

The variety of property dispositions that occur in these proceedings are endless. In a recent case, In Re Donald L.L., 916 N.Y.S.2d 451, decided by the Appellate Division, Fourth Dept., on February 10, 2011, the Court upheld a Stipulation of Settlement entered into between a husband and the Guardian for his wife.

The Stipulation provided that the husband and wife would live separately, that their marital property would be divided between them as agreed, and that the husband would pay the wife maintenance and support. The Court found the agreement to be valid although it was not based upon the concept of equitable distribution involving the applicability of the Domestic Relations Law.

Proper estate planning with the help of a New York Estate Planning Attorney, including the preparation of a Last Will and Living Trust and advanced directives such as a Power of Attorney and Health Care Proxy, may avoid the necessity of a guardianship determination of incapacity. However, a good New York Guardianship attorney is needed when such proceedings can help a disabled person and his or her family deal with property management issues and personal care decisions in the absence of alternative planning.

April 15, 2011

Joint Tenancy an Option for Disposing of Real Estate without Probate

by Jules M. Haas

We recently reported on our New York Probate Lawyer Blog about the need for ancillary estates to dispose of out-of-state real estate in cases that go through probate court.

Estate planning lawyers in New York City understand there are many options for avoiding probate. In some cases trusts or other options can be a desirable alternative. As part of our ongoing series on Avoiding Probate in New York, we will take a look at the options to transfer real estate.In general, those estates governed by a Last Will (or Intestate estates without a Will) will enter the probate court process. Probate court is a state process however, and as such it typically will not dispose of real estate or other hard assets owned in another state. It can be necessary to enter the probate process in that state as well, unless you own those assets in trust or other arrangements for avoiding probate have been made.

Some states allow automatic transfer of ownership of the property to your chosen heir. You may hold the property in joint ownership. Joint tenancy with right of survivorship will permit your spouse (or chosen heir) to assume ownership and continue living in the house after your passing.

Probate is not avoided if both owners die at the same time and the last surviving owner must make other arrangements to dispose of the property. In some cases, naming a joint tenancy may also trigger gift taxes. And it can create several headaches that can make it a poor choice for an older person who is seeking to transfer ownership after his or passing.

Joint tenancy involving other assets, such as bank accounts, can also create disputes after your death. In cases, for example, where joint tenancy on a bank account is granted to assist with bills, the person may claim those funds automatically, which may not be in keeping with the original intent of the account owner.

Consulting an estate planning lawyer in New York is the best way to make sure your affairs are in order and that your estate passes to your chosen heirs in the manner of your choosing.

April 13, 2011

New York Trusts can Alleviate need for Ancillary Estate to Handle Out-of-State Property

by Jules M. Haas

The NWI Times recently published an article explaining the complexities and expenses associated with ancillary estates, which can be necessary to dispose of real property located in another state.

Proper estate planning in New York can alleviate the need to go through the probate process in multiple states, which can be expensive, time consuming and public. An experienced New York City probate attorney can assist a client in establishing a trust or otherwise working to bypass the probate court process.As we discussed on our New York Probate Lawyer Blog, there are a number of advantages to bypassing the probate court process. One of those is to circumvent the need for ancillary estates. Probate is a state process. And as such, it does not cross state lines. A resident who lives and died in one state, and has real property in another, must enter the probate process in both states. Unless he or she invests in the proper estate planning.

By putting out-of-state property into a trust, you will be able to transfer it upon your death without the need to go through the probate process in either state. The savings of time and money can be quite substantial and you will also enjoy the privacy that comes with property and asset transfers outside probate.

There are a number of issues to consider, not the least of which is taxes. And, in states like Florida where homestead exemptions and property appreciation caps are in place, there may be significant tax implications to making a property transfer.

By planning ahead, you can be assured that your wishes will be carried out at the time of your passing, and that your heirs will not be saddled with unnecessary court proceedings, taxes or estate headaches.

April 11, 2011

Removal of a New York Fiduciary Requires a Strong Demonstration of Wrongdoing

by Jules M. Haas

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.