New York Probate Lawyer Blog

New York Estates May Require That a Bond Be Filed with the Surrogate's Court

Wed, 12 Jun 2013 14:16:00 -0500

There are two fundamental procedural avenues that are followed when initiating proceedings in the Surrogate's Court to administer a decedent's estate. If the person died testate (having left a Last Will), the proceedings concern the Probate of the purported Will. If the person died intestate (without a Will), the proceedings are determined to be an Administration of the estate.

It is fairly common that a fiduciary or beneficiary of an estate may receive information that the fiduciary must be bonded or receive a bond in order to complete his appointment by the Surrogate's. Court. The bonding requirement of an Executor (when a Will is probated) or an Administrator (in an intestate estate) is not as mysterious as it may sound.

A bond is essentially an insurance policy issued by a surety company that provides security for the estate assets. If the fiduciary misappropriates or improperly takes estate assets, the bonding company may be required to reimburse the estate for the loss and, in turn, try to recover the lost assets from the fiduciary.

In view of the financial risk that a surety incurs by issuing a bond to a fiduciary, the surety company will require that the fiduciary have a solid financial and credit background. I have been involved in a number of matters where a person was approved by the Surrogate's Court to act as an Executor or Administrator only to be rejected by the bonding company. If the prospective fiduciary cannot obtain the bond required by the Court, he most likely would need to forfeit his appointment in favor or an alternate fiduciary who can satisfy the bonding company.

The amount of the bond required by the Court depends upon many factors. Primarily, the value of the decedent's estate is the starting point. The greater the value of the assets, the larger the required bond. The bonding company will charge the estate an annual premium for the cost of the bond. The larger the amount of the bond, the larger the premium cost.

It is not uncommon to see standard language in a Last Will to the effect that the requirement of obtaining a bond by the Executor is waived. In most probate matters, the Court does not require the posting of a bond. However, there are a number of situations where even in probate proceedings the Court may require that a bond be filed with the Court as a condition to the fiduciary's appointment. For example, if the Court is asked to issue Preliminary Letters Testamentary, Surrogate's Court Procedure Act (SCPA) Section 1412(5) gives the Court discretion to require a bond.

The appointment of an Administrator in an intestate estate usually requires the filing of a bond (SCPA 805), although the filing can sometimes be avoided if all of the estate beneficiaries agree that the filing be dispensed with.

After Estate Settlement has been completed, the fiduciary is required to make a final distribution of estate assets to estate beneficiaries. When all beneficiaries have signed a Release Form or the Court has issued a Decree settling the fiduciary's Accounting, the bond will be terminated.

I have represented many fiduciaries who have been required by the Court to obtain a Surety Bond. New York Estate Attorneys typically contact various agencies that act as brokers in connection with the Bond Application Process. Since it is not always easy for persons to qualify for a bond, it is a good idea to speak with a bonding company before papers or Petitions are submitted for Probate or Intestate Administration to get a preliminary determination as to whether the person applying to be appointed as a fiduciary can qualify for a bond required by the Court. I work closely with my clients in all aspects of estate administration and assist them with their bond applications.

Trust and Estate Disputes Often Involve a Variety of Issues

Wed, 05 Jun 2013 15:23:47 -0500

Controversies arising in Estate Planning, Estate Litigation and Estate Settlement involve a vast variety of issues. New York Estate Lawyers know that the many different problems that are found in the area of Trusts and Estates are as diverse and complex as the individuals whose lives are impacted by them. In today's blog post, I will take the opportunity to discuss some recent examples of controversies with the goal of providing some insight into the different issues and problems each portrays.

The New York Probate Lawyer Blog has discussed in prior posts that a New York Executor or Administrator has an obligation to discover and to collect the assets of a decedent. This "marshaling" of estate property is one of a fiduciary's jobs when engaging in the settlement of an estate. An interesting approach was taken by one estate administrator who sued Wells Fargo Bank for wrongful death, elder abuse and other grounds for causing a decedent's death. In an article by Matt Reynolds in AlterNet dated May 14, 2013, it was reported that Wells Fargo's alleged improper foreclosure action resulted in the decedent's death after he collapsed in the courtroom in an attempt to oppose the bank's action. The estate Administrator then sued the bank claiming that it should pay damages for commencing a negligent and wrongful and malicious foreclosure action.

As can be seen from the Wells Fargo case, the assets or potential assets of a decedent are not always readily apparent. While it may be rather easy to discover and collect some estate property such as bank accounts, a fiduciary should investigate and consider all potential sources that might benefit the estate and its beneficiaries.

Another recent news story reported that a World War II veteran was attempting to prevent his daughter from evicting him from his home. As reported by Debra Cassens Weiss in the ABA Journal on May 16, 2013, the veteran had given his daughter a Power of Attorney whereupon the daughter transferred the vet's house to herself and her husband. Despite claims of undue influence, the vet's attempt to void the transfer was denied and now the daughter was seeking to evict him from the home.

The giving and use of a Power of Attorney should be carefully considered by both the Principal and the Agent or Attorney-in-Fact. While a Power of Attorney can be useful in estate planning and in avoiding Guardianship Proceedings, the person who is given the authority must be someone that can be trusted and relied upon without any doubt. Also, the person receiving the power has a fiduciary duty to act responsibly and any transfer of property by the Attorney-in-Fact to himself is considered improper.

Professional advice from a New York Estate Planning Lawyer can be very helpful in considering and preparing a New York Power of Attorney.

New York Estate Requires a Careful Review of Estate Assets

Wed, 29 May 2013 14:08:46 -0500

A New York Estate Planning Lawyer is aware that it is of utmost importance to review a person's assets when formulating an estate plan. Initially, it may seem that determining the value of assets is a primary concern so that estate taxes can be estimated and planned for and appropriate provisions can be made to afford varying estate shares to beneficiaries.

While estimated estate valuations should be known, it is equally important to obtain detailed information regarding the manner in which various estate assets are owned. For example, the title on a deed should be examined to determine whether the testator's name actually appears on the deed. Sometimes, a testator will have inherited the property from a parent or another relative or friend under a Last Will. However, the actual transfer of title into the beneficiary's name may not have been completed by the Executor. Also, title to the property may be held jointly with another person or as a tenant in common with each person having a separate share or interest in the asset.

These ownership interests are important since a Last Will is generally going to control the disposition of assets held in the decedent's name alone. If the property is held with another as joint tenants with a right of survivorship, upon the death of a joint tenant the asset will automatically become owned in its entirety by the surviving joint tenant. This automatic ownership will occur notwithstanding provisions in a Last Will that attempt to give the same property to a different person.

Controversies created by estate property ownership cause major problems for Estate Settlement and often result in Estate Litigation. A recent example of such litigation appeared in the case Herskovitz v. Steinmetz, decided by Justice Richard F. Brown (Supreme Court, New York County) on May 16, 2013 and reported in the New York Law Journal on May 29, 2013. In Herskovitz, a decedent owned a cooperative apartment along with his wife. However, the cooperative stock certificate simply had both their names on the certificate without indicating whether the married parties intended a joint ownership or tenancy in common. Since the decedent's Last Will left his residuary estate to his daughters, if the cooperative apartment was owned by the decedent as a tenant in common the decedent's share would have gone to the daughters under his Last Will. However, a joint tenancy with the wife with a right of survivorship would result in the wife automatically owning the apartment upon the decedent's death and the daughters receiving no interest in the apartment under the Will.

After reviewing the various evidence, which included joint tenancy language in the decedent's cooperative Proprietary Lease, the Court found that the cooperative apartment was owned by the decedent and his wife as joint tenants with survivorship rights. It should be noted that the facts of this case involved the ownership of a cooperative apartment by a husband and wife where ownership began before a 1996 amendment to New York Estates, Powers and Trusts Law Section 6-2.2. Under paragraph (c) of the amended law, stock of a cooperative apartment issued to a husband and wife creates a tenancy by the entirety unless expressly declared otherwise. A tenancy by the entirety results in the surviving spouse automatically owning the entire asset upon the death of the other spouse.

Therefore, when planning an estate and preparing for the proper disposition of assets a good starting point is to review the title and official or registered ownership of the assets whether they be a bank account, real estate or securities so that the Last Will, Trust and the entire plan accurately provides for the disposition of estate assets.

New York Guardianship Can Be Contested or Based Upon Consent

Wed, 22 May 2013 14:15:46 -0500

New York Guardianship proceedings are controlled by Article 81 of the New York Mental Hygiene Law ("MHL"). The New York Probate Lawyer Blog has provided numerous posts regarding issues concerning this type of court proceeding.

The essence of a Guardianship proceeding is to determine whether the appointment is needed to assist a person with personal needs or property management. MHL Section 81.02(a)(2) provides that a Guardian can be appointed when the alleged incapacitated person ("AIP") either "agrees to the appointment" or if the AIP is found to be "incapacitated". In most proceedings, the determination of incapacity is the central focus of the Court hearing. The statute requires "clear and convincing" evidence to find incapacity. A court hearing involves many different participants which may include the petitioner (the person who commences the Court case), the AIP, a Court Evaluator, a Court-appointed attorney who represents the AIP, New York State Mental Hygiene Legal Service and the local Medicaid office such as the New York City Human Resources Administration. Also, family members and friends of the AIP may become participants if they intervene in the proceeding.

If the AIP opposes the appointment of a Guardian, the Court may hear the testimony of many witnesses and may review numerous documents with regard to its consideration of the necessity of an appointment. All of the aforementioned participants play an important role in the Court case and in providing the Court with all the information needed to make a final determination. In Contested Guardianship Proceedings, the Court wants to fully understand the situation and circumstances concerning the AIP so that it can assess whether the statutory mandate of "incapacity" has been shown.

It should be recognized that even in a case where "incapacity" is beyond dispute, the Court requires a hearing and the presentation of evidence regarding the need for the appointment. New York Guardianship Attorneys know that in such matters the Court will want to hear testimony from the petitioner and receive evidence of the AIP's condition from a social worker or doctor or in some other acceptable form to document the basis for the Guardian's appointment.

As noted earlier, MHL 81.02(a)(2) allows the appointment of a Guardian where a person consents to the appointment. Consentual guardianships appear to be the exception rather than the rule since there is always the issue as to whether the AIP has the capacity to make a knowing consent. However, there are occasions when the Court will find that consent is appropriate. Such was the situation in a recent case decided by Bronx Supreme Court Justice Alexander W. Hunter entitled "Matter of the Guardian for L.J.L." decided on May 6, 2013 and reported in the New York Law Journal on May 17, 2013. In L.J.L. the Court held a hearing and recognized that Article 81 of the MHL does not provide any statutory guidance to assist the Court in deciding whether a person has the capacity to consent to a Guardian. However, after considering all of the evidence presented, the Court in L.J.L. found that the AIP had capacity to consent and appointed a Special Guardian of the person and property of the AIP for the limited period of one year.

New York Courts Prefer to Appoint Executors Selected by the Testator

Wed, 15 May 2013 13:48:47 -0500

Previous posts in the New York Probate Lawyer Blog discussed various issues concerning the qualifications of person to serve as an Executor or other fiduciary. Reference was made to New York Surrogate's Court Procedure Act Section 707 which is entitled "Eligibility to receive letters."

Notwithstanding the basic statutory qualifications, many situations arise where a person attempts to object to the appointment of an Executor named in a Last Will. For example, if a testator executes a Will and bequeaths his entire estate to his companion, and names the companion as the Executor, the children may object to the appointment. However, unless the children can demonstrate by particular evidence that the appointment was due to overreaching, or fraud or undue influence or some other improper factor, the Courts will honor the testator's intention and appoint the nominated fiduciary.

This very situation recently arose in a case entitled "Will of Rudolph M. Barboni", decided by Nassau Surrogate Edward W. McCarty III on April 25, 2013 and reported in the New York Law Journal on May 20, 2013. In Barboni the decedent named his friend as sole legatee and primary executor. Since the decedent's children were only named as contingent beneficiaries they did not benefit from the Will. Since the children were contemplating Estate Litigation in the form of a Will Contest, they objected to the friend's appointment as a Preliminary Executor.

The Court rejected the children's attempt to prevent the appointment of the friend as a Preliminary Executor. It found that the children did not present any bona fide claims of wrongdoing or undue influence. Instead, the Court said that the children's assertion of mere conclusory allegations were insufficient to defeat the testator's nominated choice for appointment.

As noted in prior blogs, the selection of an Executor and other fiduciaries is an important part of estate planning. This is particularly true where litigation in the Surrogate's Court may be expected in a Probate Proceeding or other Court proceeding. Therefore, it is important to review these issues with a New York Estate Planning Lawyer so the various problems and options concerning the naming of a fiduciary can be discussed. In some situations, it may be prudent to attempt to avoid the probate process and to create and fund a Living Trust. Such a Trust can function during the creator's life and act as a Will substitute by providing for an automatic disposition to named beneficiaries upon the creator's death. If a Will does not need to be probated, there is less opportunity for disgruntled family members to complain about the creator's choice of fiduciaries. A Living Trust is just one example of alternative solutions that are available to meet the estate planning needs and desires of New Yorkers.

New York Executors Must Be Eligible To Be Appointed by the Court

Wed, 08 May 2013 12:52:41 -0500

The selection or nomination of an Executor or Trustee is one of the most important decisions made by the creator of a Last Will or Trust. No matter how precise and formulated an Estate Plan may be, the selection of a person as Executor who makes poor decisions or fails to follow the creator's intentions can destroy the entire plan. As discussed in many posts in the New York Probate Lawyer Blog, when a person dies intestate (i.e., without a will), the provisions of the New York Surrogate's Court Procedure Act ("SCPA") Section 1001 determines who will be appointed as the Estate Administrator. Therefore, if a person takes the time and effort to avoid the statutory selection process and to put into writing an estate plan, it is imperative to make careful decisions regarding the selection of fiduciaries.

From a personal preference vantage point, there are no set criteria that a person must meet in order to be nominated as an executor or trustee. However, there are a number of important considerations. To begin with, the nominee should be someone the creator has full confidence in as to honestly and integrity. The creator also should feel assured that the nominee understands the creator's intentions and desires and will do their best to carry out the creator's plan in a manner that the creator would do. It is the job of the fiduciary in Estate Settlement to collect estate assets, pay estate bills and expenses and distribute the net estate to the beneficiaries. The Executor has a legal obligation to deal fairly and honestly and not to self-deal or take advantage of estate affairs for his own benefit.

New York Estate Lawyers are also aware that in many instances it is a good idea to discuss the possible appointment with the nominee to make certain that the nominee is agreeable to accepting the appointment when needed. If the potential nominee is reluctant to serve, it is better for the creator to find out now and be afforded the chance to make a different choice before a Will or Trust is finalized.

In most instances the choice of a fiduciary is easy since the selection is a spouse or children and the family situation is harmonious. However, where less cordial family relationships are present or persons other than close relatives are being selected, the choices may become more critical since the possibility of Estate Litigation or other Estate disputes require fiduciaries of good and strong character to protect the creator's plan from attack. It should be recognized that a fiduciary does not need to be experienced or have any business or financial background. As long as the fiduciary has some common sense and the ability to make clear decisions, the fiduciary can hire professionals such as attorneys, accountants and financial advisors to help with technical advice in Estate Administration. Estate Lawyers in New York are generally experienced and can guide the Executor through the complexities of the Probate Process in Surrogate's Court and estate settlement.

SCPA Section 707 entitled "Eligibility to receive letters" provides the basic statutory qualifications for appointment as a fiduciary. The statute sets forth a set of legal criteria for appointment. A person will be disqualified to be appointed if the person is an infant, or incompetent or a non-domiciliary alien, a felon or did not possess qualifications due to "substance abuse, dishonesty, improvidence, or want of understanding, [or] is otherwise unfit for the execution of the office." The statute also provides that the court may reject a person who cannot "read or write the English language". The selection of a fiduciary such as an Executor or Trustee is an important aspect of Estate Planning and Estate and Trust Administration. I have assisted clients over the years in creating their estate plans and have also represented many fiduciaries in estate and trust matters.

New York Issues Regarding Kinship and Domicile Are Always Important

Wed, 01 May 2013 13:22:37 -0500

The New York Probate Lawyer Blog has provided a number of posts regarding the importance of determining kinship in estate proceedings. Other posts have discussed the necessity of determining a person's domicile in estate matters. This blog contains same basic points as a reminder of the necessity to properly consider both these issues in estate matters.

With regard to kinship, many estate proceedings in the New York Surrogate's Court require that a person's distributees (i.e., next of kin) be fully determined and reported to the Court. Both Administration and Probate proceedings require that proper notice be given to such individuals. In administration proceedings, where a person dies Intestate (i.e., without a Last Will), the decedent's distributees are the ones who will inherit the estate and who can be named as Estate Administrators. Section 4-1.1 of the New York Estates, Powers and Trusts Law provides the order of priority of persons who can inherit the estate in the case of intestacy.

When the distributees of a decedent are not fully known or when the closest living relatives are more distant such as in Cousin Cases, the Court can require a Kinship Proceeding or hearing to determine the appropriate next of kin. Finding a person's kinship history is not always easy, especially when families have been separated for many years throughout the USA or the world. Obtaining the assistance of an experienced New York Probate Attorney and genealogist can be vital in these matters in order to secure a person's inheritance. While not a matter for the probate court, a recent controversy regarding the identity of the relatives of the late gangster, Al Capone, shows the confusion and uncertainty that can surround proving the members of a decedent's family.

As reported at TMZ.com on April 17, 2013, Reelz Channel is planning a new reality show entitled "The Capones". However, a person named "Chris K. Capone", who claims to the gangster's grandson, has asserted that the show's star "Dominic Capone" is not related to the deceased, Al Capone. As can be seen, family histories can become complicated and certainly difficult to prove without qualified assistance.

Turning to the issue of domicile, it has been discussed that the concept of domicile is determining the jurisdiction where a person intends that his primary home is located. Someone can have many residences in different states and countries but only one domicile. A person's domicile typically determines the jurisdictional law that applies to a person's Estate. For example, if a person is domiciled in New York, New York Estate law will be applied to identify the persons who are entitled to inherit from the estate. Additionally, marital rights may be found by looking at the applicable local law. The imposition of local Estate Taxes is another area where domicile is a determining factor.

In today's mobile society where individuals can change their residence frequently and also have multiple residences, figuring out a decedent's domicile and the applicable laws is not always easy. In a recent case, Estate of Vincent Hart, decided by Nassau County Surrogate Edward McCarty III, on April 12, 2013 and reported in the New York Law Journal on April 30, 2013, the Court was faced with a slightly different problem. The issue presented was whether the Surrogate's Court or the Superior Court in Puerto Rico was the most appropriate Court to determine issues regarding a New York Will and a New York Trust. After balancing the equities, the Court determined that most of the substantive issues, which involved New York law, should be determined by the New York Court. As can be seen from the Hart case, multi-jurisdictional Estate Litigation issues can be quite complex and complicate the Estate Settlement process.

New York Wills May Contain Trusts That Require a Trustee's Use of Discretionary Powers

Wed, 24 Apr 2013 13:46:30 -0500

New York Estate Planning can involve many different issues and considerations. The New York Probate Lawyer Blog contains many posts discussing the need for Estate Planning papers such as a Last Will, Living Will, Health Care Proxy and Living Trust. Each of these documents should be prepared so that it reflects the intentions and desires of the creator.

A Last Will can contain relatively simple provisions for the disposition of estate assets. For example, the Will may say that the entire estate is to be given to the testator's spouse if she survives him or if she does not survive then to the testator's surviving children.

Of course, there are many circumstances when the provisions in a Will need to be more complex and there may be a desire to create a trust within the Will. Such a trust is called a Testamentary Trust.

A Testamentary Trust might be used for the purposes of establishing an estate tax plan where funds are placed into the trust so as to allow their exemption from taxation in multiple estates as provided by the estate tax laws. Other situations may call for a trust to be set-up to provide management and control of funds for someone who is a minor, or is improvident or for someone who is incapacitated. A Supplemental Needs Trust can be established where an incapacitated person is receiving governmental benefits such as SSD or Medicaid without causing these benefits to be diminished.

Whenever a trust is provided for there must be a Trustee or Trustees who are typically nominated in the document by the person creating the trust. The creator has the ability to define the powers that a trustee may exercise within the confines of the various estate and trust laws concerning these powers.

Trustees can be given broad discretion regarding investments and management of trust assets as well as the power to pay income and principal to the trust beneficiaries. Conversely, a trustee may be directed to use trust assets for a certain limited purposes or to advance a limited goal such as education for a beneficiary.

In view of the limited or broad authority granted to a Trustee, it is very important to both select the appropriate person or institution as a trustee and to define the trustee's powers. Paying attention to these matters at the time the Will and Trust provisions are drafted is essential to ensuring that the creator's intentions will be fulfilled after the trust is established and is operational.

New York Estate and Trust Lawyers are familiar with the many cases in the Surrogate's Court where disputes arise between the trustees and trust beneficiaries concerning the management of the trust and the payment of trust income and principal. Most recently, Manhattan Surrogate Nora Anderson was presented with a situation where a trust beneficiary claimed that she was destitute and that the trustee of her trust was acting improperly by not making discretionary distributions to her to help her pay her rent and other expenses. In Hammerschlag v. Schlesinger, decided on April 17, 2013 and reported in the New York Law Journal on April 26, 2013, the beneficiary brought a proceeding in the Manhattan Surrogate's Court to compel the trustee to make these payments and to remove him as trustee. The trustee sought to dismiss the proceeding by claiming that the trust provisions gave him "sole and absolute discretion" to make these decisions. The Court found that despite the trustee's broad powers, the trustee has a duty to act in good faith and could not abuse his powers. Therefore, the Court scheduled a trial to determine whether the trustee acted properly.

New York Wills Need to Be Signed According to Statutory Formalities

Wed, 17 Apr 2013 14:05:32 -0500

A Last Will in New York must be created in accordance with the New York statutes. The Estates, Powers and Trusts Law ("EPTL") contains numerous provisions concerning the fundamental aspects of and requirements for a valid Will. For instance, EPTL 3-1.1 states that anyone over 18 years old having sound mind and memory can dispose of their personal and real property by Will. Probably the most important provisions regarding Wills are contained in EPTL 3-2.1 which is entitled "Execution and attestation of Wills; formal requirements". The New York Probate Lawyer Blog has discussed this section of the law in previous posts. EPTL 3-2.1 states the numerous requirements that a Will must meet in order for it to be valid. Among the stated items is that the Will must be signed at the end by the testator, and that there must be at least two attesting witnesses. While the statute contains many more execution requirements, a signed writing with witnesses is fundamental to the validity of a Will in New York.

Estate litigation in the Surrogate's Courts often occurs when there is a dispute as to whether a Will was properly executed. One of the grounds upon which to Contest a Will is lack of due execution. For example, someone objecting to a Will may claim that it was signed by a testator but not validly witnessed because the witnesses did not see the testator sign the Will or the testator did not acknowledge his signature to the witness. Sometimes there are questions as to whether the Will is genuine and if the document was actually signed by the testator. As can be imagined, there are a vast majority of Will Contest Litigations concerning the validity of Wills.

New York law tends to be very strict regarding the enforcement of the statutory requirements. In many instances, a prospective beneficiary may be without recourse where a testator prepares a Last Will to be signed or tells a beneficiary that a Will leaves a certain bequest and, as it turns out, the testator never signs a Will containing these provisions. Despite, the testator's possible intentions, in New York, the failure to comply with statutory rules typically prevents the Probate of the purported or drafted Will. In this regard it is somewhat easy to understand that the strict nature of the law is to present unsigned, unwitnessed or other defective papers from being given validly where the testator is no longer alive to confirm that the defective documents actually express his final intentions.

Notwithstanding the specific requirements of the New York Probate Law, there are recent instances in other jurisdictions where unsigned documents have been admitted to probate and allowed to determine the disposition of a decedent's estate. In a recent post by Cameron Stuart on April 6, 2013 in News.com, it was reported that Irvin Rockman, a former Melbourne, Australia Lord Mayor, attempted to sign a new Will but could not do so due to the seriousness of his illness. Although he died a few days later, the Australian court upheld the validity of the unsigned final Will finding from the evidence that it expressed Rockman's intent.

Closer to home, a New Jersey Appellate Court approved the probate of an unsigned copy of a paper intended as a Will. In the Estate of Richard D. Erlich, 427 N.J. Super.64 (2012), the Court essentially determined that the unsigned paper was sufficiently formal and expressed the decedent's intent and was therefore valid.

Despite these recent examples, the vast majority of Wills admitted to Probate are properly prepared, signed and witnessed. New York Estate Lawyers typically counsel their clients regarding their Estate Plan and supervise the preparation and execution of the client's Last Will and other estate plan documents such as Living Trusts and Advance Directives. When the time comes to Probate a Will, a professionally prepared, signed and witnessed Will can make the Probate Petition Process and Surrogate's Court filing more efficient and expeditious and less prone to a contest by unhappy family members.

New York Wills and Trusts May Be Modified to Reflect the Creator's Intent

Wed, 10 Apr 2013 12:51:56 -0500

The New York Probate Lawyer Blog has had many posts discussing the importance of a person's intent as reflected in their Estate Planning and Advance Directive documents.

A primary purpose of preparing and executing a Last Will, Living Trust, Power of Attorney, Health Care Proxy or Living Will is to provide a clear expression of the manner in which a person wants his affairs to be handled and to select the Executors, Trustees and Agents who will best carry out such desires. As has been discussed, when a person dies without a Last Will or does not otherwise provide for pre-death management of his affairs, the decisions are typically left in the hands of the Courts and New York Law to determine the rightful beneficiaries and administrators. There are occasions, however, when despite expressing ones directions and intent through language in a Will or Trust, the provisions in a person's Will or Trust fails to fully provide for the implementation of the specific gifts. For example, a Will may bequeath a sum of money to a certain charity. However, a problem would arise if the charity no longer exists or the purposes of which the charity was formed changed. In such a situation, an Executor or Trustee would be faced with a question as to how to dispose of the assets meant for the charity or a specific charitable purpose.

Fortunately, New York State Laws give the Courts, such as the Surrogate's Court, the authority to modify the Will or Trust to account for a changed circumstance. In the recent case of Matter of Wheaton Galentine Trust, decided by Manhattan Surrogate Nora Anderson on April 8, 2013 and reported in the New York Law Journal on April 12, 2013, a Trust provided for a distribution to St. Vincent's Hospital and Medical Center for geriatric purposes. Unfortunately, St. Vincent's had ceased operating in 2010. Utilizing the traditional concept of Cy Pres as set forth in New York Estates, Powers and Trusts Law Section 8-1.1, the Court found that the creator's intent was satisfied by allowing the St. Vincent's distribution to be made instead to two different medical institutions performing geriatric services. Thus, the Court was able to modify the trust terms to carry out the creator's intent when faced with circumstances that prevented the original disposition from being satisfied.

New York Estate Planning Lawyers assist their clients with documents that express the client's intentions regarding their personal and financial affairs and the disposition of their assets. In situations involving Estate or Trust Settlement, these expressions of intent can be instrumental to assist a Court in helping to accomplish the client's goal. When there is no plan in place, such as in the case of an Intestate Estate, a person's desire to benefit particular members of his family or friends or a charity cannot be fulfilled. Over the many years, I have assisted many clients with their planning goals to create an estate plan and advance directives that fully reflect their intentions and desires.

A Good New York Estate Plan is Important to Prevent Contests of a Will That May Occur in Unusual Ways

Wed, 03 Apr 2013 17:54:25 -0500

New York Estate Planning Lawyers are familiar with the fundamentals that form a good estate plan. Preparing and executing a Last Will and Testament provides a written declaration as to the disposition of a person's probate estate. A Will can be made up of various provisions some of which can give specific assets or amounts to named beneficiaries while other parts of the Will may contain bequests in percentages for a number of individuals. Additionally, a Last Will might have clauses that create trusts for minors or provide estate tax planning that might result in many dollars of savings.

In addition to a Last Will, other estate planning documents include a Living Will, Health Care Proxy, Power of Attorney and Living Trusts. All of these testamentary and advance directive papers allow a person to carefully plan their estate and future care by implementing a roadmap reflecting their intentions and naming the Executors, Trustees and Agents who will carry out their instructions.

In many instances, however, a person's attempt to plan their estate may be met with contests and controversy. It is not uncommon for a testator to disinherit a close relative such as a child. It was recently reported in Examiner.com on March 25, 2013 by Joann Scheffler that the famous hair stylist, Vidal Sassoon, disinherited one of his sons. While Vidal Sassoon died in Los Angeles, New York allows a person to completely disinherit a child or anyone else except that a surviving spouse has a right under Estates, Powers and Trusts Law Section 5-1.1-A to elect to take a share of a decedent's estate. Many times when a person who is a distribute (next of kin), such as a child, is disinherited, the result is a contested estate or a Will contest with claims of undue influence or lack of testamentary capacity. A solidly prepared and executed Last Will and estate planning papers are imperative to defeat attacks by disgruntled relatives who expected but did not receive a large inheritance.

The desire to control the disposition of estate or trust assets can sometimes lead to rather extreme actions. A Florida multi-millionaire, John Goodman, recently adopted his 42 year old girlfriend. It appears that Mr. Goodman had been convicted of drunken driving and was facing a prison sentence and civil damages. By adopting his girlfriend it appears that Mr. Goodman would allow her to receive a large share of his trust fund that would have gone to his two other children. In the article by Beth Stebner that appeared in Mail Online on March 28, 2013, it was reported that the children had contested the adoption and that an Appeals Court in Florida voided the adoption as fraudulent and having no purpose.

An even more extreme example of an attempt to control an estate distribution was reported in The Northern Echo on March 27, 2013. It seems that a man who was the sole beneficiary under his parents' Will sought to accelerate his inheritance by first failing to kill his mother and father in a fake road accident and then succeeding in having them die after he shot them in their home. In New York, a person who murders another to receive an inheritance is not allowed by the Courts to profit from their wrongdoing and they are disqualified from receiving their ill gotten gains.

While the above examples of actions to control an inheritance are not common, the important point is that an individual concerned with ensuring the proper disposition of his estate should obtain advice regarding New York Estate Planning. There is really no substitute for preparing an appropriate Will and other planning papers to minimize the likelihood of contests and controversy over an inheritance.

A New York Estate Can Be Distributed Where a Parent is Found to be Disqualified to Inherit

Wed, 27 Mar 2013 17:20:48 -0500

The Administration of a New York Estate where a decedent dies intestate is determined by the laws of descent and distribution. As the New York Probate Lawyer Blog has discussed in previous posts, New York Estates, Powers and Trusts Law ("EPTL") Section 4-1.1 provides the list of priority of distributees who are entitled to receive a share of a decedent's estate when such person dies without a Last Will ("Intestacy"). This list begins with a decedent's spouse and children, and then goes on to parents, brothers and sisters and more distant next of kin.

New York Estate Lawyers are familiar with the due diligence necessary to determine the identity of a decedent's next of kin and that sometimes is required when a person's family tree is unclear. In some cases, the Court may require a Kinship Hearing to determine the rightful estate beneficiaries.

In other situations, the identity of the Estate Heirs may be easy to determine. However, other factors may complicate the Estate Settlement process. For example, a person may be identified as the decedent's spouse, thus having priority to inherit. Sometimes there are questions concerning the status of the spouse and whether there was a valid marriage ceremony or if a divorce occurred prior to the decedent's death. Additionally, a spouse may be disqualified to inherit where the spouse "abandoned the deceased spouse". EPTL 5-1.3.

A similar disqualification can occur with respect to the inheritance rights of a parent. Pursuant to EPTL 4-1.4 a parent will be disqualified from receiving a share of a decreased child's estate where the parent "(1) has failed or refused to provide for the child or has abandoned such child...."

Questions concerning a parent's alleged abandonment are typically resolved in Estate Litigation that occurs in the Surrogate's Court in connection with the Administration Proceeding. Parental rights to inherit from a child's estate may be a very valuable item. Recently, a case was presented to Surrogate Bruce Balter (Kings County) entitled Estate of Ricardo Ramos. This case was decided on March 6, 2013 and reported in the New York Law Journal on March 25, 2013.

In Ramos the Court was asked by the Estate Administrator to approve a settlement of $900,000 for the wrongful death of the decedent who died due to an accident at work. The decedent's distributees were his mother and father. The Administrator also asked the Court to allow the entire settlement to be distributed to the decedent's mother claiming that the father had abandoned the decedent. Following the presentation of evidence to the Court it was found that the father abandoned the decedent "by neglecting or refusing to fulfill "the natural and legal obligations of training, care and guidance owed by a parent to a child . . . . ."

Estate issues regarding Kinship and determining Estate Distributees are important in all estate cases. As a New York Estate Lawyer I have represented many clients and assisted them in resolving concerns regarding inheritance rights.

New York Real Estate Litigation May Involve a Decedent's Estate Interest

Wed, 20 Mar 2013 16:32:47 -0500

New York Estates and Trusts are comprised of various types of assets. Very often these assets include real estate in the form of a single family home or commercial property. When an Executor, Administrator or Trustee has the responsibility of protecting and handling real estate interests, the job of the Fiduciary can become very complicated.

In the most simple case, the Fiduciary must protect the property which means the real estate must be secured and it should be covered by insurance, if possible. Additionally, the property may contain tenants or third-party occupants whose identity must be determined along with any leases or rights of possession such occupants may have. In many instances it will be impractical to distribute the estate without selling the real property. The decedent's Last Will or Intestate Distribution may require that many individuals receive a share of the property value which cannot be accomplished without liquidating the property into cash funds.

Also, the property may be subject to a mortgage or other liens or expenses that necessitate its sale in order that these debts or obligations be paid. Another consideration is the cost of maintaining the property and paying maintenance fees or property taxes. Such costs may require that the real property be sold rather than requiring the decedent's estate to pay these continuing costs.

When dealing with real estate an estate may also become involved in litigation that affects the property. New York Estate Lawyers often have to represent their Fiduciary clients in connection with this type of Estate Litigation. A recent case decided by the New York Court of Appeals is an example of the problems an estate can face with Real Estate Litigation. White v. Farrell was decided by the Court of Appeals on March 21, 2013 and reported in the New York Law Journal on March 22, 2013. In this case Paula and Leonard White had signed a contract to purchase real estate from the Farrells. However, after the contract was signed, the White's decided that they wanted to cancel the contract because they claimed that drainage issues affecting the property was not fully disclosed to them. The Farrells refused to cancel the contract and ultimately claimed that the White's defaulted by refusing to close title. During the course of the litigation Leonard White died and so the litigation continued and affected the interest he had in the proceedings. It appears that Paula was appointed as Executor of Leonard's estate and represented the estate's interest in the case. The Court of Appeals ultimately refused to grant summary judgment for the Farrells but did determine that the measure of damages suffered by the Farrells due to the Leonard's breach of the Contract "is the difference, if any, between the Contract price and the fair market value of the property at the time of the breach."

As can be seen from White, there are many issues that can impact Estate Settlement and the interests of a decedent. In many instances, I have represented Executors and Administrators where real estate is an estate asset. Such estates require that the Fiduciary take a very active role in managing the real property and protecting the estate's interests especially where the property is the subject of claims and is affected by ongoing litigation.

A New York Guardianship Based Upon Consent Does Not Constitute Incapacity

Wed, 13 Mar 2013 17:39:37 -0500

Article 81 of the New York Mental Hygiene Law ("MHL") is entitled "Proceedings for Appointment of a Guardian for Personal Needs or Property Management". The New York Probate Lawyer Blog has published numerous posts regarding many different aspects of the Guardianship laws.

One of the main requirements for the appointment of a Guardian is that the Court must find that a person is "incapacitated" (MHL Section 81.02). However, the statute also provides that the Court may appoint a Guardian where a person "agrees to the appointment". The vast majority of Guardianship cases typically involve a situation where a person is found to be incapacitated rather than just agreeing to such appointment. In fact, there appears to be sort of an inconsistency between having to declare someone to lack capacity while at the same time allowing them to consent or agree to have a Guardian.

Most recently, Justice H. Patrick Leis, III (Supreme Court, Suffolk County) confronted this issue in Matter of Buffalino which was decided on March 6, 2013 and reported in the New York Law Journal on March 15, 2013. In Buffalino, a person identified as "Mr. D.", who had been suffering with brain cancer, consented to the appointment of a Guardian. At that time, the Court found that Mr. D had the capacity to agree to the appointment. Thereafter, Mental Hygiene Legal Service, on behalf of Mr. D., sought to discharge the Guardian and the Guardian sought to expand his powers and keep the Guardianship in place.

The Court recognized that Article 81 did not clearly define the test to be used to decide whether someone has the capacity to agree to have a Guardian appointed. The Court clearly recognized that determining capacity to consent is not the same as the full review required by a Court hearing to show incapacity and that a finding of capacity to consent does not automatically result in a determination of incapacity.

After reviewing all of the evidence presented, the Court in Buffalino decided that the current Guardian could not demonstrate that Mr. D. required a Guardian and, therefore, discharged the Guardian.

The Buffalino case shows the problems and limitations that may be encountered when a Guardianship is based upon the consent of the person who is disabled. There appears to be an absence of certainty and the long-term ability of the Guardian to act on behalf of the ward. Due to these limitations and the inherent difficulty of determining whether an alleged incapacitated person has at least enough capacity to consent, there are generally few cases where the Guardianship is allowed based upon consent.

Unfortunately, the necessity for a Guardian where a person lacks capacity pervades both the rich and less fortunate. Recent events have been reported concerning Guardianships for film stars Mickey Rooney and Zsa Zsa Gabor. Bill Hetherman reported on March 4, 2013 in the Daily News.com that a probate court judge allowed Mickey Rooney's Conservator to sell his million dollar home. In an article reported in mydesert.com on February 24, 2013, it was reported that a Court extended the Conservatorship over Zsa Zsa Gabor.

New York Guardianships End Upon the Death of the Incapacitated Person

Wed, 06 Mar 2013 17:17:17 -0500

New York Guardianship Attorneys are familiar with Article 81 of the Mental Hygiene Law ("MHL") which provides the statutory provisions governing Guardianships in New York. When a person is determined to be incapacitated and a Guardian is appointed for property management or personal needs, the Court will issue an Order and Judgment specifying the Guardian's duties and powers. Thereafter, the County Clerk will issue a Commission which is the formal certification of the Guardian's appointment.

A Guardianship is generally ended upon the death of the incapacitated person. The Court Order and Judgment usually sets forth the procedures that are to be followed when the incapacitated person dies. These requirements typically re-state portions of the MHL law. For example, MHL 81.44 entitled "Proceedings upon the death of an incapacitated person", contains a number of requirements including that within twenty (20) days after the incapacitated person dies a Guardian must send a statement of death to the Court examiner and the estate personal representative. Also, within 150 days of death the Guardian must serve a statement of assets and deliver all guardianship property to the estate personal representative.

In addition to the requirements of MHL 81.44 other sections of the law also relate to post-death procedures. MHL 81.21(a)(14) allows a Guardian to pay funeral expenses for the incapacitated person and MHL 81.21 (a)(20) gives the power to "defend or maintain any judicial action or proceeding to a conclusion until an executor or administrator is appointed."

As stated in MHL 81.44, the Guardian is required to prepare and file a final report or accounting. As can be seen, accepting an appointment as Guardian involves a great deal of responsibility. Both before and after the death of the incapacitated person, the Guardian must maintain detailed reports to be filed with the Court regarding the person's assets, income, expenses and general welfare. When an incapacitated person dies, all of this information transfers over to the estate representative who must review the Guardian's transactions and determine whether to provide final approval or acceptance of the Guardian's conduct. If the estate representative, such as an Executor or Administrator, feels that the Guardian did not act properly, objections can be filed to the Guardianship Accounting and the Court will determine whether any corrections or other remedy is required.

Guardianship and estate proceedings often interconnect especially since many Article 81 Guardianship matters concern older individuals who have become disabled due to physical illness or other conditions such as dementia. As a Guardianship and Estate Lawyer I have represented individuals involved in all of these types of proceedings. Sometimes my clients have been involved in Guardianship proceedings and then have requested that I assist with representation in probate or administration matters after the incapacitated person has died.