Estate Planning & Probate Law

Writing a Will offers assurance that the wishes of the deceased with respect to the disposition of assets will be enacted. Even considering the intention to leave assets to the children of the deceased, a Will can guarantee who will control those assets prior to distribution as well as other important matters relating to the estate according to estate law. This applies to all states, including New York.

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According to New York estate law, only a person with an interest in the estate that would be jeopardized by the admission of the Will to probate can object. In cases where the deceased did not write a Will then only those relations alive at the time of death may object to a will. The only other person that may object to a written Will is a beneficiary in a prior Will.

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New York estate law imposes upon resident spouses many responsibilities and duties during life. At death, some of these duties cannot be avoided. Thus, one can not disinherit a spouse and a spouse is entitled to a certain percentage of the decedent’s estate despite any intention to disinherit stated in a written Will. New York estate law defines this is as “Right of Election”. A spouse’s elective share equals the greater of either $50,000, or one-third of the net estate. Generally, the statute cannot be avoided by the decedent’s gifting away assets during their life. According to this section of the law, one must “elect” within six months from the date of issuance of letters testamentary or of administration but in no event later than two years (July 4, 2007) after the date of the spouse’s death.

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A photocopy of a Last Will and Testament may be offered for probate. The Surrogate’s Court Procedure Act (Section 1408) requires that the petitioner meet the following three burdens in order to have a photocopy of the Will admitted to probate: One must establish that the decedent did not revoke the Last Will and Testament being offered to the Court, that the Last Will and Testament was properly executed in accordance with New York estate law, and that at least two witnesses can demonstrate that the photocopy is complete.

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Every adult should draft a health care proxy designating an agent to act for them and to make medical decisions for them if they are unable to make such decisions for themselves. Without a health care proxy, medical personnel in New York are required to maintain life support, even if this is not your desire.

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There are several things that may be done to secure a home within an estate. The house may be deeded to the children or other heirs and the granter may retain a life estate. This action covers several areas. First it will protect the house from a potential Medicaid lien, provided the government’s look back period elapses. Second, by retaining the life estate, when the grantor passes, the children or other heirs will be able to take advantage of capital gains savings. They will receive a "stepped up basis", the value of the house at death. Another option may be to create a "Medicaid Trust". Prior to either, it is always prudent to contact a New York elder law attorney with experience in estate law for the best advice for any particular situation.

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It is always helpful to have a Will written as soon as possible. The risk of undue hardship on family and friends is significantly greater in the absence of a written Will. Estate law declares that without an Executor named in the Will, no one has authority to gather whatever assets the deceased may have and pay outstanding debts. Family and friends will have to pay the funeral bills but without a written Will they may have trouble being reimbursed. Without a Will, the New York Surrogate’s Court will appoint an administrator (who may or may not be a family member) and may appoint an estate lawyer for the administration, both of whom will be paid out of the decedent’s estate.

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It is always a wise decision to write a Will. In the above case, an Executor would need to be named. Estate law grants an Executor the authority to use the estate’s assets and pay outstanding debts. An Executor will also arrange for and sign the decedent’s income tax returns. In some cases, assets will not be transferred without an estate tax waiver. For 2005, the exemption amount is $1.5 million, and the top tax rate is 48%. By 2009, the exemption amount will be $3.5 million, and the top tax rate will be 45%. It is imperative in such cases for every asset to be titled in joint name, for in case of death without a Will, New York estate law dictates an administrator will have to be appointed to transfer those assets not titled in joint name. Furthermore, if both joint asset holders die, the lack of a written Will would confer the costs of administering the estate to the next closest relations.

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It is always prudent to write a Will as soon as possible. The possibility exists of each spouse’s death occurring within a short time of each other. In the event of one spouse electing not to have a Will, New York estate laws will in effect determine the division of assets. There remains the chance that a written will’s heirs do not include the spouse, who under estate law may claim one-third of their spouse’s assets. This assumes the absence of a pre-nuptial agreement. In addition, it is critical that each Will names a guardian for a child in the event both parents die. When there is a minor child and no guardian is named, the court will make the final determination, but a temporary guardian will be appointed in the interim and estate laws dictate the court may appoint a lawyer for the guardian and a court evaluator. Each of these expenses will be paid out of the assets of the estate.

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A will is a document by which a person arranges for the distribution of his/her property upon death. A typical will might provide that a person's property will pass to his/her spouse, and upon the spouse's death, to his/her children. In addition, a person can make gifts to charity in a will, and can provide for the distribution of specific assets to specific people (i.e., "I give, devise and bequeath my Picasso painting to my good friend, Tom Jones . . . ).

People have wills because they want to make sure their property is distributed according to their wishes. And remember, sometimes the main purpose of a will is to not distribute property; that is to day, some people write wills to prevent their property from going to someone who would otherwise receive it (the best example of this is a parent who "disinherits" his or her children).

There are two basic types of wills: (1) A typed will and (2) a handwritten (or holographic) will.

For a typewritten will to be valid, it must be properly executed (signed) and that means it must be witnessed (most states require two independent witnesses, who must both be present when the will is signed. The execution ceremony is really quite simple. The person making the will (called the testator) declares in the presence of the witnesses that "This is my last will and testament" (or words to that effect) and requests that the witnesses serve as official witnesses of his signature. There is usually an attestation clause for the witnesses to sign also; it states that they were present, were requested to be witnesses, and that they know the testator to be the person who actually signed the will. The witnesses sign under penalty of perjury. A will does not need to be notarized.

A holographic will is a different story. A holographic (or handwritten) will must be all in the testator's own handwriting, and it must be dated. It does not have to be witnessed or notarized.

One of the obvious problems with a holographic will is proving that the testator actually prepared and signed it. One of the benefits of a typewritten will is that there are built in witnesses and the procedure will usually stand up to challenge. Holographs often invite challenges, especially if the deceased person has provided for an unusual disposition of his property.

No. If you die without a will, it is called dying "intestate." There are statutes in most states that provide for intestate succession to a person's property. A typical intestacy statute might provide, for example, that if there is no will, half a person's property passes to his spouse, and the other half to his children. Many people write wills because they want to do a distribution different from that set out in the statutes. A will can accomplish that.

You property will pass to those persons listed in the statutes on intestate succession.

Wills that are offered into probate can, and sometimes are, challenged by persons who dispute the validity of the disposition of property. Bear in mind that merely disagreeing with the deceased is no grounds to challenge a will. Challenges usually stem from two sources. One of them is a relative who claims there is another will that supercedes the one that is offered for probate. The issue will be which will is actually the "last will and testament" of the decedent. There may be an issue as to whether a given will was properly executed, or whether it was forged, or whether the decedent was not of sound mind when he/she signed it.

A second source of challenges is the potential heir who claims that the decedent could not possibly have made the claimed disposition. The classic example is the son or daughter who is "cut out" and who challenges the will claiming that his/her parent would never have done that unless someone had exerted undue influence, or was of unsound mind. These disputes can and do happen and they can involve substantial litigation. The primary issue are usually: was the will properly executed (signed, witnesses, etc.); was the decedent of sound mind and not acting under any undue influence when he/she signed the will; and is the will in question truly the "last" will.

Death taxes (also commonly called Estate Taxes) are federal taxes, imposed by the U.S. Government (through the Internal Revenue Service) on a person's estate. They are usually paid by the estate prior to distribution of property to the heirs.

Yes, and this is the major focus of much of the estate planning that is done today. Under the current law, the first $650,000 of a person's estate passes to heirs tax free. Death (estate) taxes are based on the amount of the estate over $650,000. Bear in mind that the $650,000 exemption will increase gradually each year until it reaches $1,000,000 in 2006.

People who own property that exceeds the exemption often do various things to avoid the imposition of taxes on their estate. The goal usually is to pass as much of the property, tax free, to a person's heirs. One method is to begin a "gift giving" program, whereby an elderly person who has accumulated wealth gives a little of it away each year to various relatives (usually children and grandchildren) to reduce the size of the estate.

A simple example illustrates how this can work. Assume a person with four grown children has $750,000 in property and desires to reduce the size of his estate to $650,000 to eliminate any Death Taxes. Under the law, he can give each child $10,000 each year tax free. (Any gifts to a person over $10,000 in one year may be subject to a Gift Tax). If the gifts are made for two years, the estate will have been reduced by $80,000. In the third year, he can give each child $5,000 and reduce the estate by another $20,000. The net result will be to reduce the estate by $100,000.

One nice benefit from gift giving programs is that the elderly parents (and grandparents) actually get to see their family enjoy the gifts they are making. Disposing of property by will means that the "giver" will be dead and gone by the time the gift is enjoyed by the heir(s).

There is a word of caution about gift giving programs, however. The person making the gifts has to make sure he/she keeps enough money to live on and otherwise provide for the necessities of life, including the various expenses of elder care, which can be substantial.

Other tax planning devices are generation skipping trusts and marital deduction trusts. These can be a bit complicated, but are widely used. You will have to consult a lawyer (and an accountant) to see what is right for you.

Probate is the legal procedure by which a person's will is proven to be genuine, and thereafter administered by the courts. The first step is to file the deceased person's will with the court (this is required in most states, and must be done shortly after a person dies). Once the will is filed, the next step is to prove its authenticity. This is usually done by supporting declarations, signed by the persons who witnessed the will's execution.

After a will is proved to be genuine, the administration process gets underway. This usually involves filing an inventory with the court; filing estate tax returns with the IRS; arranging to pay any applicable taxes; getting appropriate court orders if property must be sold; and finally, getting an order of court distributing the estate to the designated heirs. It can be a slow and costly process, and that has caused may people to avoid probate if at all possible.

One recent development in many states is the enactment of statutes that provide for accelerated procedures for smaller estates. This has eased the burden of probate somewhat, but it still exists.

One way is to have a small estate to submit to the probate court. While that might sound strange, especially if a person has substantial assets, it not only can be done, it often is done. The key method here is the use of a living trust prior to death. In this type of arrangement, a person transfers all of his/her property to a living trust; the property owner designates him/herself as both the trustee and lifetime beneficiary of the trust; upon death, the beneficiary's children (for example) may succeed him as beneficiaries of the trust. The point is that the property has been transferred prior to death. Upon death, the property is in the name of the trust. Even if there is a will (there usually is), it will dispose of only a small amount of property, often "pouring over" any remaining property to the trust.

The point here is that the trust can be administered without a court order and at a much lower cost. There is no saving on death taxes, but the probate fees and related expenses are minimized.

One word of caution: for the trust arrangement to work, property must actually be transferred into it; separate books must be kept; separate bank accounts maintained; separate tax returns filed. Although it sounds complicated, it need not be. Check with a good estate planning lawyer. Trusts are set up all the time and some good counseling will involve some expense at the outset, but may result in great savings in the long run.

Often, businesses are placed in trust so they can be run without the intervention of a probate court following the owner's death. Another way to transfer a business is to incorporate it and pass the shares to the heirs.

You should always pay close attention to the value of the family residence, because this is a hidden form of wealth that can be overlooked, especially in an inflationary real estate market. Many is the family that did not think it had an estate tax problem, only to find that the residence had increased greatly in value, putting the overall value of the estate over the exemption limit.

One great tax benefit at death is that a surviving heir may be eligible to receive a stepped up basis for the residence (or for other types of property, too). What this means is that the basis (cost) of a residence will vastly increase as the residence is passed from one generation to another. Example: Say a couple purchased a home for $40,000 in 1965. The purchase price (cost) is the basis of the house. They die in 1999 and the house is worth $800,000. If they sold it, they would have a gain of $760,000. But the son or daughter who inherits the house gets a stepped up basis - that means that the Fair Market Value upon death becomes the heir's basis (cost) for the house. In practical terms, the heirs in our example now own a house that has an $800,000 basis. IF they sell it for that amount during probate, they have no taxable gain (although they may be paying estate taxes because the amount of the estate is over the exempt amount).

Pre-termitted heirs are persons who are "cut out" of an estate. The classic example is the child who is "disinherited." Often a pre-termitted heir challenges the will that disinherits him. The issue to be decided is whether the decedent really meant to cut the person out of the estate. Whatever emotions may be, children do not have a legal right to inherit their parents property if the parents wish to dispose of it otherwise. The key issue is: what did the decedent intend? If it was to cut out the children (or other heirs) and the will is clear, and is properly executed, they will in fact be cut out.

Yes. Most states have law that provide for adopted children to inherit property the same as natural children.

It is an excellent idea, especially if there is an outstanding will that passes property to the estranged spouse. In fact, there are many points in time when a person should reevaluate an estate plan. It is a good idea to do so upon marriage; divorce; separation; the birth of a child; the death of a spouse or child; the marriage of a child. Any significant change in family circumstances should trigger at least a review of an existing estate plan to see if a change is needed or desired.

As noted above, a trust is a legal arrangement where the owner of property (the trustor) appoints a person (a trustee) to manage the property for the benefit of someone (the beneficiary). In many situations, the trustor, trustee and beneficiary are one and the same person. This is how people create living (or inter vivos) trusts. They place all their assets in trust, naming themselves as both trustee and beneficiary. In this way, they keep their property out of probate, and can pass it without court order upon their death. It is an excellent way to reduce the expenses of estate administration and can be effective in transferring a family business or property that requires ongoing management. Talk to your lawyer to see if this arrangement is right for you.

Many people want to write wills that provide for very specific gifts of personal property. Example: "I give devise and bequeath my golf clubs to Bob Jones; my leather jacket to my friend Phil Smith; my fishing rod to Sam Clemmons" and so on. This can be quite cumbersome, because often times people either change their mind; acquire new property that they wish to add to the list; or else remember items that they forgot to put on the list in the first place. There is an easy solution to this dilemma. Instead of burdening a will or trust document with the designation, simply state that you have communicated your wishes to the person in charge of your estate (your executor) and that it is your desire for your executor to follow your wishes. Then, write a letter to the executor explaining who gets what. If you change your mind, revise the letter (this will be no problem if the letter is stored on your personal computer). The point here is that it is far easier (and certainly less expensive) for you to rewrite the letter than it is to have your attorney continually rewriting your will.

This is a personal decision that each person must make for him/herself. Charitable giving is a wonderful thing to do and it benefits a great many people. It can save taxes, too. Consult with your lawyer or accountant to see if charitable giving should have a place in your estate plan.

Unfortunately, many elderly and/or disabled persons are unable to properly care for themselves, and cannot properly manage their financial affairs. When that situation arises, there is a legal procedure, called a conservatorship, that can be used to deal with the situation. Under a conservatorship, a person, called the conservator, is appointed by the court and is subject to court supervision in managing the affairs of the disabled person (who is referred to as the conservatee). While this procedure is effective, it can be expensive, as it requires court orders for many actions, and the conservator must provided detailed accountings. Families may be left with no choice if a person is physically disabled, but as explained below, there are some alternatives.

A power of attorney is a very useful legal device that is far more convenient and much cheaper than a conservatorship. A power of attorney is a legal document signed by a person who appoints another (the attorney in fact) to manage certain affairs. Powers of attorney come in a variety of shapes and sizes: there is a durable power of attorney for financial affairs, which can be a comprehensive, long standing arrangement whereby a second person is authorized to handle a person's affairs. Note the use of the term "second person." The individual who grants the Power of Attorney still may manage their own affairs, but under the Power of Attorney, another person is authorized to do so also. This is a very convenient procedure to use for elderly relatives who are encountering trouble managing their affairs. The key is to have the Power of Attorney form executed while the person is still of sound mind and can properly sign the form. Once in place, the Power of Attorney can authorize a relative (or close friend) to manage bank accounts, trade securities, run business, sign key documents . . . all without court order or outside supervision. The key, obviously, is empowering the right person. Make sure it is a trustworthy person, either a close relative (a son or daughter) or a close friend. It is vastly cheaper than a conservatorship.