New York Probate, Estate and Trust Administration
New York Estate Planning
There are many legal strategies involved in estate planning, including wills, revocable living trusts, irrevocable trusts, durable powers of attorney, and health care documents. New clients often say that they do not have an estate plan. Most people are surprised to learn that they actually do have a plan. In the absence of legal planning otherwise, their estate will be distributed after death according to New York’s laws of intestacy. Of course, this may not be the plan they would have chosen. A properly drafted estate plan will replace the terms of the State’s estate plan with your own. Start the process and create your estate plan alongside an estate planning lawyer.
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Your Last Will and Testament
Your last will and testament is just one part of a comprehensive estate plan. If a person dies without a Will they are said to have died “intestate” and state laws will determine how and to whom the person’s assets will be distributed. Some things you should know about wills:
- A will has no legal authority until after death. So, a will does not help manage a person’s affairs when they are incapacitated, whether by illness or injury.
- A will does not help an estate avoid probate. A will is the legal document submitted to the probate court, so it is basically an “admission ticket” to probate.
- A will is a good place to nominate the guardians (or back-up parents) of your minor children if they are orphaned. All parents of minor children should document their choice of guardians. If you leave this to chance, you could be setting up a family battle royal, and your children could end up with the wrong guardians.
Trusts: Revocable Living Trusts, Irrevocable Trusts, Testamentary Trusts, Special Needs Trusts, etc.
Trusts come in many “flavors,” they can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. At the most basic level, a trust is a legal entity with at least three parties involved: the trust-maker, the trustee (trust manager), and the trust beneficiary. Oftentimes, all three parties are represented by one person or a married couple. In the case of a revocable living trust, for example, a person may create a trust (the trust-maker) and name themselves the current trustees (trust managers) who manage the trust assets for their own benefit (trust beneficiary). Depending on the situation, there may be many advantages to establishing a trust, including avoiding probate court. In most cases, assets owned in a revocable living trust will pass to the trust beneficiaries (or heirs) immediately upon the death of the trust-maker(s) with no probate required. Certain trusts also may result in tax advantages both for the trust-maker and the beneficiary. Or they may be used to protect property from creditors, or simply to provide for someone else to manage and invest property for the trust-maker(s) and the named beneficiaries. If well drafted, another advantage of trusts is their continuing effectiveness even if the trust-maker dies or becomes incapacitated. Reach out to our estate planning lawyers to find out if you and your family could benefit from establishing a trust.
Powers of Attorney
A power of attorney is a legal document giving another person (the attorney-in-fact) the legal right (powers) to do certain things for you. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. All powers of attorney terminate upon the death of the maker, and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). When the intent is to designate a back-up decision-maker in the event of incapacity, then a durable power of attorney should be used. Durable Powers of Attorney should be frequently updated because banks and other financial institutions may hesitate to honor a power of attorney that is more than a year old.
Health Care Documents (or Advance Directives)
An advance directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. Anyone over the age of 18 may execute an advance directive, and this document is legally binding in New York. Your advance directive can specify who will make and communicate decisions for you, and it can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery. A document that goes hand-in-hand with your advance directive is an authorization to your medical providers to allow specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision maker.
How Does Probate Work in New York?
There can be terrific grief and pain at the loss of a loved one. Beyond grief and pain, when you add external stresses to the equation you can have a disaster on your hands in very short order. Part of the responsibilities or duties of an executor or administrator of an estate can be to reduce the level of stress during the New York probate process. The fundamental duties of a personal representative (also known as an “executor,” if male, or an “executrix,” if female) of an estate are the same as those of a trustee–protecting the assets and interests of the beneficiaries. One way to protect those assets and interests and, at the same time, help the probate process go smoothly, is to have all of your ducks in a row and prepare for court as best you can. Read on for some essential reminders about the New York probate process and how representatives can assist with the process.
What should I know about the New York probate process?
A personal representative is required to prepare and file an inventory and a list of claims after the representative is approved by the court. The timeframe for this important chore is set by statute. This inventory should detail all of the assets subject to probate (i.e., that did not pass outside of probate by operation of law or otherwise). The property must be valued and even appraised as necessary. The claims include debts due and owing to the estate (not debts the estate owes to another party). The inventory provides both potential beneficiaries and creditors of the estate an idea of the estate’s assets and claims. [Beneficiaries want to know what they might get and creditors want to know if there is enough money to get paid.] If the inventory is filed late, the representative could be fined and removed, which would slow down the process (and raise tempers).
One thing to realize if you are a beneficiary is that the will may be “read” a few days after the funeral, but the gifts and bequests are not given out at that time. Yes, you may be entitled to the assets, but the inheritance is subject to the estate’s administration. The representative must settle the decedent’s debts and claims before he or she can make any distribution of the assets. So, beneficiaries, do not go to Grandma’s house with a moving truck and start taking whatever you want. Most likely, the representative is doing his or her job and making sure everything stays where it is until probate is closed.
As noted above, the representative must also keep the administration process moving along by settling all of the decedent’s debts. He or she must give proper notices to creditors, to include making publication in the appropriate newspaper and sending written notice to known secured creditors by certified mail. Also, some representatives are under the mistaken impression that all debts must be paid. He or she begins paying the decedent’s bills immediately, which is not necessarily good. Some states provide “permissive notice” to unsecured creditors and this may avoid paying some unsecured claims.
The representative must keep the beneficiaries in the loop, to include providing each with notice via certified mail that the will has been admitted to probate and a copy of the will. In addition, the representative must inform the beneficiaries regarding any information that might affect their rights. For instance, beneficiaries have the right to ask for a formal accounting by the independent executor.
The representative is responsible for the care and maintenance of estate property, treating it with even greater care than his or her own property. The representative is able to sell any property that is perishable or would deteriorate in value during the New York probate process.
As you can see, being a representative is a big, big job. Consequently, he or she can be removed if proven to have been guilty of any gross misconduct or mismanagement in the role of representative. The representative may be subject to a suit for breach of fiduciary duty. Along the way, there are taxes to be paid and returns to be filed, along with many other details.
It’s okay to ask for help.
So you see, there is more than a little pressure on the personal representative. As a result, it is essential that the representative work in concert with Glenn Busch, an experienced probate attorney to guide the representative or beneficiaries during this process … and avoid all of the hidden landmines.