Articles Posted in Estate Administration

artworkGiven that the 2015 tax filing deadline is imminent, taxes and the potential reduction of tax liability are on the minds of many of our clients.  Some of our clients are fortunate enough to own collections of valuable personal property, such as artwork, cars and the like.  Our estate attorneys are in the position of advising clients how to dispose of such personal property and how to reduce potential tax liability.

For purposes of this post, let us assume that the valuable collection contains artwork.  It is prudent for the owner of such a collection to make a detailed catalog of the individual components of the collection.  That way, it may be easier to keep track of the possessions.  Gift and estate taxes could be due to the extent that an event of a public nature occurs, such as a sale or auction, or museum loan of the artwork.  If the owner of the artwork merely decides to give a work of art to his daughter, who will privately display it in her home, then such an act may be unlikely to trigger the interaction of the tax authorities.

If the artwork is given to an institution during one’s lifetime, then the value of such item can be deducted from the donor’s taxes.  Should the artwork be given to an individual and be valued at less than $14,000, then the annual gift tax exclusion will apply to make this event not taxable.  Once a person passes away, estate taxes may be due, depending on the value of the estate.

fraudOccasionally, our clients inquire as to whether a real estate transaction could  be considered a fraudulent conveyance.  This situation can occur when an individual or entity transfers property due to a judgment or pending judgment, in an attempt to evade creditors.  In New York, a judgment is a lien on real property for a period of ten years.  After ten years, the creditor can move to have the lien extended for an additional ten years.  Therefore, those who own real estate may have an incentive to transfer such property to prevent a lien from being placed on it, possibly for a twenty-year period.

New York Debtor and Creditor Law, Article 10, is the state law governing fraudulent transfers.  It states that, first, when any defendant transfers property in an attempt to evade a judgment creditor, that transfer is considered fraudulent and may be rescinded in a court action.  An important consideration in this evaluation is whether the transfer is made for consideration, that is, whether the person transferring the property received value in exchange for the transfer.

Let’s give a hypothetical situation to help clarify the law.  A husband and wife own a house jointly.  The husband alone is sued individually for a business debt, and a judgment is obtained against him.  Before the judgment is entered by the Court, the husband transfers his one-half interest in his house to his wife, so that the house is solely in his wife’s name.  The husband receives no compensation for this transfer.

promiseFrom time to time our firm is asked if a promise to make a Will leaving one’s inheritance to a particular person is enforceable.  Such promises occur in the following situations.  A relative spends a lot of time with another, perhaps even doing substantial favors for the person, who repeatedly says “I won’t forget about you in my Will.”  A person may have intended to revise his Will to include someone, told that person of such intent, but never got around to making the revision.  Such a suggestion may also be part of a resolution of a marital dispute wherein the spouse agrees to provide for a child in his Will.  Our basic answer is that such promises are not enforceable in New York.

Even if a particular disposition is made in a Will favoring a particular person, such a provision could be removed upon the execution of a Codicil (amendment to a Will) or in an entirely new Will.  Since Wills are organic documents that can be changed as the Testator (the legal term for the person who makes a Will) desires, obtaining assets through a lifetime gift or having a dispute settled by the payment of funds during lifetime is the only way to make sure that such assets are left as desired by the recipient.  The testator can leave his assets to any person or charity that he wishes.

Our readers may have heard of the term intestacy, which is the legal term for passing away without a Will.  In such a situation, New York State’s statute  determines who will inherit a person’s assets, which is dependent upon such person’s relationship to the deceased.  If the closest surviving person to the deceased is his daughter, then she would inherit the assets.  Should the deceased have a surviving spouse and children, then spouse receives $50,000.00 plus half of the assets and the children divide the other half of the assets.

valentinesAre you planning to get engaged this Valentine’s Day?  While legal concerns may not be particularly romantic, our firm offers the following legal advice pertaining to issues that arise upon marriage in this post.  Legal issues arise whether it is a first or second marriage and may become more complicated if there are children from a prior marriage.

Estate planning matters should be considered.  If you do not have Wills, it is prudent to consult an estate attorney  to develop the appropriate estate planning documents.  Wills, trusts, and health care directive documents may be drafted on your behalf.    Even if you already have estate documents in place, the beneficiaries and fiduciaries could be different now that you’re engaged.  The persons that you select to make health care decisions for you are also likely to change.

If you have children from a prior marriage, provisions should be included in your Will to include a testamentary trust .  Your new spouse would be afforded the opportunity to use some of the assets during her life, with the balance left to your children from your prior marriage.  Without such a trust, your spouse could remarry and leave monies that you intended for your children to someone else.  Also, consider how your estate plan should address personal property.   If there are family heirlooms that you would want your children to inherit, rather than your spouse, you should have your attorney specify the particular items in your Will.

disabledSome of our trust and estate clients  have adult children who are disabled.  The child may have been born with a disability, such as cerebral palsy, making the parents accustomed to allowing for the disability while knowing that such disability will never go away.  In the alternative, the disability may have occurred later in the child’s life, such as  drug or alcohol addiction or mental illness.  The parents of these children need to acknowledge the limited capabilities of their children while also providing for the possibility that the child could be self-sufficient if the underlying condition is abated.  In either case, parents need to provide for the possibility that the child could outlive both parents or the parents could become ill and unable to care for the child.  This post will address the legal issues to be considered for disabled children.

As discussed in our prior post pertaining to providing for pets in one’s estate plan , parents should write a detailed letter to caretakers and trustees specifying care for the child, such as favorite foods and activities, details of relationships with relatives and friends and medical care history and details.  Practical matters should be considered such as selecting housing, like a licensed group home or assisted living facility, for the disabled child.  This should be done prior to the decline of the parents.

It is crucial that potential access to government benefits be preserved for a disabled child. These government benefits may pay for health care and community services.  In order to preserve access to government benefits, refraining from titling assets in the child’s name outright is crucial.  As such, there should not be a bequest in the parent’s Will in the name of the child.  Instead, the Will should leave assets to the child by means of a Special Needs Trust .  The Special Needs trust needs to specifically state that it is not to be applied in such a fashion that access to government benefits would be denied.  As such, the government benefits will be used to pay for the child’s basic needs and the Special Needs Trust will be used to pay for the extras that would assist the child.

petwillSome of our trust and estate clients have asked us how to best protect their beloved pet in the event of their disability or demise.  Pets can be just as important as children when planning one’s estate.  These family members can be adequately provided for in a legal fashion.  Traditionally, pets have been considered to be personal property, being no different than a car, furniture and the like.  Our post addresses how personal property is typically distributed after someone dies.  Some pet owners consult us to have their pets treated in a more personal fashion in their legal documents.

Practical matters should be considered such as selecting a potential caretaker and confirming with such person that they are willing to serve.  The caretaker should be informed about the pet’s habits and preferences, such as how often and where the dog likes to be walked and pet food preferred.  Contact information for the veterinarian, medical conditions and medications taken should be indicated.  Funeral arrangements should also be made known, such as whether a cemetery plot has been purchased and whether funeral expenses have been prepaid.  These practical matters are particularly important because the pet is unable to communicate, as a child may.

From a legal perspective, persons interested in legally protecting their pets should consult the attorney who is drafting their overall estate plan.  Financial consideration to the caretaker needs to be arranged, while at the same time requiring the caretaker to perform certain duties on behalf of the pet in order to be compensated.  A pet trust is a legally appropriate means to accomplish this goal.  Such a document (or provision within a Will) would provide that a certain sum of money is to be set aside for the care of the pet by a particular person, which sum is to be released in particular intervals provided that the caretaker is assuming the duties expected or upon delivery of proof of payment of expenses on behalf of the pet.

dying.jpgThe New York Times recently published an article concerning the scenario that many New Yorkers fear. Having lost personal and professional connections to relatives and friends, some people unfortunately die alone. Since these people are not missed, days or weeks could go by before odors emanate from their home and uncollected mail piles up, resulting in a neighbor’s notification to the police about a suspected death. The police discover a corpse, which starts the legal matters to be addressed in this post.

These lonely people may very likely have mental issues such as compulsive hoarding. Perhaps the embarrassment of the condition of their home led these people to stop inviting people over, leading to additional isolation. The items will need to be removed in order to surrender an apartment to a landlord or to sell the home. Care is to be taken with respect to valuable items, being mindful of the need to deliver such items to the proper beneficiary, if such person is located.

It remains to be determined whether the deceased person had a Will, which may have been left in the personal possessions in the home. If there was a Will, the proposed fiduciaries need to be located so that a Probate Proceeding may be commenced in Surrogate’s Court. However, if a Will cannot be located, an estate Administration proceeding is to be conducted. We have indicated in a prior post tasks to be conducted by an estate administrator. Our readers may also wish to consult one of our prior posts concerning the mechanics of an Administration proceeding.

stock.jpgIt is not unusual for the estate of a deceased person to hold stock as an asset. Stock can take the form of shares held in a publically traded company, such as Target, or shares in a cooperative corporation. Clients often ask us how such shares can be transferred after a person passes away. This post will answer the question.

First, it needs to be determined whether the person had a Will. If there was a Will, there may have been a specific bequest of the stock. This takes the form as follows: “I give all shares that I may hold at the time of my death in Target to my daughter.” If the stock is not addressed specifically, then the residuary clause of the Will manages its disposition. Anything not specifically addressed is left to the party receiving the residuary.

If the person did not have a Will, then the rules of intestacy would dictate who would receive the stock. In New York, Section 4-1.1 of the Estates Trust and Powers Law governs the situation. For instance, if the closest surviving person to the deceased is a child, then the child would inherit the stock under New York law.

cartrip.jpgAfter another harsh winter in New York, many of us are looking forward to getting away this Memorial Day weekend. Those of us who are driving may have acquired the vehicle from an estate. This post will address estate issues as they pertain to cars and other vehicles.

As many of us know, cars in New York involve title, registration, and insurance. They may also involve a lease or a loan. We have written another post concerning how to manage debts of the deceased. The first step is that the Surrogate’s Court of the County in which the deceased resided needs to appoint an executor (if there was a will) or an administrator (if there was not a will). The executor or administrator needs to act on behalf of the estate to manage all relevant aspects of this matter.

Every car must be insured. The executor or administrator should employ his best efforts to maintain the insurance policy on the vehicle. Certainly, the car should not be driven if insurance has lapsed, because this could result in a ticket from the police if one happens to be stopped for another violation.

springmarket.jpgIn the New York metropolitan area, the residential real estate market is often seasonal. During the holidays between Thanksgiving and New Years Day, most sellers do not list their properties for sale or may remove their home from active listing status. During the winter months, most buyers are reluctant to be exposed to the cold weather and the snow to view properties. Fortunately, all of this changes with the approach of spring. The inventory of homes increases as more properties are listed and additional purchasers are looking to enter transactions. Both parties to transactions, who will experience increased competition as inventory increases, should take the steps described in this post so as not to miss the spring season.

The school calendar is also strongly influential on real estate transactions in the New York suburbs. The optimal time to close for both parties is between the end of June and the beginning of September, so that the children of the selling family can complete their current school year and the children of the purchasing family can start the next school year in a timely fashion. When representing purchasers, our attorneys confirm that the property is in the school district expected by the purchasers. If the closing may occur close to, but not in advance of the start of school, we will contact the school district to determine whether the children of the purchasing family can start school prior to the closing. We will provide any documentation requested by the school district to assist in enrollment. Our lawyers will creatively fashion a solution so that the closing can occur as needed to enroll the children in school.

The following steps should be undertaken by sellers considering bringing their property to market. The home should be physically ready, so that is shows more favorably, bringing the best price to the seller. For instance, decluttering should be done to make the rooms and closets seem larger and to make it easier to move when the time comes. Since painters get busy in the spring, appointments should be made to freshen up the look of the home. Did the winter cause any property damage such as leaks, broken gutters and the like? If so, repairs should be made before bringing the property to market.