Articles Posted in Estate Administration

In a prior post , we  discussed the death of the musician Prince and speculated about matters pertaining to his estate.  Since that time, the public has become aware of the tragic circumstances of his death and that he did indeed die without a Will.

In New York, person dying without a Will is deemed “intestate”.  The proceeding held in Surrogate’s Court  is then called an Administration Proceeding.  In such a proceeding, those persons inherit depending upon their proximity in relationship to the deceased.  For instance, if the deceased died without a spouse or children, then his parents would inherit from the deceased.  With the estimated $300,000,000 estate at stake in the Prince case, random people may have an interest in claiming to be “related”.

Recent news reports have indicated that the Judge in the Prince case has limited those who claim to be Prince’s “relatives”.  Even a person serving time in prison made such a claim.  A DNA test was administered to the inmate to eliminate his claim in the estate.  Others were not offered blood testing.  While we can debate which persons should have been more thoroughly considered through DNA and blood testing, the mechanism shows that the Court will look at scientific evidence when necessary to determine whether a claimant is indeed related.

Many of our readers are looking forward to the upcoming Memorial Day holiday weekend.  Most of us are thinking of spending time at a backyard barbeque or taking advantage of a sale at a department store.  Memorial Day also has a more somber connotation, thanking our military for the ultimate sacrifice that they have made for our country.  As attorneys, we wish to bring to your attention particular legal matters with which we can assist should your loved one make such a sacrifice for our country.

We think of our military as young and not wealthy as yet.  Saving estate taxes is not the concern of this population.  However, estate and financial planning is still needed due to the inherent danger in their profession and their age.  For instance, an accident could result in permanent disability or death.  The service member may get married.  These changes could have significant consequences if the proper legal documents are not drafted by a skilled professional.

In the absence of a Will , the service member would be deemed to die intestate and an Administration proceeding would be required to manage the person’s assets and liabilities.  Concerns with the disposition of personal property need to be addressed, preferably in a Will.

Fans of the musician Prince were distressed to learn of his untimely passing last week.  News reports now circulating have noted that Prince died without a Will.  This post will address the implications of dying without a Will.  As this firm is located in New York State, this post will address this issue from the standpoint of the law in New York.

When a person dies without a Will, an Administration proceeding is conducted.  Such a proceeding is undertaken in Surrogate’s Court.  The attorney for the surviving relative files a Petition in the proceeding.  The surviving relative of the closest relationship will apply to be Administrator of the estate.  In Prince’s case, we have heard that he was not survived by a spouse, children, or parents, making his sister the first person to be qualified to be Administrator of the estate.  Both New York and Minnesota provide that half-siblings are ranked in a similar fashion, so that half-siblings may potentially share in the administration duties of the sister who filed the Petition.  When significant sums of money are at stake, a kinship proceeding may also be filed to determine whether other relatives should be given the opportunity to share in the estate.  Once the proper fiduciary is appointed by the Court, particular duties need to be undertaken.

What if Prince’s doves continue to cry after his death?  If he had a Will, his pets could have been provided for in his estate plan.   Absent such provisions, any pets would become the property of the person(s) appointed administrators.  For pet lovers, this disposition could become a major problem if the person receiving the pets has no interest in taking care of beloved animals.  Prince’s Little Red Corvette must also be considered.  In New York, personal property could be specifically identified in a Will as a specific bequest, left in the residuary clause for the person intended to inherit all unspecified property or will be left to the person qualifying as Administrator if there is no Will.

Given 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.

From 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.

Some 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.

Some 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.