Step-up in Basis: Is There Tax on the Sale of Inherited Real Estate?

July 5, 2017

step-up in basisAs an estate planning and probate attorney, I am often involved in the sale of real estate that my clients inherited and have to deal with a very important question: “will my client have to pay capital gains tax on the sale”? As a brief introduction, capital gains tax is the government’s way of taxing people when they sell property for more than they bought it. The IRS, New York City, and New York State will tax the “capital gain” which can amount to more than 35% of the gain.

For example, if John bought an investment property for $100,000 in 2010 and sells it for $350,000 in January 2015 (the fair market value at the time), will have to pay capital gains tax on the $250,000 gain. But what if, instead of selling the investment property, John dies in January 2015, his son Jimmy inherits the property and sells it for $400,000 in 2017 – what is Jimmy’s taxable gain? Is it $300,000 (the difference between what Jon paid and the sales price in 2017) or $50,000 (the difference between the date of death fair market value and the sales price)? In my experience, many people tend to think the answer is $300,000 but the good news for beneficiaries is that inherited property (whether through a will, intestacy, or through many types of trusts) gets a step-up in basis when the decedent dies. In our second scenario, Jimmy would have a taxable gain of only $50,000 when he sells the property.

A more common example, and one I deal with frequently, is where mom dies owning a $1.2 million home which she bought in 1972 for $10,000 (remember when homes in NYC cost that little? Me neither). The son wants to sell the house immediately after mom’s passing. How much capital gains tax would he owe? Likely very little to none. What would mom pay if she sold the house while she were alive? Over $420,000!

The reason for this result is that the tax code (IRC 1014) states that the tax basis of a property passing to a beneficiary is the fair market value at the date of the decedents death (with some exceptions). In addition, expenses related to the sale of the real estate such as transfer taxes, broker’s commissions, and legal fees further increase the tax basis. And since the tax basis is the starting point for determining capital gains tax, it stands to reason that most real estate sales that occur shortly after death will not incur a capital gains tax. As an example, if dad died and left a $250,000 property to son who then sold it a year later for $270,000, the son would have a $20,000 capital gain. However, if the son had to pay a broker $15,000 to market and sell the property and an additional $10,000 in real estate transfer taxes, any gain would be wiped out and no capital gains tax would be due, even though the property sold for more than fair market value at death. If, however, the beneficiaries wait a while to sell the real estate, or the market for the particular property changes quickly, a capital gains tax may be due.

What if, instead of waiting until death, a parent decides to be generous and gift their children their real estate while they are still alive? As my prior article on gifting the home to children illustrates, it is a bad idea for many reasons, not the least of which is that the gift causes the child to take the parent’s tax basis. That means that if mom gifts her home to her son shortly before she dies, instead of leaving it to him in a will or trust, and the son sells the home, he may have to pay over $420,000 in taxes. Who says patience doesn’t pay?

It is important that an experienced estate attorney, working in conjunction with an estate accountant, reviews the exact situation with the client and makes recommendations in order to minimize taxes, including estate tax, income tax, and capital gains tax.

To speak to a New York estate planning attorney for an evaluation of your financial situation, contact us at (347)766-2685.

Preliminary Letters Testamentary in Probate Court

March 23, 2017

If you have been named as the executor of a decedent’s last will, you don’t have authority to sell or distribute their assets until you have been appointed by the Surrogate’s court. That process, called probate, can take many months, especially if someone is contesting the will. The appointment of an executor is formally made in a decree by the court and is evidenced by the issuance of Letters Testamentary. But what happens in the meantime as the decedent’s property sits unmanaged? Who is responsible for paying taxes on the home or maintenance on the co-op? Who will file the decedent’s taxes or winterize the home? This article will discuss Preliminary Letters Testamentary, a fast and efficient option for a named executor to handle the affairs of a decedent even when the probate process drags out.

Which Situations Warrant Preliminary Letters?

Every estate is different and there are a number of situations which may warrant the nominated executor seeking preliminary letters. Generally, preliminary letters are necessary when estate assets need to be managed quickly and a delay is anticipated. Some common fact patterns involving preliminary letters are:

  1. Difficulty in locating the witnesses to the will so they can produce an affidavit or testimony regarding the execution of the will.
  2. A will contest by a disgruntled family member, which may delay probate for months or years.
  3. A delay in locating the heirs of the decedent.
  4. An imminent matter such as a pending foreclosure sale which requires immediate attention even if probate isn’t expected to be delayed.

There are many situations which require quick action on the part of the executor and preliminary letters should be considered in these cases.

What are Preliminary Letters?

Preliminary letters give the person named in the will, known as the nominated executor, substantially all of the rights that a full fledged executor has, with the notable exception of the right to distribute the assets to the beneficiaries. A preliminary executor has authority to:

  1. Collect assets.
  2. Pay estate and income taxes.
  3. Pay debts of the estate.
  4. Sell real property that wasn’t specifically gifted to a beneficiary.

In addition, the court has the right to restrict or expand the rights of a preliminary executor as it deems appropriate.

What is the Process for obtaining Preliminary Letters?

Typically, a request for preliminary letters is made by the nominated executor in the will when he or she files the probate petition, although it can be requested at any time prior to the issuance of permanent letters testamentary. The court, in its discretion, can deny preliminary letters to the petitioner if it sees fit.

While there is an official form for the application for preliminary letters, it is best to verify with the court, as each Surrogate’s Courts may have their requirements for the form. In addition, some courts, including Queens Court require a bond to be posted, while others may not. Preliminary letters are revoked as soon as full letters testamentary are issued.

As with all important legal matters, you should discuss your particular situation with your attorney prior to seeking, or refraining from seeking, preliminary letters.

Roman Aminov, Esq. is a NYC based estate and probate lawyer. Call 347-766-2685 for a free phone consultation.

preliminary letters

New York Estate Accountings: An Overview

February 14, 2017

estate accountingsBeing an executor or administrator of an estate come with many responsibilities. Collecting and insuring the estate’s assets, paying valid debts and expenses, filing income taxes, and list goes on. That’s why most clients look forward to the final step in the estate process with great anticipation. That final step, known as the accounting, is where the executor or administrator (also called the fiduciary) “accounts” to the beneficiaries for their actions and proposes a distribution of the remaining assets as per the will or as per intestacy (if there was no will). The purpose of the accounting is to wrap up the estate and distribute the assets of the estate to the appropriate parties.

Duties of Fiduciary:
The fiduciary must fully and completely disclose all the assets he or she collected, all interest earned, as well as any costs, expenses or losses incurred. The fiduciary must also make sure that he collected and pursued all assets of the estate. Receipts, account statements, transaction logs, cancelled checks, and all other relevant documentation should be kept by the fiduciary or his attorney.

 Rights of Beneficiaries:
The beneficiaries have a right to examine the accounting and ask questions about any transaction until they are satisfied that their proposed distribution is correct and that the fiduciary acted appropriately in collecting the assets and paying the debts. They also have the right to hire their own attorney to oversee the accounting and to make sure their rights are being protected. Generally, only those beneficiaries who are entitled to a percentage or remainder of the estate review the accounting. Any beneficiary who is entitled to a dollar amount or specific assets (like a necklace) is fully satisfied when they get their check or item, and have no need to review all the other transactions.

Informal Accountings:
If all the beneficiaries are satisfied with the accounting of the fiduciary, and assuming none of them are minors or disabled or missing, the beneficiaries can sign a receipt, release, and refunding agreement (RRR). The RRR is an agreement between the parties in which the beneficiaries agree that the fiduciary acted appropriately and that they release the fiduciary from liability once he makes the distributions outlined in the agreement. This is that way most estates are settled since it is much cheaper, faster, and easier than the alternative.

Judicial Accountings:
Judicial accountings, while rare, are initiated in a few main ways:

  1. By a beneficiary if there is a disagreement with the fiduciary which can not be resolved amongst themselves. For example, that the decedent’s home was worth $500,000 but was only sold for $300,000, or that the fiduciary paid improper debts of the decedent which he was not obligated to pay.
  2. By a court order. For example, if there is a minor in an estate, the court may order that there be a mandatory judicial accounting.
  3. If the fiduciary initiates it, typically because they anticipate a disagreement with a beneficiary and want a court ruling on their actions as fiduciary.

Once the fiduciary files his judicial accounting with the Surrogate’s Court, the beneficiaries and possible creditors have a chance to review the accounting and raise objections. If any of them file objections to the accounting, we enter the world of contested accountings and estate litigation. Once all objections are resolved, ruled upon, or settled, the Surrogate issues an order regarding the accounting and the fiduciary’s actions.

Conclusion:
Estate accountings in New York can either be very straightforward or complicated affairs. If you are an executor or administrator of an estate, it is important that you hire the right estate attorney to represent you. When done properly, an accounting releases the fiduciary from liability while making sure the beneficiaries and creditors of the estate get what they are entitled to. Beneficiaries of estates can also benefit from the services of an estate accounting lawyer who can help them review  the proposed accounting and determine whether they are receiving everything they are entitled to.

Roman Aminov, Esq. is an New York estate planning lawyer concentrating in estate planning, elder law, Medicaid planning and probate. For a consultation, contact him at (347)766-2685 or www.AminovLaw.com

 

Contesting a Will in New York: An Overview of Will Contests

November 28, 2016

Will Contests in NYPeople (usually those who have been disinherited) often wonder if they have any rights to contest a last will and testament of a loved one which they believe to be an invalid will. There may be many reasons why they believe the will to be a sham; a forgery, duress, lack of mental capacity, undue influence, lack of proper execution, among others. This article will provide a basic overview of the process of contesting a will, while future ones will go into detail on the elements of specific challenges.

Who Can Contest a Will?
It would be quite awkward if any Joe off the street could contest a stranger’s will. Therefore, the law generally, with some exceptions, only allows the following categories of people to contest a will:

  1. Someone who would have inherited more if there had been no will (also known as a distributee, i.e. a disinherited child, spouse, or sibling) and
  2. Someone who would have inherited more under a prior will.

How Does an Interested Party Contest a Will?
A will contest is started when the contesting party files objections to probate in the Surrogate’s Court. This needs to be done on or before the return date of the citation the court issues, or as the court otherwise directs.

Preliminary “1404 Examinations”
Before formally filing objections, it is common for the objectant to exercise his rights under SCPA 1404 and examine the attesting witnesses to the will as well as the drafting attorney. In addition, an objectant can request medical records and relevant financial records for 3 years prior and 2 years after the date on which the will was drafted, or up to the decedent’s death, whichever is shorter. 1404 Examinations, as they are known, are a great way to get preliminary information to help the objectant make a determination whether a will contest is warranted and under what theory (i.e. undue influence, fraud, etc.). It can also help the objectant hone in on the focal points in the subsequent discovery once objections are filed.

There is also practical reason to request 1404 Examinations before filing objections since the proponent of the will has to pay for the expenses of producing the witnesses as well as of the transcripts and medical/financial records. This shifts the cost of producing documents and initial witnesses on to the estate and saves the objectant money. In addition, the examinations help eliminate costly litigation by helping both sides reach a settlement quicker and cheaper than a full blown discovery proceeding.

Another crucial benefit of conducting 1404 exams is that, by statute, they generally do not trigger an in terrorem clause in the will. An in terrorem clause states that if a beneficiary in a will contests the will and loses, he forfeits all of his share under the will. Conducing 1404 exams allows room to probe the validity of the will without losing your existing bequests if you decide not to contest.

Once the examinations of the witnesses have been completed, the objectant has 10 days to file objections, unless otherwise allowed by the court. The objections must state the theory or theories under which the objectant is contesting the will and should, almost always, include a demand for a jury trial. Once objections are filed, a notice of objections is served on all interested parties and discovery proceeds, although it is not uncommon for the court to schedule a preliminary conference to discuss the outstanding issues and possibly aid in a negotiated settlement. Once discovery has been completed, and the matter is ready for trial, a note of issue generally must filed, placing the matter on the court’s calendar for trial.

Will contests are very fact specific and even tiny nuances can have consequential effects. This article is a simplified generalization of will contests. It is crucial to remember that this information is general in nature and specific rules vary court by court and case by case, and that a competent will contest attorney should be consulted before taking any action, as even small mistakes can carry devastating and irreversible consequences. In future articles we will discuss the various theories under which a will can be contested.

Roman Aminov, Esq. is a NYC based estate and probate lawyer. Call 347-766-2685 for a free phone consultation.

 

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Probating a Copy of a Lost Will in New York

August 29, 2016

lost willIn order to probate a will, i.e. to have it accepted by the Court as the decedent’s Last Will and Testament, New York States Surrogate’s Courts require the original Will to be turned over to the Court. What happens, however, if the original Will is lost or destroyed? Can a copy of the Will take the place of the original, or do the wishes of the decedent disappear with the original Will? What if no copy is found – is all hope lost? The answer, as always, depends on the facts.

The Law:
The rules (SCPA 1407) allow for a lost or destroyed will be to be admitted to probate if all three of the following conditions are met:

  1. The Will has not been revoked.
  2. The Will has been property executed.
  3. Either there is a copy or draft of the Will or, if there is no copy or draft of the Will, then all of the provisions of the Will must be proved by at least two witnesses.

Let’s take a look at each of these three requirements individually:

Will Not Revoked:
New York law presumes that if someone had a Will in their possession which can’t be located, that the Will was revoked. If the Will was not in the possession of the individual, there is no such presumption. That is part of the reason, as we discussed in an earlier article, it is recommended that clients leave the original Will with their lawyer. If the Will is lost or destroyed while in the possession of an attorney (or anyone other than the person who made the Will), the Will is much more likely to be admitted to probate.

Proper Execution:
Proper execution (spelled out in EPTL 3-2.1) requires that an individual sign the Will in front of at least two witnesses, declaring that this is his Will, and that the witnesses sign their names at the end of the Will in the presence of the individual, at his request. Due execution can be established through testimony by the witnesses and/or the attorney who drafted the will. Additionally, an attestation clause at the end of the Will and/or witness affidavits may also be used as proof of proper execution.

Copy of Will OR Testimony by two witnesses:
If the aforementioned requirements can be established, the court can accept the terms of the copy (or unsigned draft) of a Will if the original can’t be found. More surprisingly, even if a copy or draft can’t be located, if at least two witnesses testify to the terms of the lost Will, the court can accept their testimony to probate the Will. That means that, even if no copy is found, verbal testimony can be accepted as evidence of the contents of the lost Will.

Conclusion:
Courts have discretion on whether to accept lost Wills or not. It is very important that clients keep their documents in a safe place. While probating a lost Will is possible, it is risky, expensive, time consuming, and unnecessary if proper precautions are observed.

Roman Aminov, Esq. concentrates in estate planning, elder law, Medicaid planning, and probate. Call or visit us today at our NYC(Manhattan) or Queens Offices.

For a free phone consultation, call us at 347-766-2685

What Are My Rights as a Surviving Spouse?

September 21, 2015

I received a frantic call earlier this year from a woman with two young children whose husband passed away a few months prior without leaving a will. Although she had been appointed administrator of his estate, she quickly realized that all of her husband’s assets had been left to his brother through a beneficiary designation on his investment accounts, and that nothing was left to her or the couple’s children.

In a separate matter, a gentleman contacted me to tell me that his late wife’s will had bequeathed her investment property to a daughter from her first marriage and the rest given to the husband. The problem was that the investment property was worth 80% of the estate and his remainder only 20%.

Both had read my article entitled Disinheriting a Spouse and the New York Spousal Right of Election and realized that they have rights under New York law. What do you think happened next? This article will discuss these two real life examples (with names and select facts changed to protect privacy) of how the spousal right of election in New York operates in the hopes that more people will learn about their rights. For those who haven’t read the prior article on the right of election, let me oversimplify the rule by stating that a surviving spouse is entitled to received the greater of $50,000 or 1/3 of the net state of their predeceased spouse, even if they were left less than that under a will and beneficiary designations.

Case 1: The Husband’s Beneficiary Designations
The first case I described above was complicated by the fact that the husband and wife did not live together for several years prior to the husband’s death. The brother of the decedent claimed that the wife abandoned the husband and therefore was not entitled to her spousal right of election. Time was of the essence and we had to act. First, my office contacted the investment bank which still held the funds and asked them to put a freeze on any distribution, pending a court order. Next, we prepared a petition asking the court to rule that our client had a right to 1/3 of the funds in the account. Finally, we served all the necessary parties and appeared in court. The husband’s brother maintained his position that the wife abandoned her brother and was not entitled to a recovery and was ready to proceed to trial. After months of intense negotiations, we settled the matter without the risk and expense of trial for an amount very close to the full 1/3 she was entitled to.

Case 2: The Investment Property Fiasco
The gentleman whose wife died leaving him everything except the investment property was curious of his rights. After all, his wife did leave him “everything else”; was he really entitled to more? Fortunately for him, the answer was yes. Even though there was a will and he was left the remainder of the estate, after a thorough calculation of all of the assets of the “net estate”, it turned out that he got only 1/5 of the estate, not the full 1/3. In that case, the attorney representing the step-daughter had nothing to defend with and agreed to have his client make up the difference so that my client would receive his full spousal right of 1/3.

Not every client is as fortunate. Quite often, I speak with potential clients who, for different reasons, waited too long to act on their rights before they called our office. One gentleman trusted his stepchildren to do the right thing and take care of him despite not being included in his wife’s will, only to find that they were evicting him from the home he had been living in with his spouse of 20 years.

For every client I can help, there is a client I have to break the bad news to. That is why I write these articles – to help educate people on their rights so that they can speak to a competent and experienced estate attorney before it’s too late.

Roman Aminov, Esq. is an estate planning and elder law attorney at: Law Offices Of Roman Aminov 147-17 Union Turnpike, Flushing, NY 11367 (347) 766-2685 Aminovlaw.com
Attorney advertising. Prior results do not guarantee a similar outcome.

 

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Opening a Safe Deposit Box After Death in NY

April 17, 2015

I oftsafe deposit boxen receive phone calls from clients who had recently lost a loved one and, among other things, are confused about how to access the decedent’s safe deposit box. A common concern is that the loved one kept their last will in the box, which needs to be probated. In fact, before the Surrogate’s Court allows anyone to file an Administration Petition alleging that the decedent did not leave a last will, they generally require a search of all safe deposit boxes. In addition to a last will, safe deposit boxes often contain vital information which the family needs immediately after the decedent’s death such as a deed to a burial plot or instructions with regards to dealing with their remains. That is why I advise my clients not leave important documents, which need to be accessed soon after death, in their safe deposit boxes. I have seen banks routinely deny access to surviving joint tenants of safe deposit boxes, including spouses and deputies, without a court order. Not surprisingly, the question of how one can quickly access a safe deposit box after the death of a loved one is an important and frequent one in my probate and estates practice.

In New York, the Surrogate’s Court Procedure Act, Section 2003, allows an interested party, usually a family member, to petition the court to examine the contents of the box. The court generally requires a death certificate and a fee of $20 for the petition and $6 per box. Upon reviewing the petition and receiving the fee, the court issues an “Order to Open Safe Deposit Box” which will allow the box to be opened, inventoried, and then sealed again. After making an appointment with a bank officer at the branch which houses the box, the client takes the Order to the branch along with a key to the box. If the family member does not have a key to the box, more time and money are required before the box can be accessed. Once the keys are located and the appointment with the bank officer is scheduled, the box is opened in the presence of the bank officer, and the contents are inventoried. If there is a will, the bank delivers it to the Surrogate’s Court. If there is a life insurance policy, it is given to the beneficiary. If there is a deed to a burial plot, the Surrogate’s Court will direct where it goes. Everything else is inventoried and put back in the box and kept at the bank pending further court order. Any other contents in the box stay put until an administrator or executor are authorized to remove them. The purpose of Section 2003 is to allow an interested party quick access to important documents, not to collect and distribute the assets.

To be allowed the right to collect the contents of the box, a petition for letters testamentary (if there is a will) or letters of administration (if there is no will), would need to be brought before the Surrogate’s Court. The court will then issue letters, appointing an executor or administrator, who could then collect the contents of the box and distribute them as per the will or the rules of intestacy (dying without a will).

If your loved one left behind a safe deposit box which needs to be accessed, contact an estate attorney in Queens or Brooklyn today for a free phone consultation.

Law Offices Of Roman Aminov 147-17 Union Turnpike, Flushing, NY 11367 (347) 766-2685

Frequently Asked Probate Questions

March 10, 2015

As a probate lawyer, I am often asked many important questions about the probate process. I have decided to make a list of some of the most frequent questions in an effort to help people understand the process better.

What is Probate?
Probate is the process of presenting a last will and testament to the court to have it admitted as such by the Surrogate (judge).

If I Have a Will, Can I Avoid Probate?
No. In fact, the ONLY way to end up in probate is by dying with a will. If a person dies without a will, they go through a similar process called Estate Administration.

How Long Does Probate Take?
Probate can take anywhere from seven (7) months and longer. That is the minimum time that creditors have to make a claim against the estate after it is opened. Some very complex estates can take many years.

Is There a Time Limit To Start Probate?
No. Although it is advisable to start probate as soon as possible after a person passes, I have worked on cases in which probate was not started until more than 20 years after the decedent’s death. However, a delay in probate can result in the court penalizing the person who caused the delay if it harms beneficiaries or creditors.

What Are The Costs of Probate?
The Surrogate’s Court charges a filing fee based on the size of the estate, ranging from $45 for smaller estates to $1250 for estates with probate assets of over $500,000. Estates with assets under $30,000.00, known as small estates, have a filing fee of $1. A lawyer will charge a flat fee, hourly fee, or, in rare situations, a contingency fee to handle the matter.

Can a Probate Proceeding Be Challenged?
Yes. An heir of the decedent, known as a distributee, can contest either the will or the appointment of the executor, or both. Common reasons for contesting a will include:

(1) Lack of Testamentary Capacity: the testator did not have the mental ability necessary to make a will.

(2) Undue Influence: the testator was improperly influenced by a third party in making the will.

(3) Undue Execution: the will was not properly executed as required by EPTL 3-2.1.

(4) Fraud: The testator was induced by fraud to make the will.

(5) Revocation: The will was revoked, either through the execution of a new will, or by simply revoking the presented will.

(6) Forgery: The signature of the testator was forged.

Does Jointly Owned Real Estate Go Through Probate?
That depends on the type of asset and the type of ownership. Real estate owned by husband and wife together avoids probate and goes to the surviving spouse. Any real estate owned as “joint tenants with rights of survivorship” also avoids probate and goes to the remaining living owners. Real estate owned as “tenants in common” does go through probate.

Do Accounts With Beneficiaries Go Through Probate?
IRAs, 401(k)s, investment accounts, bank accounts, and life insurance policies with listed beneficiaries avoid probate entirely. The listed beneficiaries need to submit a death certificate and fill out some forms in order to receive their money.

Do I Need an Attorney to Probate a Will?
While there is no requirement that an attorney probate a will, it is generally advisable to hire an attorney to assist in the process. The process is too daunting, with too many technical requirements, for most people to handle it on their own. A qualified probate attorney will have the necessary experience and knowledge to expedite the process and avoid unnecessary expense and delays.

If I Hire an Attorney, Do I Need to Go To Court?
The vast majority of probate proceedings do not require a court hearing and therefore, you will most likely not need to appear in Surrogates Court. Even if a court hearing is necessary, the probate attorney will not require your presence in most cases.

When Are Taxes, If Any, Due?
Estate taxes, if required in your estate matter, will be due within 9 months of the decedent’s death. The final income tax return will be due by April 15th of the year following the decedent’s death. There may be other taxes, such as income taxes on IRA distributions, which may be due, and a qualified tax professional should be consulted.

What Are Ways I Can Avoid Probate?
Feel free to read our article on avoiding probate here.

To speak with a Brooklyn and Queens Estate Lawyer about your particular matter, please call 347-766-2685.

Consenting to the Probate of a Will

November 9, 2014

Have you lost a family member and received a document called a “Waiver of Process; Consent to Probate”? If you are like most people, you may be confused about what this means, and more importantly, if you should sign it. This article will help explain the purpose of the document, and what you should discuss with your lawyer after you receive it.

Why did I receive a “Waiver of Process; Consent to Probate”?
The reason you received this document, usually from an estate attorney representing the nominated executor, is because the decent had a will which needs to be submitted to Surrogate’s Court for probate. Before a will can be probated and an executor appointed, all of the distributees (family who would have received a portion of the estate if there had been no will) have to be given an opportunity to object to (1) the validity of the will and (2) to the appointment of the executor. Distributees are given the opportunity to object at a court hearing at the Surrogate’s Court and are issued a formal notice called a “Citation” advising them of the time and place of the hearing. There are various reasons why one would want to object, and different grounds for objections to probate, which are outside of the scope of the article and should be discussed with an experienced probate attorney.

In order to save the estate time and money by avoiding a hearing, the nominated executor can ask the distributees to sign a “Waiver of Process; Consent to Probate” instead, which is sent along with a copy of the last will and testament.

What happens if I do not sign?
As we mentioned, if you don’t sign the “Waiver of Process; Consent to Probate”, the court will need to issue a Citation and a court date to give you the opportunity to object to the will or to the appointment of the executor.

What happens if I sign?
If you sign the document, you are stating that you agree that the will is valid and should be accepted as the last will and testament of the decedent, and that the nominated executor should be appointed as the executor of the estate. If you are a beneficiary of the estate, you still retain your right to make sure that you receive your inheritance.

What if I consent to probate, but want to make sure the executor acts properly?
I often have clients who have no problem with the will but who want to make sure that the executor acts properly. In those cases, a distributee or beneficiary can hire their own estate attorney who will keep in touch the executor’s attorney regarding the status of the estate and make sure things keep moving. At the end of the administration of the estate, your attorney can request an accounting to make sure that all of the assets were collected and all expenses were reasonable and properly paid.

What if I believe the will is invalid or that the nominated executor should not serve?
If you have any doubts about the will or the appointment of the nominated executor, you should not sign the document and immediately speak to a probate attorney to learn your rights. A probate attorney can challenge the validity of the will or the appointment of the nominated executor to serve.

This information is general in nature, and before you sign any documents, speak with an estate attorney to learn your rights by calling 347-766-2685 for a free phone consultation.

How To Avoid Probate

October 19, 2014

There is hardly a week that goes by that I don’t receive a call from a potential client asking me to help them “avoid probate”. Unfortunately, most of the time, the client only has a vague understanding of the probate process, and no compelling reason to try to avoid it (more about the probate process can be found here.) While each individual’s estate planning situation should be discussed with their attorney, there are situations in which avoiding probate is highly advisable. In this article, we will discuss a few ways that New York estate planning attorneys help their clients avoid probate. For more specific legal advice, we urge you to speak with an estate planning attorney.

Name a Beneficiary on Your Accounts
Almost all brokerage, retirement, and bank accounts as well as life insurance policies let you specify who you want to inherit your accounts when you pass away. They do this by allowing your accounts to be POD (payable-on-death) or TOD (transferable-on-death) to a beneficiary or beneficiaries that you list. You can select beneficiaries by filling out the beneficiary forms and submitting them to the institution. You can also specify alternate beneficiaries in case the original beneficiaries predecease you. After your pass away, your named beneficiary has to bring in his identification and proof of death to collect the proceeds; all without a Surrogate’s Court proceeding. If the beneficiary form is not filled out, or if all the listed beneficiaries predecease you, the bank will require a probate or estate administration proceeding before they release the funds to the estate.

Own Assets as Joints Tenants With Rights of Survivorship
As discussed in a prior article on joint ownership, if you own property with someone else as joints tenants with rights of survivorship (JTWROS), or as tenants by the entirety (TBE), the property will automatically pass to the other owner(s) when you die. Fortunately, many assets, including bank accounts, investment accounts, and real property can be held as JTWROS or TBE, which allows you to avoid probate upon your death. It is important that the ownership papers such as deeds, be properly filled out. I have seen many instances in which people assumed that assets were owned at JTWROS, but were really owned as tenants in common, and did not pass automatically upon death.

Create a Revocable Living Trust
A revocable living trust is an agreement that you sign which allows you to manage your property while you are alive, and lets you select someone else to manage it when you pass away, and therefore avoids probate when you die. When you, as the “grantor”, create a trust and transfer assets into it, the trustee of the trust (which is initially also you) becomes the legal owner. When one trustee passes away, a successor trustee takes over management and control of the assets in the trust, according to the instructions the grantor set up. Therefore, although assets in the name of the decedent alone do go through probate, assets which are in trust don’t since the ownership didn’t end; it simply changed to another individual. Revocable trusts also allow you to plan for incapacity by letting someone else manage your assets if you are incapable of doing so yourself.

Make Gifts
Another way of avoiding probate is gifting away your assets while you are still alive. This is generally not recommended since it leaves the client at the mercy of the beneficiaries, who are generally not under the obligation to return the gift. There are also significant tax and long term care consequences which go along with gifting away assets during life. It is important to speak with an estate planning attorney before gifting away any assets.

As always, we invite you to contact our office for a free phone consultation at 347-766-2685 to discuss your particular situation with a New York estate planning lawyer

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