Our Estate Planning Frequently Asked Questions
Our legal team offers answers and information to help your family learn more about your rights and what to expect from a New York estate plan. Learn about how to protect your loved ones and preserve your assets most effectively. Don’t see your concern here? Don’t hesitate to reach out to our Manhattan office by calling us at 212-203-0937.
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FAQ: Will Contests - Do I have grounds for contesting a will? (Part 2 of 6)
Grounds for Contesting a Will
In Part 1 of this series on will contests, we discussed the following questions:
Who can contest a will?
What are legitimate grounds for contesting a will?
In this post, we will get into the details of the first ground for contesting a will – undue execution. When someone objects to a will on the basis of undue execution, what is being alleged is that the will was not duly executed. Remember, the information below focuses on will contests in New York and more specifically on will contests in New York City.
Due Execution: Was the will properly executed?
Wills must be executed in strict compliance with the provisions of New York Estates, Powers, & Trusts Law (EPTL) §3-2.1. The elements are due execution are:
The signature of the testator must appear at the end of the will, just before the witness attestation clause;
The testator must sign the will in the presence of each of the witnesses, or his signature shall be acknowledged to each witness as his signature;
The testator must declare to each of the witnesses that the document they are witnessing is the testator’s will; and
There must be two witnesses to the will. The testator must ask each witness to sign his will. Additionally, both witnesses must sign the will within 30 days of each other.
If the will was not executed in compliance with the above provisions, it is not a valid will and can be challenged through a will contest.
Examples of Improper Execution of a Last Will & Testament
1. Thomas executes his will at his estate attorney’s office in Manhattan by signing in the middle of page 5. Thomas then adds language at the bottom of page 5, beneath his signature, leaving his Brooklyn apartment to his niece, Beth.
What is the result? Under New York law, although the will may be valid, the language after the Testator’s (Thomas’s) signature is considered invalid and ineffective. The Brooklyn apartment would be distributed as though the additional language after Thomas’s signature did not exist.
2. Thomas wants to draft a will but is not physically able to travel from his Brooklyn home to his estate attorney’s office in Manhattan. In order to accommodate Thomas, the attorney travels to Thomas’s home in Brooklyn where Thomas executes the will. The attorney then takes the will back to his Manhattan office and has his two associates sign the will as witnesses.
Problems? Yes – two of them. First, the Testator did not sign the will in the presence of the either witness nor did he acknowledge that the signature was his. Second, the Testator did not declare to the witnesses that the document they were witnessing was Thomas’s will. Under New York law, this will is invalid.
It is extremely important to properly execute a will; otherwise, it may be subject to a will contest in Surrogate’s Court on the ground that it was not duly executed.
FAQ: Will Contests - Do I have grounds for contesting a will? (Part 3 of 6)
In the previous posts in this series on will contests in New York, we discussed whom may contest a last will and testament and on what grounds a will may be contested. Here, in Part 3, we will go into further detail on the second ground on which a last will and testament may be contested – revocation. Revocation is the claim is that the will is invalid on the basis that the Testator revoked or canceled it. Remember, the information below focuses on will contests in New York and more specifically on will contests in New York City.
Revocation of a Last Will & Testament:
Under New York State Law, EPTL §3-4.1 provides that a will is considered revoked under the following situations:
- The Testator executed a subsequent will;
- The Testator clearly indicates, through a written document, an intention to revoke the will, which is executed with the same formalities of a will; or
- The Testator destroyed the original will by ripping, burning, tearing, or another act of destruction.
If the Testator revoked his last will and testament in such a manner, any prior wills are not automatically revived. For example, if Thomas executed his last will and testament in 2008 and then executed a new last will and testament in 2010, then the 2008 will is considered revoked. If Thomas then revokes the 2010 will, the 2008 will remain revoked subject to certain exceptions. Therefore, assuming the 2008 and 2010 wills are the only wills ever executed by Thomas, he is then considered to have died with no will and his estate would be distributed according to the laws of intestacy.
How Divorce Can Affect Your Estate Plan
Background: Designating Beneficiaries & Appointing Fiduciaries
Executing a last will & testament, power of attorney, and health care proxy are important estate planning tools and this basic plan can be expanded to include designating beneficiaries on life insurance policies, bank accounts, and other assets. Simply having a named beneficiary on a life insurance policy, for instance, makes that asset a “ non-probate” asset, meaning the asset transfers automatically to the beneficiary outside of any estate proceeding. On the other hand, if that same life insurance policy had no beneficiary, then the proceeds would flow into the estate and be subject to an estate proceeding in Surrogate’s Court. Another example is a savings account. With a named beneficiary, the savings account transfers automatically to the named beneficiary upon the death of the account owner. The beneficiary would only need to comply with the rules of the bank or institution holding the account (e.g. provide a copy of the death certificate and identification of the beneficiary). On the other hand, if that same savings account had no named beneficiary, then the funds would become part of the estate and be subject to the administration of the estate, which could take a significant amount of time (months or perhaps years in the case of a contest). An equally important task in the estate planning process is the appointment of fiduciaries. A fiduciary is a trusted person who is appointed to a position where she is legally bound to act on behalf of another in good faith. Common fiduciary roles include the executor of a last will & testament, trustee of a trust, health care agent, guardian, and agent under a power of attorney (also known as an attorney in fact). Your fiduciaries play crucial roles because they have broad powers over your financial and health care decisions.
Effect of Divorce on Designated Beneficiaries & Nominated Fiduciaries
The effects a divorce can have on your estate plan can be easily overlooked when dealing with the many issues surrounding divorce. Under New York law, a divorce or a judicial separation revokes revocable dispositions of property made to your then-spouse. This may include, but is not limited to, dispositions in a last will & testament and designations as beneficiary on a bank account, life insurance policy, pension, or revocable trust. It is important to note that not all states have adopted similar laws. In New York, the key characteristic is revocability of the instrument. This means that if the decedent could have revoked the instrument during her life, then divorce will likely nullify the provisions concerning the ex-spouse. A divorce or judicial separation also revokes appointments of your ex-spouse in estate planning documents such as appointments of executor, trustee, guardian, health care agent, or attorney-in-fact. The effect of revocation will likely have a large impact on the estate since the ex-spouse will be considered to have predeceased you. For example, if your ex-spouse was named as beneficiary in your last will and testament and you failed to change the will before your death, your ex-spouse would be treated as having predeceased you and receive nothing; therefore, your assets that were directed to go to your spouse would instead go to the alternate beneficiaries named in your will – this is one reason why giving careful consideration to your alternate beneficiaries is very important. Similarly, if you name your spouse as your executor under your will but that provision is revoked by divorce or judicial separation, then your now ex-spouse will be unable to serve; your alternate agent will have to step up to fill the role. Revocation of provisions regarding ex-spouses are appropriate in many cases. It is natural to think that if you divorce your spouse, you no longer want the spouse to be entitled to your assets upon death. However, this is not always the case. In some situations, spouses separate on amicable terms and intentionally leave each other as beneficiaries for the purpose of care and support of the surviving ex-spouse. In other cases, this is done for the benefit of minor children. However, this intent might not be realized under the structure of New York estate law. In such cases, it is extremely important to consult a New York estate planning attorney to make sure your intentions are realized.
There are exceptions to this general rule of revocation. Here are two examples:
- A divorce decree or separation agreement that requires you to maintain certain benefits for your ex-spouse will control.
- Similarly, if you designate your ex-spouse as a beneficiary after your divorce and demonstrate a clear intent that the ex-spouse remain as beneficiary, then the ex-spouse may still be entitled to inherit.
What should I know about Living Trusts in New York?
A living trust can be an excellent estate planning tool for many individuals with significant assets that they want handled a certain way. The process of creating a living trust can seem overwhelming at first, however, it can be significantly less complex when you understand the basics of what living trusts are and how they can be utilized to help you create a comprehensive estate plan that covers all your bases.
What Is a Living Trust?
Understanding what a living trust is boils down to knowing what a trust itself is. A trust is simply a fiduciary agreement made between three people, a trustmaker, the trustee, and a beneficiary. The trustmaker, also called the grantor or settlor, agrees to transfer property to the trustee, who will then manage the trustmaker’s assets on behalf of the beneficiary. The trustee does not own the assets contained in the trust – instead, the assets belong to the trust itself and the trustee simply manages those assets. When and how those assets transfer to the beneficiary vary depending on how the trust is created and under what terms it is created.
What makes a trust a living trust, or an inter vivos trust, is that it is created when the grantor is still living, as opposed to the trust being created at the time of the trustmaker’s death.
Types of Living Trusts
There are many different types of living trusts and each can be used for a variety of purposes. Determining what kind of living trust you need and how it can potentially benefit you depends largely on your unique situation and what your financial goals are for yourself and your family.
Revocable Living Trusts
A revocable living trust is likely the most widely used type of living trust. This type of trust can be modified, changed, added to, or even canceled at any point during the grantor’s life. A revocable living trust can help the grantor to avoid probate, which can be costly and time consuming for family members following the grantor’s death. However, if assets are owned by a trust at the time of the grantor’s death, those assets avoid the probate process. Many people set up revocable living trusts because they enjoy the idea of being able to protect their assets from probate upon their death, but still want to maintain control over those assets during life.
Irrevocable Living Trusts
An irrevocable living trust is also a well-known type of living trust and is often used in a variety of situations. This type of trust cannot be modified, changed, added to, or canceled during the life of the grantor. Essentially, this type of trust separates the use of assets from their legal ownership, meaning that the owner of the assets technically no longer owns the assets and the assets are owned by the trust. However, if also named as the beneficiary as in a self-settled trust, the former owner (or grantor) may be able to continue to use these assets.
Asset Protection Living Trusts
An asset protection trust is a type of irrevocable trust that is designed to protect an individual’s assets from creditors. A grantor can set aside his or her assets in an asset protection trust, transferring ownership of the assets from themselves to the trust. Once the trust owns those assets, creditors no longer have the ability to collect against them. This rule is subject to exceptions such as where the individual transfers the assets in an attempt to evade creditors. Because of the control that is maintained over a revocable living trust, creditors may still look to the trust’s assets to satisfy the debt.
Special Needs Living Trusts
A special needs trust is a specific type of trust created to provide assets to an individual in a way that does not compromise their ability to receive government benefits that have an asset limit, such as Medicaid or Social Security Disability.
First Party Special Needs Trusts
If a disabled person owns significant assets but is concerned that these assets will prevent them from taking advantage of government funded benefits, he or she may set up a type of irrevocable, self-settled living trust designed specifically for this purpose. The ownership of the assets are then transferred to the trust and the grantor no longer has control over how those assets are received. This allows the grantor to omit the trust assets when calculating the value of the grantor’s total assets on government benefit applications. The trust assets are considered “non-countable” assets.
Third Party Special Needs Trusts
A third party special needs trust can be either revocable or irrevocable. It is a type of trust created by a grantor to provide assets to a third party beneficiary who is disabled without affecting their eligibility for government assistance but still allowing them to have many comforts that they would not otherwise have if they were solely relying on government benefits as their source of income. For example, parents with a disabled child may set up a third party special needs trust that disperses assets during the lifetime of the parents, as well as after their deaths.
Spendthrift Living Trusts
Almost any type of living trust can be made a spendthrift trust. Essentially, this prevents the beneficiary of the trust from selling or giving away interests in the trust.
Pros & Cons of a Living Trust
There are many benefits to creating a living trust, however, there are also downsides depending on your unique situation.
Living Trust Benefits
Living trusts can be beneficial in many different ways, including:
As mentioned above, a living trust, whether revocable or irrevocable, will help avoid probate. Any assets that are owned by the trust at the time of the grantor’s death will not enter into probate but will instead pass directly to the beneficiary named in the trust.
A living trust, especially a revocable living trust, is harder to dispute than a will because the grantor typically continues to have involvement in the trust after it is created. While many people will bring a claim after an individual’s death that he or she was not of sound mind when creating a will, such a claim is generally more difficult to bring against the validity of a living trust.
A living trust can be beneficial in cases where the grantor has become incapacitated or unable to manage their financial affairs. Instead of a family having to go to court and obtaining a guardianship over an incapacitated individual, the individual’s successor trustee steps in and is able to manage the trust and its assets without the need for a time consuming and costly court battle.
Living Trust Caveats
Although the benefits of creating a living trust are many, there are a few caveats, including:
Living Trusts Can be Time Consuming and Costly to Establish
Because living trusts cover all types of assets, they can be costly and time-consuming to set up. Additionally, the continued involvement of the grantor is necessary in a living trust. It is not recommended that a grantor attempt to cut the costs of establishing a living trust by going the do-it-yourself route. Although having a lawyer-drafted trust costs more, it is well worth it in the end to be confident that your assets are protected and will be distributed according to your wishes.
Revocable Living Trusts Do Not Protect Your Assets
As mentioned earlier, a revocable living trust can still be accessed by creditors. Because you maintain control over this type of living trust prior to your death, creditors can count the assets contained in the trust as your own. This type of trust may not be the right choice for individuals who wish to protect their assets from creditors.
How to Choose If a Living Trust Will Meet Your Estate Planning Needs
There are many different types of living trusts and many estate planning techniques in general, so it can be difficult to know which one is right for your situation. Discussing your individual estate planning needs with an experienced estate planning attorney is the first step to learning what types of living trusts may offer the solutions you are looking for and which one may be right for you.
What are "issue" in New York estate law?
Definition of ISSUE: (noun) / descendants in any degree from a common ancestor
Plain English translation: Issue refers to a person’s lineal descendants, such as children, grandchildren, great-grandchildren, etc. This differs from “heirs”, which could include other relatives besides lineal descendants.
FAQ: What is a Beneficiary?
Definition of BENEFICIARY: (noun) / one that benefits from something; the person named to receive proceeds or benefit; a person or entity designated by another to receive a gift of money or property
A beneficiary under a last will and testament is known as a testamentary beneficiary. For example, if John executes a last will and testament that states “I leave the sum of $1,000.00 to Jane”, then Jane is a testamentary beneficiary of John’s will.
A will can provide for gifts to any number of individuals or organizations. Therefore, there can be many beneficiaries of the same will. When a will provides for only one beneficiary, that beneficiary is referred to as the sole beneficiary. A will can also have many different types of beneficiaries.
Typically, a will provides for both primary and contingent beneficiaries. A primary beneficiary is the person who is designated to receive a gift. A contingent beneficiary is someone designated to receive a gift but only upon the happening of a certain event. In most wills, that “certain event” is the failure of a primary beneficiary to survive the person executing the will. For example, John makes a will that states, “I leave the sum of $1,000.00 to Jane. If Jane shall fail to survive me, I leave $1,000.00 to Henry”. In this case, Jane is the primary beneficiary and Henry is the contingent beneficiary.
A will can provide for other contingencies. For example, John could put a provision in his will stating, “I leave my house located in Queens to my son, Dave, but only if Dave completes four years of college.” Dave will not receive the house in Queens unless the contingency occurs, namely, if he completes four years of college.
A trust can have similar provisions to those in a will, in which case the receiver of the gift is referred to as a trust beneficiary. Further, beneficiaries can be designated on various types of assets including bank accounts and insurance policies.
FAQ: What is Intestacy? What is Testacy?
The following information focuses on New York estate law.
Intestacy describes a person’s estate where the decedent passed away without a last will and testament. This is known as dying intestate. Conversely, Testacy describes a person’s estate where the decedent passed away with a last will and testament. This is known as dying testate.
Whether a person dies intestate or testate has a significant effect on how the decedent’s estate is distributed upon death. The main difference is that if a person dies testate, then the decedent’s assets are transferred according to the terms of the will. If the person dies intestate, then the decedent’s assets are transferred to the distributees according to the laws of intestacy of New York State.
Two different court proceedings are in order depending on whether the decedent died with a will. If there was no will, then the proper procedure in New York City is to file a Petition for Administration. If the decedent died with a will, then the proper procedure is to file a Petition for Probate.
What is a Distributee?
In this video, Daniel Antonelli, Esq, explains who can inherit from you if you die without a will. The legal term for these people is Distributees.
Attorney Antonelli’s additional You Tube videos cover questions frequently asked by clients, along with legal trends and legal news.
Video: Do I Need a Lawyer for My Will?
In this video interview, Attorney Daniel Antonelli, partner at Antonelli & Antonelli, a noted probate and estate administration law firm in New York, NY, discusses whether you really need a lawyer to write your will.
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