probate-logo

What is an Ancillary Probate or Ancillary Administration Proceeding?

When a person passes away with real property in multiple states, an ancillary proceeding may be necessary. The primary probate proceeding (if the person passed away with a Last Will & Testament) or primary administration proceeding (if the person passed away without a Last Will & Testament) is commenced in the State and County where the person was domiciled prior to passing away.  Once the Executor or Administrator is given legal authority from the court, that Executor or Administrator can start an Ancillary Probate or Administration proceeding in the State where the decedent owned real property but was not his primary residence.

Daredevil Dan Example:

Daredevil Dan owns a brownstone in Park Slope, Brooklyn and a house in Scottsdale, Arizona which he snowbirds to during the cold Brooklyn winters.  He is domiciled in Park Slope and he spends the majority of the year at his brownstone.  Daredevil Dan went to grab a candy bar from a vending machine, the candy bar got stuck and when Daredevil Dan shook the machine, the machine fell on him, and that was the end of Daredevil Dan.  Daredevil Dan went to Ira K. Miller & Associates and created a will that left everything equally to his two friends, Don and Meg.  He made Don the executor of his will.  Don would have to start a Probate proceeding in Kings County because that is where Daredevil Dan was domiciled.  Following the grant of Letters Testamentary by the Kings County Surrogates Court, Don would then have to start an ancillary probate proceeding in Arizona to gain authority to sell or transfer the Scottsdale home.

Probate proceedings and ancillary probate proceedings can end up being very costly due to filing fees and attorney fees. Both a probate proceeding and ancillary probate proceeding can be avoided with the use of a revocable trust.

Daredevil Dan Trust Example:

The facts in the above Daredevil Dan Example are the same, however, instead of creating a will at Ira K. Miller & Associates, Daredevil Dan created a Revocable Living Trust.  He deeded both his property in Park Slope, Brooklyn and his property in Scottsdale, Arizona into the trust.  The trust terms had Daredevil Dan as the trustee of the trust and upon his passing his friend Don would take over as trustee. The trust terms stated that upon Daredevil Dan’s passing both properties in Arizona and New York would be sold and the proceeds split between Don and Meg. Following Daredevil Dan’s vending machine accident, Don would have legal authority to sell both properties as trustee and would avoid  probate in New York and ancillary probate in Arizona.

If you own real property in multiple states, a trust is a great way to avoid probate and ancillary probate. Contact Ira K. Miller & Associates for any questions you may have regarding trusts, probate, and ancillary probate.

brownstone-002

Joint Ownership of Real Property- Different Ways Real Property can be Titled

Title to real property can be held in three different ways; tenants by the entirety, tenants in common, and joint tenants with rights of survivorship.

Tenants by the entirety- the property is owned by a married couple.  The deed will usually state the parties as husband wife. For example the deed would say “John Doe and Jane Doe, husband and wife” or “John Doe and Jane Doe, his wife.” When one spouse passes away the property will pass automatically to the surviving spouse.

Daredevil Dan Example:

Daredevil Dan and his wife Brittany own property as tenants by the entirety in Park Slope, Brooklyn.  Daredevil Dan tried swimming from the Brooklyn Bridge to Governor’s Island.  He made it to Governor’s Island successfully but caught something swimming in the East River, and that was the end of Daredevil Dan.   The Park Slope property would pass automatically to Brittany.

 

Tenants in Common- the property is owned by more than one person in what could be various percentages. A person with a tenants in common interest can sell or transfer their interest without notifying the other owners. They can leave their interest to a person in their will or if they do not leave a will their interest would pass to their heirs at law.  A person with a tenants in common interest has the right to live in the property without paying rent.

Daredevil Dan Example:

Daredevil Dan, his brother Kenneth, and his friend Adam purchase a property in Bushwick, Brooklyn.  They each own one-third (1/3) of the property as tenants in common.  Daredevil Dan tried a stunt which involved jumping a shark, he failed, and that was the end of Daredevil Dan.  Daredevil Dan in his will left the Bushwick property to his friend, Christopher. Christopher would now be a one-third (1/3) owner of the property and would have the right to live in the property without paying rent.

 

Joint Tenants with Rights of Survivorship-  the property will pass automatically to the co-owner upon the first person to pass away. The deed must state joint tenants with rights of survivorship.  For example, the deed would say “John Doe and Mary Smith as joint tenants with rights of survivorship.”  A joint tenancy with rights of survivorship can be unilaterally severed to a tenants in common titling. The joint tenant would deed themselves their interest in the property from joint tenants with rights of survivorship to a tenants in common interest. For example the deed’s language would be “John Doe with a joint tenants with rights of survivorship interest as party in the first part to John Doe as tenant in common as party in the second part.”

Daredevil Dan Example:

Daredevil Dan and his friend Sophie own a property on the Upper East Side of Manhattan as joint tenants with rights of survivorship. Daredevil Dan was walking down the street when a piano fell on his head, and that was the end of Daredevil Dan.   Sophie would now own the property on the Upper East Side.

Do not transfer or re-title property without consulting an attorney.  For more information regarding the titling of real property, contact Ira K. Miller & Associates

 

Family

What is a Testamentary Trust?

Simply put, a testamentary trust is a trust that is written into a Last Will & Testament.  The trust does not come into existence until the Will is probated. Testamentary trusts can be created for a variety of reasons.  Here are a few reasons a person might want to set up a testamentary trust in their will:

 

  • The beneficiary receives public entitlements and receiving the funds would disqualify them from these public entitlements. This type of trust is called a supplemental or special needs trust.
  • The beneficiary is a young child and the parent does not want their child receiving a substantial sum of money at the age of 18 or 21. Instead the trust can specify that the child shall receive the money at a later age like 30 or 35 years old.
  • The beneficiary is not financially savvy. The trust would specify a trustee who would help ensure the money was not spent immediately on frivolous items.
  • The beneficiary has many creditors. The trust would prevent creditors from reaching the property or cash in the trust.  This type of trust is called a spendthrift trust.

 Daredevil Dan Example:

Daredevil Dan has a 17 year old son named Charlie.  Charlie loves luxury sports cars. All he talks about are Lamborghini’s, Ferraris, and McLaren’s.   While paragliding in Patagonia, Daredevil Dan flew right into a mountain and that was the end of Daredevil Dan.

Daredevil Dan went to Ira K. Miller & Associates for estate planning.  He decided to set up a testamentary trust in his Will for his son, Charlie, so that Charlie would receive the money from his estate when he was 30.  He named his friend, Donald, the trustee of Charlie’s trust.  Instead of Charlie inheriting the money and immediately spending it on a luxury sports car, Donald now controls Charlie’s money. According to the terms of the trust Donald can spend the money on Charlie’s health, education, maintenance, or support. Donald spent the trust money on sending Charlie to college.

 

Contact Ira K. Miller & Associates for all your questions regarding Estate Planning and trusts.

Guardianship

Who may commence a Guardianship Proceeding?  

If you are concerned that a loved one or family member can no longer take care of their finances or are unable to make safe medical decisions for themselves, a guardianship proceeding may need to be commenced.   Who has the authority to commence a Guardianship proceeding? M.H.L. §81.06 lists specifically who may commence a guardianship proceeding.   §81.06 sets out some specific people who have authority to start a guardianship proceeding such as any distributee (meaning any person who would be entitled to the AIP’s estate according the NY laws of intestacy EPTL §4-1.1), an executor of an estate where the alleged incapacitated person is or may be the beneficiary of the estate, the trustee of a trust when the alleged incapacitated person is or may be the grantor or a beneficiary of that trust, or a person whom the person alleged to be incapacitated resides.

There is a catch all provision to §81.06. Under 81.06(a)(6) “ a person otherwise concerned with the welfare of the person alleged to be incapacitated,” can commence a guardianship by filing a petition.

In other words, anyone concerned for an alleged incapacitated person (AIP) can commence a guardianship proceeding.  This includes friends, significant others, neighbors, even the mailman.

 

Daredevil Dan Example:

Daredevil Dan has been living in an apartment in Fort Greene, Brooklyn.  His mind has been beginning to fail him and he has been wandering around his apartment complex unable to find his apartment. Daredevil Dan’s friend, Jeremy, sees Daredevil Dan struggling and decides to commence a Guardianship proceeding.

Step Up image

What is a Step-Up in Basis?

Step Up image  One of biggest gifts given to estate planners is given to us through the Internal Revenue code.   IRC §1014 is the rule that says a beneficiary receives the basis of the decedent at the time of their death.  Step up in basis is best explained through an example.

Daredevil Dan Example #1:

Daredevil Dan purchased a rental property in Cobble Hill, Brooklyn in 1980.  He paid $100,000 for this property. The $100,000 spent for this property is called the basis.  In 2017, Daredevil Dan decided to go mountain biking in upstate New York, hit a tree, and that was the end of Daredevil Dan. When Daredevil Dan passed away the Cobble Hill property was worth $2,000,000.   According to his Last Will & Testament, Daredevil Dan’s Cobble Hill property is to pass to his son, Brian.  Brian’s basis in the Cobble Hill property will be “stepped up” to the value at the time of Daredevil Dan’s death. Therefore, Brian now owns the Cobble Hill property with a basis of $2,000,000.  If he were to sell it immediately he would owe no taxes. To calculate gains you take the amount realized, or the price sold and subtract it by the basis.  In this example it would be $2,000,000- $2,000,000 resulting in zero gains and zero taxes owed.

Daredevil Dan Example #2:

Daredevil Dan did not go to Ira K. Miller & Associates for estate planning advice. Daredevil Dan wanted to gift his Cobble Hill property to his son Brian and deeded the property to Brian in 2015, two years prior to his death. Brian would inherit the basis that Daredevil Dan paid for the property. Therefore, Brian now owns the property with a basis of $100,000. In 2017,  Brian goes to sell the property for $2,000,000.  Brian would have to pay capital gains taxes on $1,900,000.   ($2,000,000-$100,000= 1,900,000 capital gain on the property).  The capital gains tax would be between $285,000 and $380,000.    Had Daredevil Dan passed away with this property in his estate and left the property to Brian in his Will, he would have saved Brian over $250,000 in taxes.

To learn more about Estate Planning and the step-up in basis, contact Ira K. Miller & Associates.

 

estate-planning

What documents should be part of a basic Estate Plan?

A basic estate plan involves planning for two things; a person’s demise and their incapacity.

A Person’s Demise

“In this world nothing can be said to be certain, except death and taxes.”- Benjamin Franklin.  Unfortunately, we all only have a limited time on this earth. Estate planning details how you would like your property to be distributed when you pass away.  At the most basic level, this can be done in two ways, through a Last Will & Testament or a Trust.

 Last Will & Testament- A Last Will & Testament is a document that details how property should be left when a person passes away. It states the wishes of the person creating it, known as the Testator. A will can be changed or revoked until the Testator passes away.  This document needs to be executed according to the statutory formalities listed in EPTL §3-2.1. A Last Will & Testament is not given legal effect until the person passes away and the will is probated in Surrogates court. To learn more about probate, click here.

Trust- A trust also plans for a person’s demise.  The person that creates the trust is called the Grantor or Settlor.  That person appoints a trustee to follow the terms of the trust and act as a fiduciary toward the Grantor.  In some instances the Grantor may also be the Trustee.  The trust terms will specify how the income and the principal of the trust are used during the Grantor’s lifetime. It will also specify how the trustee should distribute the principal of the trust upon the passing of the Grantor. A major benefit of a trust is that it avoids probate and the Surrogates court.

Incapacity

An often overlooked part of estate planning is planning for a person’s incapacity.   Who will make my medical decisions and financial decisions if I am no longer able to? Three documents plan for incapacity; a healthcare proxy, a living will, and a durable power of attorney.

 Healthcare Proxy- A Healthcare Proxy specifies who would make medical decisions if you were unable to. This person specified to make these decisions is known as the agent. The person creating their healthcare proxy should discuss their end of life decisions with their agent.

Living Will- A living will gives direction to the agent of the healthcare proxy. It will detail the medical care and life sustaining treatments you would like.

Durable Power of Attorney- A durable power of attorney is a powerful document that allows your agent to make financial decisions for you, even in the event of incapacity.  The agent in a power of attorney can be given very limited power or broad discretion.  In the event broad discretion is given to an agent, the agent can pay bills, transfer real property, plan for Medicaid, and even make gifts to themselves.

With the above documents, you will be well covered for all of life’s challenges. Contact Ira K. Miller & Associates for an Estate Planning consultation.

mark_gastineau_2012_10_08

What does the New York Jets all time sack leader have to do with Elder Law?

Recently Mark Gastineau, the New York Jets all time sack leader, told the public that he was diagnosed with dementia, Alzheimer’s disease, and Parkinson’s disease. Alzheimer’s disease is an awful disease that affects the brain and destroys memories and other important mental functions.  He may not be able to recall family members or how to get dressed. It is an absolutely awful and debilitating disease.  Alzheimer’s disease is a progressive disease and will eventually render Mark Gastineau incapacitated. There are two ways of dealing with incapacity. First planning in advance through advanced directives and second through a guardianship.

Due to this incapacity, Mark will have trouble taking care of his financial affairs and issues giving the doctor direction as to his treatment.  With some basic estate planning, Mark could plan for this eventual incapacity.  By executing a power of attorney and health care proxy a full guardianship can be avoided. These documents are called advanced directives.  A power of attorney will allow an agent of your choice to take care of your financial matters.  A health care proxy allows an agent to make medical decisions for a person if they are unable to give a doctor direction.

If there are no advanced directives in place, a court hearing called a guardianship may need to be commenced to help Mark with his financial affairs and medical decisions.   A guardianship may be commenced by a loved one or a friend.  The person commencing the hearing is called the petitioner. The petitioner must prove by clear and convincing evidence that a person alleged to be incapacitated (AIP) has functional limitations and is in fact incapacitated and in need of a guardian.   To learn more about guardianships or have any questions, contact Ira K. Miller & Associates.

What Happens if I Die without a Will?

What happens if I die without a Will featuring Daredevil Dan

If a person dies without leaving a Last Will & Testament, that person has died intestate.  Intestacy is the default rules in New York has as to who would inherit your property if you did not have a Will.  It is codified in EPTL 4-1.1.  The relatives who are entitled to a share of the decedent’s estate are called distributees.

 

Daredevil Dan Example:

Daredevil Dan got caught up in this Pokémon Go craze.  While he was trying to catch a Pikachu in Bushwick, Brooklyn he accidentally stepped in front of the B52 bus and that was the end of Daredevil Dan.    Daredevil Dan never made it to Ira K. Miller & Associates for any estate planning and died without a Last Will & Testament.  The intestacy laws of New York would determine who inherited Daredevil Dan’s estate.

 

If Daredevil Dan had:
A spouse and no children Spouse inherits everything
children* but no spouse His children would inherit everything
spouse and children* His spouse would inherit the first $50,000 of Daredevil Dan’s estate plus half of the balance. His children* would inherit everything else.
parents but no spouse and no children* His parents would inherit everything
siblings (brothers or sisters) but no spouse, children*, or parents the siblings inherit everything
* If a child dies prior to Daredevil Dan and had children of their own, then Daredevil Dan would have grandchildren. Those grandchildren would step into the Daredevil Dan’s child’s place and inherit in place of the child.

Example 1:

Daredevil Dan was married to Brittany and they did not have any children.  Brittany would inherit Daredevil Dan’s entire estate

 

Example 2:

Daredevil Dan was not married but had three children, Anna, Betty, and Charlie.  Each child would be entitled to 1/3 of Daredevil Dan’s estate.

Example 3:

Daredevil Dan was not married but had three children, Anna, Betty, and Charlie. Betty passed away two years before Daredevil Dan and had two children, Devin and Emma (Daredevil Dan’s Grandchildren). Under this scenario Anna would inherit (1/3), Charlie would inherit (1/3) and Devin and Emma would inherit Betty’s 1/3 share.  Therefore, Devin would inherit 1/6 (.5 of the 1/3) of Daredevil Dan’s estate and Emma would inherit 1/6 of Daredevil Dan’s estate.

Example 4:

Daredevil Dan was married to Brittany and had three children, Anna, Betty and Charlie.  Daredevil Dan died with $170,000 in his bank account which he received from his stunt of swimming in the Gowanus Canal.

In this scenario Brittany would inherit the first $50,000 and would receive ½ of the remainder. The remainder = $120,000 (170,000-50,000=120,000) (1/2 of $120,000 is $60,000). Brittany would inherit $110,000 of Daredevil Dan’s estate.

Anna, Betty and Charlie would each receive $20,000 (1/3 of $60,000).

 

Example 5:

Daredevil Dan was married to Brittany and had three children, Anna, Betty and Charlie.  Betty passed away two years before Daredevil Dan and had two children, Devin and Emma (Daredevil Dan’s Grandchildren).  Daredevil Dan died with $170,000 in his bank account which he received from his stunt of swimming in the Gowanus Canal.

In this scenario Brittany would inherit the first $50,000 and would receive ½ of the remainder. The remainder = $120,000 (170,000-50,000=120,000) (1/2 of $120,000 is $60,000). Brittany would inherit $110,000 of Daredevil Dan’s estate.

Anna and Charlie would each receive $20,000 (1/3 of $60,000).

Devin and Emma would each receive $10,000 (1/2 of the $20,000 that Betty would have received if she were living)

 

 

Do not let New York intestacy laws determine who inherits your money. For more information about different scenarios or Estate Planning, please contact Ira K. Miller & Associates

 

What is a Probate Estate?  

Probate is defined as the official proving of a Will.  Many people think that when they create a Will all their assets will be distributed according to their will. This may not be the case. The only assets that can be administered according to the terms of the Will are assets in the probate estate.

Assets includible in the probate estate are:

  • Any asset owned by the decedent alone
  • Any real property owned in the decedents name alone or assets owned in the decedents name that are titled tenants in common.
  • Personal property such as household items or jewelry as long as this property is not in trust.

Assets NOT includible in the probate estate are:

  • Joint accounts
  • Accounts that have beneficiaries attached to them
  • Any real property titled joint tenants with rights of survivorship or tenants by the entirety
  • Any properties that are in trust

Seven Benefits of a Revocable Living Trust

 

Trust

Many Americans simply leave a will to distribute their assets upon their passing.  However, the creation of a Revocable Living Trust creates several benefits unavailable to those simply leaving a will. Here are seven benefits to creating a Revocable Living Trust

1) Avoiding Probate- A great benefit of a living trust is that it avoids probate. Probate means the official proving of a will.  This official proving is done at the Surrogates Court in the county where the person was domiciled before their passing.  In order to probate a will, a copy of the will must be distributed to everyone who would inherit from the person’s estate if there were no will.  In some cases, locating these people who would inherit can be very difficult, costly, and time consuming.  By creating a trust, this issue can be avoided.

2) Privacy- Another key distinction between leaving a will and creating a living trust is the level of privacy. A living trust is not made public and upon death of the grantor, the distribution of an estate is done in private.  A will becomes a public document once it is probated and anyone can view how you left your estate upon your passing.

3) Quicker access to funds- Probating a will and having the Surrogates Court grant authority to the executor can take months. With a Revocable Living Trust, the successor trustee can gain access the person’s funds quickly and distribute them according to the terms of the trust.

4) Revocable- The trust can be changed, revoked, or amended at any point during the grantor’s life. Once the grantor dies, the trust becomes irrevocable.

5) Protect your beneficiaries from creditors- Terms can be placed in the trust to protect your beneficiaries from creditors. If a trust owns the beneficiaries funds, creditors cannot gain access to those funds.

6) Avoid Ancillary Probate- If a person has property in multiple states, they can deed or transfer all property into the trust. Upon the passing of the grantor, the property can be distributed according to the trust. If a person has a will and resides in New York and has property in Florida, a court proceeding for probate would have to be started in New York. Following the executor given legal authority under the will by the Surrogates Court of New York, a second proceeding for Ancillary Probate would have to be started in Florida in order for the executor to collect the property in that state.

7) More Specific Terms- A trust gives the grantor more options as to when a beneficiary receives an inheritance or what condition is necessary for the beneficiary to receive their inheritance.

A Revocable Living Trust is more complex and expensive than a simple will, however, there are many benefits associated with it.