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.

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.

key-01

Key Parties to a Trust

key-01   This article will focus on some of the key parties to a trust.  There are generally three parties to a trust; the grantor, trustee, and beneficiaries.

The Grantor or Settlor is the person that creates the trust.  This person will discuss with their attorney their wishes for the trust and the terms that will be drafted into the trust. This is the person that executes the trust.

The Trustee is the person who will receive the property of the trust and accepts the obligation to follow the terms of the trust.  The trustee must be prudent with the property in the trust and is obligated to administer the trust for the benefit of the beneficiaries. A trustee can be an individual or corporation.

The Beneficiary or Beneficiaries are the people who will benefit from the trust property. They have a right to enforce the terms of the trust.

In a typical revocable trust meant to avoid probate, the grantor is usually all three parties.

Daredevil Dan Example:

Daredevil Dan walks into Ira K. Miller & Associates and asks Ira K. Miller & Associates to draft a revocable trust for him to avoid probate.  After his passing, Daredevil Dan wants to leave 50% of the trust to his son Brian, and 50% of the trust to his daughter, Angela.  He only wants Brian and Angela to have access to their money when they are 30 years old. He makes himself the primary trustee and makes his friend Charlie the successor trustee of the trust.

In this trust Daredevil Dan is the Settlor because he is creating the trust, the trustee, because he will manage the trust during his lifetime, and the beneficiary of the trust as the trust says that the trustee shall pay the income to Daredevil Dan during his lifetime and may use the principal of the trust for Daredevil Dan’s health, education, maintenance and support.

Daredevil Dan was lying on a beach in Hawaii when a coconut fell from a tree above him and hit him on the head, and that was the end of Daredevil Dan. When Daredevil Dan passed, Brian was 25 years old and Angela was 21 years old.   Upon Daredevil Dan’s passing, the successor trustee, Charlie will act as trustee of Daredevil Dan’s trust.  He will follow the terms of the trust and hold the money in trust for Brian and Angela until they reach the age of 30.  At that point he will distribute the money outright to Brian and Angela.
Contact Ira K. Miller & Associates for any questions you have regarding trusts.

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.

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.