Probate

You Cannot Disinherit Your Spouse

Published on: July 7, 2023 | by Ettinger Law Firm

New York law prevents spouses from being disinherited. Instead, a spouse who is disinherited may go to court and claim their “elective share” which is the greater of fifty thousand dollars or one-third of the estate.

Questions often arise as what the “estate” of the deceased spouse consists of. Naturally, any assets in the decedent’s name only and listed in the estate court proceeding apply. Other assets, known as “testamentary substitutes” because they do not pay by will, and is against which the spouse may make their claim are: bank accounts, investment accounts and retirement accounts with named beneficiaries other than the spouse or, similarly, those same asset if they have a joint owner other than the spouse. An exception would be if the other joint owner had made contributions to the joint account and then as to the contributions only.

Gifts made within one year of death are also available for the elective share claim. Oddly enough, life insurance is not considered a testamentary substitute however annuities are.

Trusts Create Order Out of Chaos

Published on: March 17, 2023 | by Ettinger Law Firm

At Ettinger Law Firm, we are fond of saying “trusts create order out of chaos” — for three major reasons:

First, as noted in previous columns, an ever-increasing number of Americans suffer a period of legal disability later in life. Without your own private plan for disability, consisting of a trust and a “prescription strength” elder law power of attorney, you run the risk of a state appointed legal guardian. Do you want the people you choose to be in charge in the event of your disability, with the freedom to act immediately in your best interests, or do you want the state to appoint someone who will require court permission to protect your assets and your family — which permission is sometimes denied. A guardianship proceeding is expensive, time-consuming and stressful — in other words, chaotic. Trusts create an orderly process whereby your appointed trustees consult with your elder law attorney and are free to act immediately without court interference.

Secondly, trusts avoid probate court proceedings on death whereby wills, even though supervised by an attorney, with two witnesses and a notary, must first be proven to be valid in court proceedings. The client has no control over probate court proceedings – the time they will take or the amount they will cost. Typically, it takes months and, not unusually, one to two years or more. Meantime, property cannot be sold and assets cannot be reached to pay bills. In other words, chaos. With a trust, the trustee may act immediately upon death, list property for sale and access investments and bank accounts.

Estate Planning and Former Spouses

Published on: March 24, 2022 | by Ettinger Law Firm

Over half the marriages in the United States result in divorce. For many people, divorce ends up being one of the most difficult experiences in their life. As a result, when attorneys present a person with divorce paperwork, this individual often fails to consider every little detail of how it will impact their life and does not update their estate plan. Unfortunately, failing to update estate planning documents after divorce could lead to many undesirable complications

A Hypothetical Situation

Imagine, a couple who got married in 2005. The wife had one daughter from a previous marriage. Even though the husband never officially adopted the girl, he treated the girl as she were his daughter during the marriage. A joint trust even referred to the girl as the couple’s “only living child” and named the girl as a residuary beneficiary. These terms have substantial meaning under the law and not considering these statements after a divorce can create substantial challenges.

WRONGFUL DEATH LAWSUIT AS PART OF PROBATE ESTATE

Published on: March 7, 2016 | by Ettinger Law Firm

PROBATE IS UNAVOIDABLE

It is a fact of life that we can never plan for the worse case scenario and there is always risk in anything you do. The law recognizes this special risk, at least in part, in wrongful death lawsuits. In order for a wrongful death action to proceed, a party must apply to the Surrogate’s Court to act as the personal representative of the estate. In essence, that person must stand in the shoes of the deceased for purposes of the wrongful death action. Any and all settlement or award monies must pass through the probated estate under the jurisdiction of the Surrogate’s Court. This can present special issues if you already have a will, but no trust or other legal device to bypass the probate process and your estate is close to the estate tax exemption threshold. The federal estate tax exemption is currently set at $5.45 million dollars.

Anything above the Federal exemption is taxed at a heavy 40 percent. New York’s estate tax exemptions are changing and will continue to change until 2019 when it will match the Federal government’s exemption amounts. After 2019 there is an added problem with New York’s estate tax exemption; specifically, if the entirety of the estate exceeds the exemption amount by five percent, the entirety of the exemption is forfeited and the entire estate is taxed. That means that if your estate is say, for example, 120 percent of the exemption amount, the entirety of your estate will be taxed under New York rates. At the same time, 20 percent of your estate will be taxed at 40 percent. It is important to note the difference between the exemption amount and the taxable rate.

Back to the Basics – Probate Administration

Published on: October 25, 2015 | by Ettinger Law Firm

The death of a loved one is an especially traumatic event. Lives can be upended and surviving family members and friends can be left feeling lost and confused about how to carry on. This is especially true when the death occurs suddenly or under tragic circumstances. Unfortunately, the law does not provide grief-stricken family and friends much time to mourn their loss before important work must be done. This important work involves admitting the deceased’s estate to probate and then administering that estate.

In New York and elsewhere, an individual who dies with a will or similar document in place is said to die testate. If a person does not have such a document in place, the person dies intestate.

Dying Testate: If the deceased left a will, the first step of administering the estate involves probating the will, or proving the will’s validity. Usually this involves simply introducing the will into the appropriate court. Once the will has been probated, the executor or administrator named in the will is tasked with carrying out the wishes of the deceased as expressed in the will, settling any lawful debts the deceased must pay, and providing an accounting or report to the court showing that the deceased’s assets were dispersed according to the terms of the will.

Mentally Ill Man Kills Mother and Still Wants Inheritance

Published on: March 10, 2015 | by Ettinger Law Firm

In 2010, John Armstrong killed his eighty year old mother, Joan Armstrong, by bashing her head in with a brick and then stabbing her body repeatedly to drain the body of blood. However, despite this gruesome crime his attorney is arguing that he should still get his part of his mother’s inheritance. He is one of five children of Ms. Armstrong, who enjoyed success as an artist before her death and included all of her children in her will. His attorney is challenging the state’s slayer rule based on mental illness and incompetence.

No one disputes that Mr. Armstrong killed his mother in 2010. On August 7, the Ocean Springs Police Department responded to a call from Ms. Armstrong friend who said that when he knocked on her door, Ms. Armstrong showed up at the door covered in blood. Ms. Armstrong was found on her back in the apartment with a large open wound to her forehead. John Armstrong told police that he killed his mother because he didn’t want her to leave and go to the pool in the complex. In his mind, he thought she was abandoning him by going to the pool.

A mental exam in 2012 found John “seriously and persistently mentally ill,” and the recommendation of the psychiatrist was that “it is not clear that, even with treatment with antipsychotic medications, Mr. Armstrong can be restored to competence to proceed legally.”

Court Applies Disentitlement Doctrine in Estate Lawsuit

Published on: February 26, 2015 | by Ettinger Law Firm

This case centered on a dispute over the administration of a family trust as well as the interpretation of trust documents. Despite appealing the ruling, the defendant in the case violated court orders and, and the plaintiff moved to dismiss the appeal based on the rules within the disentitlement doctrine.

Facts of the Case

In the case of Adam J. Blumberg v. Gloria M. Minthorne, Gloria and Ralph Minthorne created the Minthorne Family Living Trust in 2008, with Gloria named as the sole trustee. Both parties had children and assets from previous marriages. In regards to the division and distribution of the trust property, one clause stated that the trustee was allowed to transfer the entire estate to a survivor’s trust after the death of one spouse. Another clause left “all the rest, residue, and remainder of the trust estate, including the remainder one-half interest” in an apartment building to Ralph’s children and grandchildren.

Tax Issues to Consider When Closing an Estate

Published on: February 20, 2015 | by Ettinger Law Firm

When a person dies, someone else must step up and close the estate. If that responsibility falls to you, as an executor you must identify all of the estate’s assets, pay off creditors, and distribute what is left to the heirs. However, an added responsibility as the executor is that you must also file all of the tax paperwork for the estate, as well. There are four major tax considerations that you must complete as the executor of an estate.

Filing the Final 1040

The first thing that you must do as an executor is file the deceased’s personal tax return for the year that the person died. The standard 1040 form covers from January 1 of that year until the date of death. If there is a surviving spouse, you can fill out the 1040 as a joint return and is filed as though the deceased lived until the year’s end. A final joint 1040 includes the decedent’s income and deductions up until the time of death in addition to the surviving spouse’s income and deductions for the entire year.

Update: Gandolfini’s Estate Faces Huge Estate Tax Liability

Published on: July 15, 2013 | by Ettinger Law Firm

Last week we discussed the recently unearthed will of former Sopranos star James Gandolfini. The document was filed with a Manhattan court late last month, with the actor’s assets being left to a wide range of people including his two children, wife, sisters, and several friends. Those earlier reports noted that Gandolfini’s assets including life insurance, real estate in Italy, and more. All told he allegedly had more than $70 million in assets.

With fortunes of that size, estate taxes are obviously an immediate concern. There are both federal and state taxes that apply to inheritances. The rates for each are different and they take effect at different income levels. Federal estate taxes apply to non-exempt assets over $5.25 million with a top rate of 40%. Alternatively, New York’s separate tax kicks in at assets over $1 million with rates between 5% and 16%.

Considering there are two levels of taxation and rates that are not trivial, it is critical to account for these potential taxes in an estate plans. Attorneys working on these issues for local residents must be intimately aware of all legal options to guard against the largest tax bills.

Michael Jackson Estate Saga Continues — $500 Million in Debt Paid Off

Published on: July 2, 2013 | by Ettinger Law Firm

When someone passes away, the basic principles of settling the estate seem straightforward: collect assets, pay off debts, and distribute what is remaining per the deceased’s wishes. While that cursory sketch appears easy enough, in practice, dealing with these matters can take years, have a significant cost, and result in prolonged disagreement, destroyed relationships, and even legal battles.

As always, a high-profile celebrity example offers a helpful look at how it plays out in the real world.

The Las Vegas Sun recently reported on the latest in the prolonged battle related to famed pop star Michael Jackson’s estate. The singer died over four year ago, but from most reports the matter is nowhere near being resolved. For one there, there is still pending litigation related to the billion-dollar tour production Jackson was set to complete just before his passing.