New York Estate Planning & Elder Law Blog

Advanced directives to end the pain of terminal illness within a “living will” became a near future possibility for terminally ill individuals at the end of May this year. Euthanasia has been offered to resident of California, Montana, Oregon, Vermont and Washington) for some time, yet physician assisted suicide continues to be an issue set aside by many state governments unwilling to take on the moral controversy of organized religious groups opposed to such legislation. Thirty-seven (37) U.S states still stand firmly against medically assisted suicide, defining euthanasia under criminal statute; or at minimum codified as an illegal, life-terminating act. At present, New York law classifies the act of intentionally causing or aiding the commission of a suicide of another person as second-degree manslaughter (N.Y. criminal statute 125.15).

A History of “Living Will”

Mid-twentieth century integration of the concept of a “Living Will” within U.S. law was originated by the public policy agenda of the Euthanasia Society of America. Intended to influence public opinion in the interest of legalizing physician-assisted suicide, the Society promoted euthanasia as a treatment solution in the event of medical impairment. Today, the term advanced directive associated with living will formation, also refers to a Durable Power of Attorney for Health Care (DPAHC). Advanced directives now provide instructions for medical treatment, including authorization of euthanasia or physician-assisted suicide in states where it is permitted.

Trustees make difficult decisions about estate or trust investments, distributions and requests for disclosure of financial information. If an estate holder’s investment portfolio is comprised of assets held by onshore and offshore institutions, trustee decisions are especially at risk of an inquiry giving rise to significant claims. Where ambiguities exist, the prudential authority of an estate or trust entity must follow the laws of all jurisdictions involved. An estate attorney can provide a trustee with legal representation in a petition for court instructions in an estate or trust litigation matter.  

Trustee Powers and Duties in U.S. Law

In the United States, the common law of estates provides trustees with prudential authority unless there Is reasonable doubt that the discretionary powers or duties are unreasonable (Restatement (Second) of Trusts § 259 (1959)). The Uniform Trust Code (UTC) allows for “judicial proceeding[s]] involving a trust may relate to any matter involving the trust’s administration, including a request for instructions[.]” (UTC § 201(c) (2010)). U.S. courts generally do not interfere prior to the exercise of a trustee’s discretionary authority, and trustees are entitled to request court instructions absent of a legal dispute.

Traditionally, estate planning has primarily been focused on transfer of assets to a tax-exempt shelter for distribution to named heirs or beneficiaries at time of an individual’s death. In addition to a written will, these five (5) directives specifying “end of life” actions to be taken by a Trustee or Personal Representative (“Executor”) may be part of an estate.  

1. Advance Directives

If a decedent is expected to die soon, or has court ordered physician-assisted-suicide in response to a terminal illness, “end of life” directives can be created in a “Letter of Final Instruction” or “Disposition Authorization” with instructions for contact of family members, attorney representation, and funeral and burial arrangements, and organ donation if a “Living Will” is not already present. A “Designated Agent” may be identified to administer those arrangements. A Durable Power of Attorney for Health Care might already be present to manage the transfer of the decedent from a hospice to a hospital.

Homestead exemption protect property assets from probate. Properties recognized under laws of homestead are off-limits to creditors seeking attachment. New York homestead law protects property owner rights to the value of an asset transferred to an estate or trust. Homestead declarations are automatic for title holders of residential property in the state. Jointly owned property owned by a married couple is held as a single married entity, “tenancy by the entirety” – not as individuals. Trustees of revocable trusts seeking homestead protections for property assets from lien, can consult with a licensed attorney specializing in estate probate law.  

NY Homestead Law

Federal and state property taxes are an exception to estate or trust homestead exemption from lien or attachment. No exempt homestead is exempt from taxation or from liquidation for purposes of payment of an outstanding assessment or tax lien. The NY C.P.L.R. §5206 Real property exempt from application to the satisfaction of money judgments outlines criteria for (a) homestead exemption; and (b) distribution of a property asset after the original owner has died. Homestead properties are “exempt from application to the satisfaction of a money judgment, unless the judgment was recovered wholly for the purchase price thereof: 1) lot of land with a dwelling thereon, 2) shares of stock in a cooperative apartment corporation, 3) units of a condominium apartment, or 4) a mobile home.”

Publication of the Financial Industry Regulatory Authority’s (“FINRA”) rule reform by the federal Securities and Exchange Commission (“SEC”) clarifies the enhanced practice rules recently enacted to protect investors from financial exploitation. As of February 2018, FINRA Rule 4512 Financial Exploitation of Specified Adults  requires FINRA members to place a temporary hold on the disbursements of a client’s funds or securities where “there is a reasonable belief of financial exploitation” of a customer falling under the criteria of a “specified adult.” Financial professionals must make a reasonable effort in obtaining the name and contact of a “trusted contact person” (“TCP”) before making changes to a client’s account.

An Added Layer of Protection

Amendment of Rule 4512 fulfills contract provisions for “incapacity” of parties. Rule 4512 allows for a hold on a specified person’s account if a TCP has made a decision that is questionable. The new legislation furthers prudential protections for clients that might otherwise be compromised by account mismanagement. FINRA members have fiduciary duty to a professional standard of care. Similarly, estate laws require fiduciary duty of a legal guardian, holder of power of attorney, executor, or trustee responsible for the administration of an elderly client’s account(s). The new TCP rule is intended as an added layer of protection; alerting an administrator of any exploitation by a third party.

Professional assessors have a duty to a standard of care under federal and state law. New York Department of Taxation and Finance (“DTF”) licensed assessors must take adequate precautions to not commit 1) errors of omission; or 2) commission that would significantly affect a valuation appraisal. All valuation of real property and special property assets of an estate or otherwise, must involve numerous checks during the process to ensure prevention of errors that could affect the value conclusion of an assessment report. Sufficient attention to site inspection should be followed by county recorder record to exhibit due diligence has been practiced so to avoid errors or omissions to the extent no further inspection is required. Evidence that accurate data from reliable sources shows that a value has been ascertained accurately. Only in a circumstance where real property consists of a substantial inventory of assets with value changing characteristics, should repeat onsite inspections be required.

ASB Appraisal Guidelines

The Appraisal Standards Board (“ASB”) of the Appraisal Foundation responsible for the definition and publication of  Uniform Standards of

The New York Department of Taxation and Finance (‘DTF”) recognizes the Office of Real Property Tax Services (“ORPTS”) and Appraisal Standards Board (“ASB”) definition of  Uniform Standards of

Professional Appraisal Practice (“USPAP”) guidelines

for the appraiser inspection process requiring licensed appraisers identify 1) the property to be inspected; 2) the purpose and intended use of the assessment report; 3) the data collection and analysis process; 4) conditions or limitations to valuation; and 5) the effective date of the valuation. Property rights and interests are a key rule element in the rules to professional appraiser valuation of real property in the state.