When someone is a fiduciary (Executor or Administrator) of an Estate, they are accountable to the people who have an interest in the Estate.  This includes the beneficiaries.  When they are doing their job correctly, they are transparent, honest, and communicative.

What if they aren’t doing those things?  What if they are being secretive, or doing things that don’t seem right?  Or are doing nothing?

Sad to say, these things happen with some frequency.

The remedy in New York is filing a “Petition to Compel an Accounting”.

This is a Surrogate’s Court proceeding which causes a Citation to be issued to the Fiduciary, directing them to appear in Court and file a formal accounting (or otherwise explain why they haven’t yet).  As in any Surrogate’s Court proceeding, the person asking for relief (the Petitioner) files a Petition which explains what’s going on.  It’s a pretty simple Petition, “I am a beneficiary in the Estate of Smith. Joe  is the Administrator.  It has been more than 7 months since Joe was appointed, and he has not accounted.  Make him file an Accounting”.  The wording is a bit more legal, but essentially that’s what it says.

Why 7 months?  That’s the time period for creditors to file claims, so generally we don’t expect a fiduciary to account before that time.

The “Petition to Compel” is served on the Fiduciary.  When the Fiduciary appears in Court in response to the Citation, the Surrogate generally asks a few questions:

  • Have you filed an Accounting yet?  If so, the “Compel” proceeding is over.  If not, the next question is “why not?”…
  • There are all kinds of answers, but no matter the explanation, the next question is, “when can you get it done and filed?”
  • Depending on the response, the next question will be “Are you willing to consent to an Order directing you to Account?” The answer should be yes, and then…
  • How long will you need?  The choices are usually 30, 45 or 60 days.  People sometimes ask for longer, but they better have a good reason.

The Court will then note for the record what the Fiduciary has agreed to, and then ask the Petitioner (the one who asked for an Accounting) to “Settle an Order”.  This means the Petitioner (or their attorney) will submit an Order for the Judge to sign that directs the fiduciary to account by a certain date.  Submitting this order is an important step because the time doesn’t start to run until the Judge signs the Order. If it seems strange that the litigants (or attorneys) have to submit the Order for the Judge to sign, I’d say “Welcome to law practice”.

When the Fiduciary files their accounting, this is a new proceeding.  That means their Petition and Accounting gets filed with the Court, with Citations issuing to all interested parties.  This is its own proceeding, where objections can be filed and the REAL issues are addressed.  I will cover this in a future post.

One more thing about compelling an accounting.  What if the fiduciary agrees to account, consents to an Order, an order is signed, and they STILL don’t account. The next step is a Petition for Contempt of Court.  Why is it “contempt”?  Because the person has violated a Court order.  Are fiduciaries ever put in jail for such things?

YES!!!

When things reach that point, they usually do what they are supposed to do.  Sometimes that’s what it takes.

And, sometimes at the outset you suspect it will be that way.  That’s why you get to ball rolling with the “Petition to Compel”.

When I start representing someone who is about to become a Fiduciary (Executor or Administrator) of an Estate, I always talk about “how an Estate finishes”.  Like many things in life and business, if you know where you are trying to go it is much easier to make a good plan to get there.

Not every State handles “estate completion” the same way.  There are two basic approaches:  mandatory accounting vs non-mandatory accounting.

In a mandatory accounting State, there is some proceeding that must be filed so the the Court knows the Estate has been completed and the fiduciary has done what they are supposed to do.  This generally involves filing forms and paying a filing fee, and there are generally time constraints (so if it is not ready to be completed you have to explain why).  I’m not going into more detail because New York (where I practice) is NOT a mandatory accounting State.

In a non-mandatory accounting State, the fiduciary is not required to file anything with the Court to show that the Estate is completed.  This raises two logical questions:

  1. What SHOULD fiduciaries do to complete an Estate and protect themselves?
  2. What happens in New York if there is some issue or problem in completing the Estate?

What a fiduciary SHOULD do is keep good records, communicate regularly with the beneficiaries in a transparent way, file any tax returns that are required, and then….SEEK TO COMPLETE THE ESTATE WITH AN INFORMAL ACCOUNTING.

This is done by showing the beneficiaries what has been done.  This can be done with a letter, or on a spreadsheet, or in any way that shows a bottom line for a proposed final distribution.  With this informal accounting we would send a document called a “Receipt & Release”.  This document essentially says “I know what you did as Fiduciary and I agree it was correct and I agree with the bottom line and I release any claims I may have about this”.  The letter to the beneficiary makes clear that when the Receipt and Release is signed “then you will get your money”.

What if the beneficiaries don’t agree?  Or don’t respond?

While New York is not a mandatory accounting State, the Surrogate’s Courts have an Accounting Department, and there is plenty of law on how one CAN file a formal Accounting Proceeding.  Unfortunately, this happens a lot.  The Accounting Department is where the action is, and most of the really acrimonious disputes are there.

In a nutshell, when a Fiduciary wants approval for what he has done, or what he is proposing to do to complete the Estate, a formal accounting is filed with the Court.  The Court will then issue a Citation to the interested parties, which essentially says “Fiduciary has filed the attached accounting and is asking the Court to approve it.  Come to Court on (date) or a Decree will be issued approving the Accounting.”

If a beneficiary gets such a Citation and wants to dispute something, they come to Court and file Objections to the Accounting.  This then becomes a case, like any other civil litigation….discovery, motions, conferences, etc.

Generally, an expensive, nasty mess.

Which is why it’s better to do a good job as fiduciary and find a way to account informally.

Next post – what if you are the beneficiary and the Fiduciary doesn’t account (formally or informally)…. at that point it’s a “Petition to Compel an Accounting”

 

There are two types of Surrogate’s Court Petitions that often give a lot a value. These are:

Petition to Compel Production of a Will and Petition to Compel an Accounting. These are proceedings that can be used when you are trying to get things going and nothing is happening.   Not only are these petitions relatively easy to bring, they force recalcitrant players to come to Court and/or hire lawyers.  Very often these elements advance a situation and hopefully create momentum to get the matter resolved.

When you are in the right, sometimes the best thing that can happen is your adversary gets an attorney.  When this happens, there is now somebody other than you and me telling the adversary they are wrong.  Sometimes people need to hear it from someone they trust.  Also, the reality of what it will cost to pay a lawyer to defend a bad position is often a big incentive to start negotiating.

PART 1 – Petitions to Compel Production of A Will

I will make some references to New York law, but I dare say there are similar proceedings in most (if not all) States.  For our discussion here, I am primarily interested in the practical and tactical issues in these types of proceedings.

What do we do if someone has died, some time has passed, we know/believe there is a Will (and we believe we know who has it), but for some reason they are not doing anything with it?  There are reasons someone would act this way.  It pays to think about why.  If the person is living in the  decedent’s house, almost anything they do will make their financial situation worse.  Sometimes the person doesn’t have the financial ability to retain an attorney and pay the Court filing fees.  Sometimes they are paralyzed by emotions.  Sometimes they just don’t know what to do.

Of course, sometimes we know what’s in the Will we are looking for and sometimes we don’t (we just know/suspect there IS a Will).  Hard as it might be, you have to find out.

In any event, we need to get the Will filed because until that time, nothing positive can happen and problems just become bigger problems.

Factored into this, sometimes, are situations where a client may have the right to file under intestacy and become the fiduciary (in NY this would be an Administrator).  However, it’s a bad situation when you do the work and pay the fees as if there’s no Will, and then some knucklehead wakes up and files the Will. Just to add another challenging scenario, what if you had inheritance and/or fiduciary rights under an earlier Will…so that if there is no later Will the Will you have would be IT.  Prior wills raise all kinds of issues and problems.

I try to stay away from legal talk and Citations, BUT, the applicable law is pretty clear…

A Petition to Compel the Production of a Will can be brought under Surrogate’s Court Procedure Act (SCPA) sec 1401.  SCPA 1401 says….

“Whenever it shall appear to the court, sua sponte, or by the petition of a person authorized under the succeeding section of this act to present a petition for the probate of a will, that there is reasonable ground to believe that any person has knowledge of the whereabouts or destruction of a will of a decedent the court may make an order requiring the person or persons named therein to attend and be examined in the premises. Service of the order must be made by delivery of a certified copy thereof to the person or persons named therein either personally or in such manner as the court shall direct. The court may either in the order or otherwise in the proceeding require the production and filing in court of any will of the decedent which it finds is in the possession or under the control of the respondent. The court may impose the reasonable attorneys fees of the petitioner in such a proceeding against a respondent when the court determines the respondent did not have good cause to withhold production of such will or codicil.”

So, the Court is authorized to order people to “attend and be examined” regarding Wills they might have.  You start the proceeding with the intention of convincing the Court to issue a Citation directing a person to bring the Will to Court and possibly be examined (questioned under oath).  Per the statute, when the Court signs the Order, a certified copy of it must be personally served (though the Court can fashion alternate means of service if there is a problem).

The person gets served with a Citation, directing them to come to Court at a certain date and time and Answer the Citation.  The most frequent result is that when you Answer the calendar in support of the Petition, the person who was served comes up to the bench, says “Here”, and hands over the Will.  When this happens, this particular proceeding is done.

The ball is then in someone’s court to file a proceeding regarding the Will.  At least now, with the Will filed in Court, if the person doesn’t do anything, YOU CAN.  If they try to snooker you after you Petition, by saying they are named in the Will, you have great grounds to object.  “Look how irresponsible they were, look at conflicts of interest, look what they cost the Estate, etc.”

Sometimes the person gets an attorney and they file the probate papers and get things moving.  If this happens, you got what you needed…something is happening.

Sometimes people come to Court and deny they have a Will.  In this case it pays to consider what questions you might ask this person on the record, which may be pertinent to finding the Will or establishing there isn’t one.

Sometimes people get served with the Order and don’t show up.  The remedy, and this applies to any ignored court orders, is to file a Contempt Proceeding. Are people ever brought into Surrogate’s Court in handcuffs for violating a Court Order? YUP, I have seen it many times.  Also, receiving the Contempt paper saying they are going to be arrested if they don’t show, often has the person come in with the Will and say “Uh, here.”

A few New York Surrogate’s Court notes:

You should check whether the particular County’s Surrogate’s Court does these Petitions in the probate department or the misc. department (yeah, it’s really called that).

Like many proceedings, you have to prepare a proposed Order.  When you serve the Order, since it must be certified you need to ask whether it needs to be Court certified or whether an attorney can certify.  Also, the Affidavit of Service must state that a certified copy was served.

In the statute, where it says “sua sponte”, this means “on its own”.  So, if there is a Court proceeding going on and the Court thinks there is a Will out there, it can issue an order sua sponte (even without someone filing a Petition).  I saw it happen once.

The filing fee for a Petition to Compel Production of a Will is $20.

Coming Next – Part 2 – Petition to Compel an Accounting

Comments and questions always welcome!

 

 

 

Basic definition – A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other asset for another person.

When doing Wills or handling Estates, we are often talking about fiduciaries.  A person who is named as Executor of an Estate, or who is appointed as Administrator of an Estate (in a no-will situation) is a fiduciary.  What does this mean?  Why is understanding this so important?

I usually explain it this way – “A fiduciary has a higher level of responsibility than an individual.  They are responsible to look out for the interests of everyone who has an interest in the thing they are the fiduciary for.  If there is a conflict between an individual’s interest and their responsibility as a fiduciary, they must exercise extreme caution and make sure they fulfill their fiduciary responsibility before looking out for their individual interests.”

Very often a person named as Executor in a Will (who will therefore become a fiduciary) is also a beneficiary.  Is there an inherent conflict of interest in this?  YES, but this is not a prohibition against doing it, it is simply something to heed at all times and to work through carefully.

On the surface, we can see that if a Will names one child of four as Executor, and splits the Estate equally among the four, the Executor should divide the Estate equally and not make their own share higher, or pay their share earlier than the others.  That’s easy.

But there are often others the Executor/fiduciary has obligations to, like creditors and tax authorities.  What happens if the Estate owes taxes, or if a creditor claim arises within the permitted time?  Let’s add the fact that the Executor has marshaled the assets and wants to do right by the other beneficiaries, so he pays them their full shares.  Lo and behold, a timely creditor claim against the Estate pops up but the Estate funds have already been paid out to the beneficiaries.  Guess what?  The fiduciary can  be held personally responsible for breaching their fiduciary responsibility!

Being a fiduciary can often be a difficult and stressful job.  In New York an Executor or Administrator is entitled to be paid a fee for their work.  The fees (called “commissions”) are roughly 5% of the first $100,000, 4% of the next $200,000, 3% of the next $700,000, and so on.  It can add up to some money, but most would tell you, they EARNED IT.  I have to agree.

A few observations about fiduciaries….

  • Selecting an Executor via a Will is a VERY important decision.  Sometimes even more important than naming beneficiaries.  Naming successor Executors in a Will is also very important.  These people will be fiduciaries, so make sure they are up to it.
  • When an Estate is being handled well, usually it’s because the fiduciary understands their responsibility.  When an Estate is not being handled well, or when someone has an issue with the way things are being handled, a “breach of fiduciary responsibility” is generally at the core of any claims.
  • In an Estate Administration (no Will), when people are fighting over who should be appointed fiduciary, they either don’t understand the fiduciaries’ role, or they are fearful that the others don’t.  I have seen this scenario MANY times.
  • The best ways for fiduciaries to avoid problems are to have clear and transparent communications with the interested parties and to keep great records.  Other than outright stealing, nothing will put a fiduciary in a worse position than secretiveness and lack of communication.  I counsel client fiduciaries to be pro-active in communicating with the other interested parties.  I can’t say they always follow my advice, but I KNOW it is the right advice.

I may have given a few practical reasons to do things right, but there is a bigger reason.  If someone named you as Executor, it’s because they TRUSTED YOU.  As difficult as the fiduciary role can be, it is an “honor bestowed”.   That alone ought to be enough for a person behave as a fiduciary should.

If you are that person, remember that.  If you are making a Will, choose someone who will get that!

Sometimes in Surrogate’s Court proceedings there are parties who have an interest in the proceedings but for some reason they cannot legally participate.  This can occur in any type of proceeding:  Probate, Administration and Accounting are the most common.  A party is considered “interested” if the proceeding affects them in some way.  In order to proceed with ANYTHING in Surrogate’s Court, you have to have “jurisdiction” over interested parties.  What this really means is you have to show the Court that the party was legally notified of the proceeding, and they either agree, object or take no position.  Bottom line though, the Court has to know they were notified and given the opportunity to be heard.

In a probate proceeding, the Court must have jurisdiction over anyone who would inherit under intestacy, since these are the only people would would have standing to object.  In an Administration proceeding (no Will), we need jurisdiction over all the inheritors because someone is asking to be named as Administrator, a right that the inheritors also have.

The problem is sometimes the people you need jurisdiction over either cannot consent, cannot legally be served with a notice, or cannot be found.

Here are a few common examples:

  • Minors – in New York a person under age 18 is cannot legally sign a Waiver or object to a proceeding that affects them.
  • People who are mentally or physically disabled.
  • People who are incarcerated.
  • People whose whereabouts are unknown.

If someone fitting any of the above categories is identified as having an interest in a Surrogate’s Court proceeding, the Court will appoint a “Guardian-ad-Litem” (Latin for Guardian for the litigation).  These Guardians represent their ward’s interest in the case and report their findings to the Court.  If they have a basis to file Objections on their ward’s behalf, they are empowered to do it.  Guardian-ad-Litems are usually attorneys who practice in the Surrogate’s Court.  At the conclusion of their service, they file a Report which includes a statement of the time spent, for which they request the Court to set a fee.  This fee is paid by the Estate.

I have been appointed Guardian-ad-Litem many times.  I take the assignments very seriously, and am honored that the Surrogate has the confidence to appoint me. Although many times the reports are pro-forma and state that things are all in order and there is no basis to object, by no means is it always a rubber stamp.  I have filed Objections MANY times, and very often these cases are quite interesting.

For example, I am currently Guardian-ad-Litem in a case where an Administrator was appointed, then found a Will among the decedent’s possessions, which was filed with the Court.  However, they did not try to probate the Will because the Will had writing on it, apparently in the Testator’s handwriting, saying “This Will is no good”. The Will also had sections crossed out.  The Will named a non-family member as the sole beneficiary.  The Administrator took the position that the Will had been “revoked” by the writings on it, and proposed to pay all the money to the decedent’s estranged son.  The Administrator claimed they did not know where the named beneficiary was.  The Surrogate appointed me Guardian-ad-Litem for the beneficiary.   I filed Objections on my wards behalf, because in my opinion it is arguable this Will was not properly revoked.  I then tried to find my ward (who the Administrator claimed they could not find), and within an hour I found her!  I don’t know yet how this will turn out, but at least now the issues can be fairly decided, with all the interested parties being heard from.

I have certain steps I follow when I am appointed Guardian-ad-Litem.  Among the things I do are review the Court file, contact the Petitioner’s attorney and discuss the case, contact my ward (if appropriate), contact other interested parties if necessary, research legal issues, participate in Court proceedings, file a report and any supplemental reports the Court may require.

Anyway, the above are the basics.  In future posts I will discuss other specific Guardian-ad-Litem situations.

What happens if someone involved in an Estate is dead?  These situations are very common.  A few standard approaches apply….let’s look at a few situations:

The most important distinction to know is that PRE-deceased situations are very different than POST-deceased situations.  When I refer to “PRE” and “POST” I am talking about when the person died in relation to the decedent (the one whose Estate we are talking about)

The basic rule is that POST-deceased persons do not lose their rights.  Generally, the interest a post-deceased person had in an Estate now belongs to THEIR Estate.

A quick example – A widow with three adult children dies with no Will.  Her heirs would be her three adult children.  Some time passes and no action is taken in this woman’s Estate and then one of her adult children (let’s make him a son) dies. What are the shares in the widow’s estate?  It would be one-third each to the two living children and one third to the heirs of the post deceased son.  Those heirs would be determined either by the son’s Will, or if he had no will, by HIS heirs under intestacy.  Let’s give the post-deceased son a spouse and 4 minor kids, and no will.  So now, his one-third interest will be divided within his Estate under intestacy ($50K + half to the spouse and the other half among the minor children).

Wait, it gets worse…..if we want to move forward with the widow’s Estate, we can’t even get started until we get jurisdiction over the post-deceased son’s estate.  That is, we have to establish the post-deceased son’s estate before we can even move forward with the main estate.  It is not unusual to process a post-deceased estate BEFORE you can even do the main Estate.

Pre-deceased situations are different.  Let’s take the above example and make the adult son pre-deceased.  In that case, the widow’s Estate would go one-third to each of the the two surviving children and one-third split among the 4 grandchildren.  The daughter-in-law would be OUT.  (Note – in a post-deceased situation she would be IN for a meaningful share).

I have been involved in Estate with multiple “estates within estates”.  These complexities must be addressed or nothing can move forward.

There are a few important lessons in all this:

  • Estates should be addressed promptly.  For various reasons things can get delayed.  I have seen situations where nobody did anything in an Estate for 20 or 30 YEARS!  This usually happens when the only asset is a house, and nobody does anything because some family member is living in the house and then they die (or move, or need money).  But even in non-extreme situations, a delay of a few years due to procrastination creates complications related to post-deceased parties.
  • People should make Wills.  When people don’t make Wills, results are often a crapshoot.  In the predeceased child situation above, if the widow had a Will her wishes would be clear.  Maybe she would have left something to the daughter-in-law…it happens more than you might think.  Maybe she would have put her grandchildren’s funds in a trust and named an appropriate Trustee.
  • People should make Wills, Part 2.  If the post-deceased son above had a Will, it would have been clear what HE would have preferred, and I suspect it would have been 100% to his spouse…for her benefit and so she could take care of their children.  Having the inheritance going partially to the grandchildren is a horrible result, especially if they are minors.  The money would be tied up in Guardianships, with a ton of money wasted, to say nothing of the inconvenience and heartache.  Easily preventable, but a person has to be pro-active and make the Will.
  • When people make Wills, among the most important considerations are the “what-if” scenarios.  Well drawn wills reflect the persons intentions in case someone pre-deceases.  Wills that don’t do this leave too much to chance.

While “estate within estate” situations are more work than estates without this issue, it is a huge mistake to procrastinate.  These situations only get harder, and yes, there are cases with MULTIPLE estate within estates.  My own personal record is six!

If you are confronted with one of these situations, or if you want to prevent such a situation, please contact me.

When I do Wills for clients, I always discuss the option of doing Living Wills and Health Care Proxies.  I consider these so important, and so fundamental to proper practice, that I offer them at no additional charge.  Here are the basics:

LIVING WILL – This is a person’s written declaration that if they are in a hopeless situation, they do not want to be kept alive artificially.  Sometimes I say to clients “This is like that Florida situation from a few years ago, where the woman was in a coma and the husband was feuding with her parents.”  For some reason, everyone seems to remember that case.  The basic forms for a living will provide for pain relief, but invasive life sustaining procedures not be undertaken. Having this all stated in writing makes it much easier for doctors, hospitals and families to know what to do…or not do.

When I state the option, most people opt for it, but not all.  I have not editorial opinion on it.  When people express a strong opinion that they want a Living Will, the sentiment is usually “If I’m hopeless pull the plug, I don’t want to suffer and I don’t want my family to suffer.”  When there is a strong opinion not to do it, it’s usually along the lines of “These things should be in G-d’s hands”.  I never argue.  My informal data suggests that when this option is suggested, people say to do a Living Will about 90% of the time.

HEALTH CARE PROXY – This is different than a Living Will, but crucially important.  A health care proxy designates someone to make health care decisions if you are not able to make the decision.  This would be a “not hopeless” situation.  My usual quote is “A health care proxy comes into play if you are in a coma, but not hopeless, and the risky ‘xyz’ procedure MIGHT help, but who will decide whether to do it?”  The health care proxy gives someone, usually a trusted family member, the responsibility to decide.

I always include the designated person’s cell phone and home #.  Hey, if we need to reach the person quickly we better be able to.  Sometimes people want to have two people have the responsibility together.  I am not a fan of this, but will do it if clients insist.  I often name one person and a successor or back-up.

Obviously, being designated a Health Care Proxy is a big responsibility, so the decision on who to designate is important.  I had some first hand experience with this, and I often relate this to my clients, to illustrate its importance.  Bottom line:  my Dad had named me his health care proxy and unfortunately ended up a a very serious medical crisis where decisions had to be made.  My step-mom and I were not in agreement on what should be done and when, but I had the health care proxy which enabled me to be clear to the doctors and the hospital that I was the one designated to make decisions.  I took the time to investigate ALL the options, and discussed them with her and other family members.  I had made a painful decision that I was comfortable with, but thankfully I did not have to actually implement it because my Dad regained consciousness, lived another two weeks, then passed peacefully (This was in 2010).  The reason I tell this story is to impart that not only did I feel I had honored my Dad’s wishes, but that in the short time he regained consciousness, I told him what had transpired.  In fact, his last words to me were “I’m proud of you”.

Health care proxies are VERY important!

When I am discussing the possible preparation of a Will, I ask a series of questions that follow a general framework.  This tends to bring all the issues to the surface in a logical way.  I respect that people often want to just “tell me what they want the Will to say”, and that very often they have put serious thought into it.  I usually then ask if they would be OK if I asked questions in my preferred order, as it tends to bring out EVERYTHING, including the things I am sure they want to tell me.  Most people are fine with this.

I call my approach the WHO, the WHAT, and the HOW.

WHO – I start with a pretty detailed family tree.  I don’t go back to the Mayflower…what I am looking for is establishing who are the “distributees”, that is to say “who would inherit if this person died without a Will?”.  As mentioned in earlier posts, this is very important because even if those people are not in the Will you have to get jurisdiction over them during probate.  All my will files start with a little family tree diagram.  I get the names, the relationships, the ages, and make note of anything pertinent the client tells me.  Of particular interest are people in the tree who are minors, or disabled, or missing, or elderly.  I make note of pertinent details about them.  During this part of the interview I usually have a sense of what is going on and who is “involved” and who isn’t.  Since the people on the tree are likely to be discussed as the interview proceeds, I can now refer to them all by name and with some clarity as to who they are.  When I have enough family information, I draw a line on my notepad and say….”This concludes the WHO portion of the program, let’s move on the the WHAT”.

WHAT – In this section I make clear that while I don’t need to know every account and asset down to the penny, I do need to know WHAT we are talking about.  I specifically want to be clear about what assets the Will will affect and what assets it won’t.  For example, Wills don’t generally change things like life insurance beneficiaries, or bank accounts with beneficiaries.  This must be looked at carefully because, and I actually say this to clients “I once did an Estate where the drafting attorney did not ask about these things, and there was a horrific result”.  In that case a man did a Will and left everything to his sister, who was his closest relative. However, his biggest asset was a retirement account where he had named a beneficiary, a girlfriend from 20 years ago where there was a bad break-up…Orders of Protection, death threats, etc.  Guess what? – the ex inherited $400K, and there is no doubt that if the drafting attorney had asked, the client would have been told to change the beneficiary. He surely thought a Will leaving “everything to my sister” would do the job.  It didn’t.  So now, I always ask

I also ask about things like title to real estate, and if it’s within NYC I check it on ACRIS (the City’s e-recording system).  Many times we find surprising things and address them.

I basically inquire about the title to any meaningful assets and make notes about it.

And then at some point I say “Now we are done with the WHAT, lets move on to the HOW, as in HOW DO YOU WANT THINGS TO TURN OUT”

HOW – At this point I ask the clients how they want things to go, what is their idea about who should get what?  It is a good idea for people to have thought about this before we speak, and most have.  An interesting question is often whether to do things in terms of dollars or in terms of percentages.  Generally the smaller bequests (if any) should be in dollars, and the broader ones (often called the “residuary bequests”) should be in percentages.  At this point I ask questions that many people have not thought of, which is a series of “what if” questions.  Things should not be left to chance, so we then get into the sometimes uncomfortable “what ifs”.  What would happen if “so and so” dies before you, which is something we ought to provide for.  I don’t take this to ridiculous extremes, but I do go pretty far into it.  Strange things happen, and as long as we are doing a Will, I do not leave these things to chance, especially if someone has a strong opinion, like “if x dies before me, I do not want y to get his share”.  I make sure this is covered.

Also very important in the HOW section is naming Executors and if applicable, Trustees.  The Executor is the person who takes care of the Estate after a person dies. They get the Will probated, marshal the assets, pay expenses and taxes, and make sure the Wills terms are carried out,  Naming an Executor is a VERY important decision.  Co-Executors are permitted and sometimes appropriate. Naming a successor Executor (another what-if) is also important.  Trustees come into play if the Will is establishing aTrust, which would usually apply for a minor or a disabled beneficiary.

Obviously, the above is just a framework.  If the discussion leads to more details about particular issues, of course we explore them.

Funny thing though, when I follow my outline and we reach the end and I ask “Is there anything else?” most of the time the answer is “Nah, we covered it, what happens next as far as preparing and signing the Will?

And so it goes.

Next post – “Living Wills & Health Care Proxies”

 

As noted in previous posts, aunts/uncles/cousins CAN inherit, subject to certain special rules.

During a kinship trial, cousin claimants not only have to prove their relationship, they also have to dis-prove the prior classes.  Specifically, they have to prove that the decedent died without a spouse, children, grandchildren, parents, grandparents, siblings, nieces/nephews.  It can be challenging to prove the non-existence of classes of people.  However, there are a few sources and techniques that we frequently use.  Here are a few:

  1. Testimony – During a kinship trial we generally need court testimony to lay a foundation for the introduction of documents into evidence.  The best testimony often comes from older relatives who can essentially “testify as to the family tree”.  Not everyone can do this, and not every family has someone who can do it. But many do.  In a cousin case we need someone that can testify about the decedent’s grandparents and more importantly, the grandparents children (who are the aunts and uncles of the decedent). Testimony and documents about aunts and uncles is crucial in a cousins case because after all, who are cousins? They are children of aunts and uncles!
  2. Surrogate’s Court records – These are often the gold standard for proof in a kinship case.  This is because the files contain Affidavits where people have sworn to familial information.  So, if you have an old Surrogate’s Court file for Grandpa, where there are Affidavits stating how many children he had, this is very useful in establishing how many aunts and uncles there were.  These files often have other useful peripheral information too.  Outside of New York there are similar Courts relating to probate and inheritance, and they are always worth looking for in a kinship situation.
  3. Obituaries – The internet has made these much easier to search for and obtain.  When you are trying to prove how many children a particular person had, or who someone’s relatives were, obits are often useful.  That being said, sometimes they get it wrong too.  For example, obits sometimes step-children and even foster children are referred to as children.  This can often be explained with testimony.  So, obits are useful, but you have to look at them carefully and be prepared to explain discrepancies.
  4. Census records – You can send away for certified Federal (and State) census records.  The Federal census is every ten years, and at this time you can get them through 1940.  These are very useful in establishing how many children a particular person had.  The records are pretty detailed regarding who was living in a particular household, and how they are related.  As with obits, sometimes the census records really help, and sometimes they present questions that have to be explained.  Like, if in 1920 you have a 3 year old showing as a child in a household, and in 1930 that child is no longer there, what happened?  Sometimes there’s a useful explanation….like, he died.  But what if the explanation is “the family was poor so he was sent to live with relatives down South, and we lost track of him”?  Hopefully you can pick up the trail and account for this person and his/her offspring.
  5. Military records – these can often be obtained and provide useful family information, particularly about a person’s parents.
  6. Church records – Very useful for marriages, births and sometimes deaths. Very often in kinship cases we are going back in time and needing to prove family histories from other countries. Very often the local church records are a good source of documents and leads to other documents.
  7. Cemetery records and tombstones.  Yes – I’ve even gone myself and looked, and taken a picture or two to use as evidence.
  8. Documents themselves – Sometimes documents themselves prove more than what you got them for, and/or provide great leads.  For example, death certificates show marital status and also show the relationship of the “informant”.  Marriage records list parents.  Immigration records list family members and relations. Birth certificates from many places list “number of children born to this mother” (which can either be very helpful or cause a need for some ‘splaining)

The records above are just a few of the more common techniques and sources.  But every case presents unique proof issues, and we are always finding new and creative ways to establish kinship.

If a person dies without a Will, and the closest relatives are aunts, uncles and first cousins, do they inherit in New York?

The answer is YES, but there are some special rules. Aunts, uncles and cousins can inherit if there is nobody in the prior inheritance classes (spouse, kids, parents, siblings, nieces or nephews).  Here are just a few of the special rules:

  • Usually first cousins are not permitted to serve as Administrators of an Estate. The Public Administrator (in the 5 boros, Nassau, Suffolk and Westchester) generally serves as Administrator in cousin cases.  In the other Counties the tax assessor acts as Administrator.
  • In cousin inheritance cases the Estate is divided into two halves, the maternal and paternal sides.  In a cousin case we must look at the status of aunts/uncles/cousins on the decedent’s mother’s and father’s side of the family.  As an example, if there is one cousin on the father’s side and ten cousins on the mother’s side, the paternal first cousin gets 50% and the ten maternal cousins split 50% ten ways.  Life is hard sometimes.
  • First cousins once removed (children of first cousins) can only inherit if there are no other first cousins on either side of the family.  First cousin once removed cases can be tough.

When the Public Administrator handles an Estate, they do anything and everything that a typical family member Administrator would do. They sometimes arrange burial, they clean out apartments and houses, they search for a Will, they receive mail, they sell houses or apartments, they marshal accounts and assets, they deal with claims of creditors, they file tax returns, and ultimately they try to figure out who is legally entitled to receive the inheritance.

When they reach the point where an Administrator would ordinarily pay the money to the heirs, the Public Administrator will file an “Accounting Proceeding”. Essentially, they set forth for the Court what they have done, detailing all the money taken in and paid out, and ask the Court to approve the way they have handled the money and the claims, and to approve fees for their attorneys.  The final thing the accounting proceeding requests is a determination regarding WHO is entitled to receive the balance of the money. The Public Administrator does a kinship investigation, so they generally list (and notify) the people they believe are the cousins. However, in the Accounting Proceeding they refer to the cousins as “alleged” cousins.

When cousins receive a Citation in an Accounting Proceeding where they are called “alleged” first cousins, they should retain counsel and file Objections with the Court.  Attorneys who do this type of work will generally agree to work on a contingency fee basis.

This is the beginning of a “Kinship Proceeding”.  In a kinship case, the cousins have to prove who they are, and thereby claim and ultimately receive the money. This is not as simple as it seems. Not only do the cousins have to prove who they are, they have to DIS-prove prior inheritance classes AND show how many cousins there actually ARE. The proof in these cases consists of testimony and certified documents.  Typically it is necessary (and certainly helpful) to use a genealogist to prepare a family tree and obtain the necessary documents.

Proving negatives creates some special challenges.  In future posts I will address many of the techniques that are used to prove kinship.

For the people who die and create these cases, or for the friends or family who WOULD have been included IF the decedent had made a Will, these cases are often kind of sad. For people who are notified out of the blue that “your cousin so and so died, and you may have inheritance rights”, not so sad.  In law school they called these “laughing heirs” cases. Law students probably think these never actually happen, but they actually happen pretty often.

Next post – “Proof and Nuance in Kinship Cases”