When I refer to a “probate case”, I am talking about any situation where someone has died and now someone else is now in my office.

In these situations there are 3 main areas I ask questions about.  I can’t think of a situation where these questions would not be asked.  Ask these questions helps me figure out what may need to be done, helps me analyze possible scenarios, and helps me decide whether (and on what basis) I would consider getting involved.  Here are the 3 questions….

  1.  IS THERE A WILL?
  2. IS THE SITUATION FRIENDLY OR UNFRIENDLY?
  3. AM I BEING ASKED TO REPRESENT THE FIDUCIARY, OR SOMEONE AFFECTED BY WHAT THE FIDUCIARY DOES (OR DOESN’T DO)?

 

IS THERE A WILL?  Sometimes it’s not so simple.  Maybe we only have a copy?  Maybe the Will is questionable?  Maybe the Will was revoked?  Maybe we can’t locate the Will?Whatever the story is, I want to know any issues about a possible Will.   Sometimes the answer is a clear “there’s no Will”.  So be it, and we know we are doing an Administration under the laws of intestacy.   But at least we have square one covered…

 

IS THE SITUATION FRIENDLY OR UNFRIENDLY?  Contrary to what many people think, very often these situations are friendly.  That being said, even friendly situations require identifying and locating all the people whose written consent may be required.  This is true whether there is a Will or not.  Anyone who has a possible legal interest must be accounted for in the Court filings, or a fiduciary cannot be appointed.  So, in a friendly situation we would have the interested (friendly) parties sign the right papers (usually a “Waiver & Consent”) for whatever is going on.  If some interested party is unfriendly, I want to know what the problem is.  We can proceed even if there is unfriendliness, but we will have to put those folks on notice (usually with a Citation), knowing they may show up in Court and have something to say.  So be it, we can prepare accordingly…

 

AM I BEING ASKED TO REPRESENT THE FIDUCIARY, OR SOMEONE AFFECTED BY WHAT THE FIDUCIARY DOES (OR DOESN’T DO)? – Very often the person who contacts me is not the fiduciary.  In fact, they contact me because they have questions about what the fiduciary is (or isn’t) doing.   In those cases I ask first about #1 and #2.  I ask about the Will because I want to know what their interest is….a fixed dollar bequest?  a percentage?  an intestate share?  I ask about #2 because rather than assume things are very unfriendly, that is not always the case.  Sometimes nobody has actually asked the fiduciary (m)any questions.  While the fiduciary should have volunteered the info, a clear and polite request from an attorney will often get a useful answer.  Sometimes, it’s only a little unfriendly and things can be resolved with some level of inquiry.  And of course, sometimes it’s VERY unfriendly and the fiduciary is a dastardly sociopath.  In those cases you have to be prepared for ANYTHING.  I’ve been there, and getting involved is sometimes a bad choice.  It’s a choice I make VERY carefully, and if I sense insanity on the horizon, I say NO and never regret it.

Anyway – that’s how I approach every new case.  Three main issues, once we talk about all three I’ll have a good idea of what the options and scenarios are.

BTW – I would NEVER quote a fee, flat fee, hourly fee, percentage, or any other fee, without thoroughly discussing the 3 issues.  It would not be fair to a potential client and it would not be fair to ME (something I DO consider).

Comments and questions are always welcome!!!

 

 

If a fiduciary (in NY it’s an “Administrator” if no Will and “Executor” if there is) has to file an Accounting, where should they start?  What should they do?

The Answer is to know what you should have been doing all along, and if you haven’t been, get caught up as much and as quickly as possible.   Here’s what you should have been doing:

  • Collecting the decedent’s assets and depositing into an Estate bank account.
  • Addressing any creditor claims.
  • Filing tax returns when due and paying any taxes that might be owed.
  • Communicating to the interested parties about what is going on.

Does everyone do all these things perfectly?  Not always.  But if you have to account it should not be difficult to start catching up.  Not only that, if catching us is going to take some time, I’d suggest being open about it by disclosing to the beneficiaries exactly what is going on and how you are addressing it.

I have been using an expression lately that fits here:  “The fact that I should have already done something is no reason not to do it”.  Start doing it.  Collecting assets, dealing with creditors, dealing with taxes and communicating with beneficiaries IS the job.  It takes time and some persistence to do these things.  Just do what needs to be done.  If you need help, get help.  But get it done and communicate.  It’s way worse for everyone when you don’t.

Will some people second guess you?  Maybe, but that’s part of the job too.

For all these things to do, you should have your records and back-up.  If you got a little disorganized, or don’t have all the records, it just takes some time and effort to get what is missing and then organize it.  For many reasons, assets are sometimes hard to locate or difficult to collect.  Most beneficiaries understand this, and most of these problems ARE solvable.  I suggest fiduciaries try to solve these problems, but many times I do get involved as an attorney.  If this costs the estate a few bucks, beneficiaries understand this.

Creditor claims can be tricky and time consuming, but a fiduciary should not ignore them.  Every case is unique when it comes to creditor claims.  You have to factor in the nature and size of the claims, the number of claims, the known assets in the Estate, and know your settlement leverage, whatever it may be.  At the very least, I like to review this issue with the fiduciaries and have a strategy.

Most accountants do a fine job with filing income and estate tax returns for Estates. Common sense says avoid tax season for this if you can.  Accountants are happy to work on these estates when they are less busy.  If you don’t know an accountant, or don’t want to use your own, ask your attorney to refer one.  As a fiduciary, what you never want to do is have tax returns filed late.  When this happens, it’s your fault and you could be liable for any penalties an interest.  One of the reasons to collect assets quickly is have the Estate liquid enough to pay estimated taxes and avoid penalties.  I’d rather a fiduciary over pay an estimated tax and get a refund, than to incur penalties and interest later and be personally on the hook.

This brings up an important point.  When I am an attorney for a fiduciary, who is my client?  Am I the “attorney for the Estate”, as is often said?  I never refer to myself that way.  I consider myself the attorney for the fiduciary, in that capacity. That’s why I give the advice referred to above – I view my role as advising the fiduciary to act correctly in their role.

Finally, when communicating with the other beneficiaries, one should be conscious of any appearance of a conflict of interest.  This becomes clear when, as is often the case, the fiduciary is also a partial beneficiary (ie – the Estate is to be split 4 ways and the fiduciary has a 1/4 interest).  Your communication should always make your role clear, and you should be blatantly non-preferential towards yourself.  You’ll be entitled to you Executor’s fee off the top, and reimbursement of your expenses, plus your beneficiary share.  I want to make sure you get all that if that’s what you want.  (Sometimes fiduciaries do reduce or waive their fee, but that is a personal decision)

It is often said that the best way to settle a possible lawsuit is to prepare as if you would have to prove everything at trial.

When you have the goods, and you show that you did it right, these things resolve.

And if they end up in Court despite this, you are ready.

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.

Questions sometimes arise about where to keep a Will, and who to tell about it. In a perfect world, where families are close and people communicate openly, this would not be an issue.  The person who makes a will should discuss it with his trusted family members and tell them where the will is, confident in the knowledge that when the time comes, the will will be found, the Executor will probate the Will, and its terms will be carried out.

Unfortunately, things don’t always work that way.  Sometimes clients have to resort to deception and skulduggery just to make their will, and they want to keep it a secret.  Sometimes they are comfortable having people know they made a Will, but they don’t want the location of the Will to be known.  When I draft Wills for clients in this situation, I want to respect their wishes and help them achieve their objective.

I always alert Will drafting clients about the importance of deciding where the Will should be kept.  In these situations I look at whether anyone with access to the will would benefit from its disappearance. I recently had an elderly client whose closest living relative is a nephew.  He didn’t care much for the nephew, who would stand to inherit 100% if there were no Will.   He put the nephew in the will for $50,000, made some other cash bequests, and left the rest (about $400,000) to his best friend, with a provision that if his best friend died first, this share was to go to his best friend’s family.  I knew this client long enough and well enough to know this was all legit, but he is very concerned that his nephew would be called to his residence if he died, and then the Will would not be secure.  (As an aside, in my view a person would have to be conscience-less to destroy a Will, but sadly there are a lot of folks who’d do that)  My client is uncomfortable keeping the Will in a safe deposit box, and did not want to leave it with me.  I suggested that we file the Will for safekeeping with Surrogates Court, while he is still living.

Many people, including lawyers, don’t know you can do this.  You CAN, and it can be very useful.  In New York, it costs $45 to file.  The benefit of this is clear:  A person who doesn’t like the Will can’t get at it.  Furthermore, if the person dies and the bad person tries to file an Administration proceeding as if there were no Will (which is what they always do), the Surrogates Court clerks ALWAYS checks for wills on file.  This stops the bad guys in their tracks.  I have filed wills for safekeeping quite a few times in the last 30 years.  I know of a few instances where it prevented mischief.  Just as important though, is that the clients always felt better having done it, and they always appreciated the advice.

What happens when a person dies without a Will? Contrary to popular misconception, their assets do NOT “go to the State”. When there is no will, and a person dies, the laws of intestacy apply. All States have such laws, essentially a logical order with the closest relatives inheriting. In New York, it goes like this:

– if a spouse and no children, all to the spouse

– if children and no spouse, all to the children, per stirpes *

– if spouse and children, first $50,000 to the spouse, then 50% to the spouse and remaining 50% to the children, per stirpes *

– if no spouse or children, all to the parent(s)

– if no parents, all to siblings (or children of predeceased siblings, a/k/a nieces/nephews), by representation **

– if no siblings or nieces/nephews, you start getting to aunts/uncles and cousins. (lots of special rules)

– if no aunts/uncles/cousins, you go to first cousins once removed, ie – children of pre-deceased first cousins (even more special rules)

* I try to avoid using legal lingo, but “per stirpes” come up a lot, and is mentioned in lots of wills.  It means “per the lineage”, and can be illustrated with a simple example.  If an unmarried person dies, and had two adult children, but one of the children had pre-deceased but had three children (grandchildren to the person who died), the estate would go 50% to living child, and 50% split 3 ways among the children of the pre-deceased child.

** Sibling/niece/nephew cases are not done per stirpes, but “by representation”.  The best way to calculate this is to say its sort of like per-stirpes BUT nobody has an advantage or disadvantage by being in a larger or smaller family.  A simple example to illustrate this:  The decedent was not married, had no children, and parents pre-deceased.  He had three siblings, one is living and the other two pre-deceased.  Of the two who pre-deceased, one had two children and the other had four children.   Under inheritance by representation, the surviving sibling would inherit 1/3, and the remaining 2/3 would be divided equally among the six nieces/nephews.

The above is a rough sketch.  There are rules to cover EVERY situation you could think of, and they ALL come up.  When the question is “which relatives are entitled to what percentage”, there is always an answer to that question.  Of course, sometimes it is not so clear who is legally related. As you might imagine, we sometimes have to determine who was married (or divorced), or who was somebody’s parent, or was somebody legally adopted, or whatever became of somebody who has gone missing.

Rarely a dull moment!

Every case has a story, a set of facts that answer the question “What is this about?”

That is always the first question. The first question I ask a new client. The first question I address when telling an associate or paralegal about a new matter, and the first question Judges ask whenever you appear in court.

In the past few years I’ve been focusing on probate and estate administration cases. I always had a few in general practice, and was surprised how much I liked them. Sometimes when I tell people I do “probate and estate administration” they say “Oh, estate planning?” Well….no, the cases I have are usually the ones where they didn’t do any fancy estate planning, and then….they died. This turns out to be most cases where people die, and most people do need professional assistance to get things done and completed efficiently.

It is also sufficiently complicated that not every lawyer is trying to get into it (I like to think it’s because of the complexity, but perhaps other lawyers find it distasteful). I find it challenging and not distasteful. There is something satisfying in bringing a successful conclusion to someone’s affairs.

In these situations, the initial answer to “What is this about?” is always the same….

“So-and-so died, and then……”

Thus begins a probate and estate administration case. In New York, probate means there is a will, estate administration means there isn’t. Either way the dead person’s assets are going SOMEWHERE. Ah, but where, and how, and who is involved, and what’s going to happen?

Although the stories all start out the same (somebody died, and then …), after that it is never the same. Sometimes it all falls into place, everybody is lovey-dovey, and it’s just a matter of knowing what papers to file. Sometimes these cases are dysfunctional family feuds, with acrimony and bitterness that would humble the worst matrimonial case. If contested matrimonials involve anger, jealousy, and other toxic emotions, contested estates have that and more. It is not uncommon to find a range of emotional issues among numerous family members (generally the children of an older person), where none of it has been openly discussed for many years. Then, the dreaded unspoken thing happens (so and so dies….), and now all the things that have not been talked about MUST be talked about. It would be easy to say these cases all come down to money, and many do, but it is also money infused with deep-seated emotional and psychological issues.

I stopped doing matrimonial cases many years ago, precisely because I did not like being involved in such bitterness. One of the things I hated about matrimonial cases was, they never ended. The parties were always coming back for more. Estates are not like that. Even when they are bitter, at some point they end, the dead remain dead, and the living move on. And no matter what they did during the case, as they fought over their relatives money, none of them are getting out of here alive either.

Sometimes people actually realize this during the case and make peace. Sometimes not, but it’s nice when that happens.