Articles Posted in Estate Administration

Who you name as a trustee is possibly the most important decision that a person who decides to create a trust will make. The trustee is responsible for distributing income and principal to the beneficiaries of the trust according to the terms of the trust. This typically involves extensive recordkeeping, managing investments and property and being in contact with beneficiaries and other professionals to help manage the assets. Traditionally many people have named trusted individuals such as friends or family to administer the trust, but these days many people turn to corporate trustees for managing trust assets. What are the benefits of a corporate trustee over a personal trustee?

Personal or Corporate

Typically, many settlors, the person who brings the trust into existence, will name themselves, a family member or a friend as the trustee. After all, being a trustee is a major responsibility and failure to administer a trust properly may result in liability being taken on by the trustee, which is why it makes sense to name someone that a settlor has a lot of trust and a strong relationship with.

AN IMPORTANT AND SOMETIMES THANKLESS JOB

There are times in life when we all will have to do or engage in a thankless job.  One such time is when a close friend or a family member asks you to be the executor of their estate.  The difference between an executor and an administrator of an estate is small but noteworthy.  An executor is someone who is appointed by the terms of the will itself to administer the estate.  If there is a trust document to convey property to heirs, they are then known as trustee.  

An administrator is the title for the person who appointed to administer the estate by the Court when someone dies intestate, or without a will, or when the appointed executor refuses or cannot complete the task.  In either event the probate Court Judge must approve of the selection.  A recent survey by U.S. Trust found that three-quarters of high net worth individuals choose a family member or close and trusted friend to be the executor of their estate and two-thirds of the same people chose a friend to be the trustee for their testamentary trust.  The process is started when the executor presents the will and a death certificate to the Surrogate Court in the County in which the deceased resided.  The Court then issues letters testamentary to the executor, which is when the hard work begins.

COMMON PROBLEM

There is much talk lately of how to deal with email, facebook, twitter accounts, et cetera of people who pass away.  For those of us who have friends or family who passed away and see their facebook account send a reminder to all of their friends on their birthday or some other event, it is nothing short of strange, even ery to see their former friend live into perpetuity in the digital realm.  Many people use it as an opportunity to post memories and give a public shout out to the living that their friend or family is still alive in their heart.  Others find the matter to be a painful memory.  

Facebook instituted a policy whereby a legacy contact can delete your account or transition the account to a memorialized account, whereby your name will be changed to a remembered account (more properly a “remembering account“).  Currently, New York does not allow an executor, or anyone else for that matter, to access the emails, online drives and various other digital accounts owned by a person after they pass away.  If it was private while the person was alive, shouldn’t it be alive after they pass away?  Yet, this is a rapidly evolving area of the law, with private corporations creating their own rules in the absence of legislative pronouncements to the contrary.   In the 2012-2013 legislative session, Representative M. Kearns introduced a bill that would address the issue of access to such accounts by an executor.

ORDER OF PAYMENT

It should not be a surprise to anyone that when someone passes away, their estate must pay for all legally binding outstanding debt owed by the decedent just prior to passing. New York as well as just about every other jurisdiction has laws that address how the estate puts creditors on notice that they must file a claim, but how the creditor must go about making a claim and getting paid from the estate. As in other areas of the law, there is an order and priority to the claims that can be paid. The administrator has a fiduciary obligation to the heirs to distribute the estate to the terms of the will. That fiduciary obligation also extends to creditors of the estate. The payment of expenses, ensuring that all disbursements are properly documented and all taxes and fees are paid are core responsibilities of the estate administrator.

To do this, the estate administrator must first understand what assets the deceased owned, the value of those assets, which in and of itself costs money. When an estate is insolvent, the creditors will surely examine every expenditure by the administrator to determine if they acted appropriately. On the other side of the ledger, the administrator must determine if the claims are valid or overpriced and inflated. The estate administrator has an obligation to dispute all claims, except properly owed, legally enforceable obligations. Since the final accounting by the estate administrator presupposes that all parties are already involved in litigation and there is a Court already scrutinizing all credits and debits, the likelihood that a party will enforce their rights, or, more specifically, object to the final accounting, is all the much greater. The balancing act that the estate administrator must engage in can be a complicated endeavor.

When a married person applies for Medicaid, the government looks at the collected, or, pooled, resources of the two to determine if one of the two spouses is eligible for Medicaid. If the combined income of the two spouses is above the income threshold set by law, the balance must be paid to the nursing home of the dependent spouse.  But what income provisions are allowed for the spouse who remains in the community?  What do the get to keep?  Is the community spouse allowed to tap into the income of the dependent spouse if his/her income is not enough?

The legal, financial benefits that allow for the community spouse to keep a certain amount of income has the terrible name of spousal impoverishment standards. This contains an amount of money, known as the minimum monthly maintenance needs allowance (commonly known as or referred to as the MMMNA). The figure from July 1, 2015 to June 30, 2016 is $1,991.25 per month. Starting on January 1, 2016 the maximum monthly maintenance needs allowance is set at $2,980.50 per month. This is the maximum the community spouse may keep before being required to contribute to the medical needs of the dependent spouse (NOT minimum, so not to be confused with the MMMNA).

WHAT IF THIS IS NOT ENOUGH?

On June 24, 2015 a trial Court in California invalidated a California law as unconstitutional, which created a default surrogate decision maker when that individual is mentally incapacitated and does not have a family member, or anyone else for that matter, to make key decisions for them.  The law and the issues addressed are not limited to California.  Even though by definition, the law deals with individuals with no proxy decision maker, that does not mean someone did not exist in the past or could not step up to become one.  Proxy decision makers pass away themselves, they move or simply just fade away and no longer attend to their responsibilities.  New York law deals with these issues in a rather collaborative way.  In 2010, New York enacted the New York Family Health Care Decisions Act, which creates a decision ladder for medical professionals who need to know with whom to check with for certain critical decisions.  It was designed to avoid the parade of horribles that the California law dealt with.  Certainly, no one wants a loved one or relative, even a distant relative, to have to rely on these provisions; they are used as a last resort.

DETERMINATION OF INCAPACITY

In the absence of a health care proxy, The New York Family Health Care Decisions Act begins to shape decisions, for all intents and purposes, at the time of the determination of incapacity.  

Almost six months after the untimely suicide of comedian Robin Williams, his wife and children are embroiled in a contentious legal battle over his estate. Court documents filed in California during December and January pit his last widow, Susan Schneider Williams, against his children from his two previous marriages: Zak, Zelda, and Cody Williams in a battle over money and property in his estate. The family is not only arguing over the apportionment of wealth that Robin Williams acquired over four decades of acting, but they are also fighting over personal effects and belongings of the late actor.

Sides of the Case

In the documents filed with the courts, both sides want to hold on to the majority of Robin Williams’ memorabilia that he accumulated over his lifetime. This includes his bicycles, toys, fossils, and other personal reminders of him as a husband and father. The papers show a schism between his last wife, who he married in 2011, and his children that were a highly visible part of his life.

It has been said that life is a journey, not a destination. So it makes sense that in our last days, on our final journey, we should strive to have a good one–a bon voyage.

While talking about end of life issues–particularly our own–can sometimes be uncomfortable, the best way to make sure that your end of life wishes are honored is to lay them out in writing and make sure that your loved ones are aware of them. Don’t miss the opportunity to have a bon voyage–take the opportunity to set out your end of life wishes and take control of your journey.

Unfinished Life Matters

While many New York residents familiar with and have an existing will in place in the event of their death, most people do not realize that estate planning documents extend far beyond a last will and testament. The world of estate planning documents includes not only living wills and advanced medical directives, but also trusts. Trusts offer several benefits associated with them, and come in two forms: revocable and irrevocable.

Benefits of Having a Trust

Trusts can not only provide for loved ones upon death, but they can provide for the person who created the trust during their lifetime. This is important in cases where the creator has a health issue, a mental disability or incapacitation, and other scenarios. Trusts can be administered without the need to involve a probate court, and can therefore protect privacy as to the contents of the trust. Trusts also serve as protection of assets for trust beneficiaries, and offer a wide variety of options in creating them to suit different needs.

Family feuding is all too common, and finances are often at the root. One argument often made in legal cases involves these matters is that an adult child or other close relative is abusing a position of trust and confidence with a parent to take advantage of them financially. Proving such an abuse is the challenge of an undue influence lawsuit.

Undue influence is usually defined the use of confidence for the purpose of taking unfair advantage of one with a weakness of mind (or other vulnerability). In other words, undue influence is about pressure. The question is when does pressure become excessive, and thereby amount to undue influence. In a legal case where undue influence is an issue, a court may consider a number of factors:

1. Unusual or inappropriate time of discussion of the transaction;

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