November 21, 2015

Surrogate's Court: Renunciations

There are several reasons a person may want to renounce property they inherit. Perhaps they have no need for the piano their deceased uncle left them. Perhaps they would rather the property go to someone else beside themselves. Perhaps they are a high income individual and have no need for additional income or property. Whatever the reason may be for renouncing property, the rules regarding properly/legally renouncing such property are very complex. As such, the information provided below is only intended as a very basic outline of some of the rules, under New York law, on renouncing inherited property.

Under New York law, nearly any inherited property can be renounced if the renouncing party does not want the property intended as an inheritance. In considering whether to renounce or not, it's important to note that a person can renounce all, a portion of or specific items inherited - a renunciation need not be an "all or nothing" decision. In order for the renunciation to be valid under New York law, the following must be done:

     1) The renunciation must be in writing, which writing must be signed, properly acknowledged and filed with the Clerk of the Surrogate's Court having jurisdiction over the deceased person's estate within 9 months of the "effective date of the disposition" (which is typically the deceased person's date of death);

     2) The written renunciation must be accompanied by affidavit of the person renouncing that states that the person renouncing did not receive payment for filing their renunciation; and

     3) A notice of renunciation, which shall include a copy of the renunciation, must be personally served on the Executor or Administrator of the deceased person's estate and a copy of the notice of renunciation, together with a copy of the renunciation itself, shall be served via first class mail upon all people who may receive the renounced property.

A person who renounces an inheritance is treated as if he or she predeceased the decedent, and this treatment of the renouncing party as having predeceased will direct to whom the inheritance is to pass. Note that a party may not accept property and later renounce it - the act of accepting the property makes it so the property is renunciation proof. Also note that once a renunciation is filed, the renunciation is irrevocable - once done, a renunciation cannot be undone.

November 9, 2015

Surrogate's Court: Temporary Administration

Whenever there is an issue which may cause delay in the Surrogate's Court appointing an Administrator or Executor for a deceased person's estate, the Surrogate's Court has the authority to appoint a Temporary Administrator until the issue may be resolved and an Administrator or Executor appointed.

Generally speaking, a Temporary Administrator has all the powers of an Administrator or Executor, except that the Temporary Administrator may not use property belonging to the estate under his or her control to pay or satisfy gifts made under the deceased person's Last Will and Testament and/or to make payments to the deceased person's other family members, called distributees, if such deceased person did not have a Last Will and Testament.

November 4, 2015

Surrogate's Court: Eligibility Requirements for Executors/Administrators


In order to be eligible to serve as the Executor or Administrator of a deceased person's estate, you must meet the following requirements:

     1) be at least 18 years old; and

     2) be mentally competent; and

     3) generally speaking, a citizen of the United States; and

     4) not have been convicted of a felony; and

     5) not be a drug addict, drunkard, dishonest persons and/or imprudent; and

     6) not found by the Court to be ineligible for any other reason.




October 29, 2015

Surrogate's Court: Trial by Jury


As in all courts in the State of New York, if a trial by jury is desired in the Surrogate's Court, a trial by jury must be demanded. In each case initiated in the Surrogate's Court, a jury demand must be made by the Respondent in the Respondent's answer or objections to the Petitioner's petition.  If the Petitioner wants the matter tried before a jury, the Petitioner must demand a trial by jury within 6 days after he or she is served with the Respondent's answer or objections.

If a demand for a trial by jury is not made as outlined above, the case will either be tried by the Surrogate himself/herself or by a referee appointed by the Surrogate's Court to hear the matter.

Surrogate's Court: "Appearing" in the Surrogate's Court


A legal "appearance" is an act by which a party to a Surrogate's Court proceeding, either directly or indirectly, consents to the jurisdiction of the Surrogate's Court and typically makes the Surrogate's Court aware of his or her position with respect the proceeding - either that he or she consents to the relief sought by the Petitioner or that he or she wishes to contest such relief sought. While physically appearing at the Surrogate's Court when your case is called will usually count as a legal appearance, if you are looking for directions to any of the Surrogate's Courts in New York, please visit http://www.nycourts.gov/courts/index.shtml.

Generally speaking, there are 4 ways a person appears in a Surrogate's Court proceeding:

     1) By filing a pleading with the Surrogate's Court which sets forth such person's position with respect to the proceeding; or
     2) By signing and filing a Waiver with the Surrogate's Court, which Waiver will usually state that the person filing such Waiver does not wish to contest the proceeding; or
     3) By filing a Notice of Appearance, which typically does not set forth such person's position with respect to the proceeding; or
     4) By physically appearing at the Surrogate's Court when your case is called and by verbally noting your appearance in the Surrogate's Court record.


Note that if a person is a child or a disabled individual, such person appears in the Surrogate's Court through his or her guardian and the Court has the authority to, and typically does, appoint a local attorney, called a Guardian Ad Litem, to protect such child or disabled person's interests in the proceeding.


August 6, 2015

Surrogate's Court: What Assets Can Creditors Reach?

Before attempting to answer the question: in a Surrogate's Court proceeding, what assets can a creditor reach, it's crucial to understand that, in all Surrogate's Court proceedings, there are two (2) categories of assets: Probate Assets and Non-Probate Assets.

Probate Assets:  In a nut shell, Probate Assets are any assets the deceased person owned at the time of death which are titled solely in the deceased person's name. By way of example, if a deceased person had two (2) bank accounts, one with Bank X, which is a joint checking account with the deceased person's name on it and his son's name, and one with Bank Y, which is a checking account in the deceased person's name alone, only the account with Bank Y will be a Probate Asset.

Non-Probate Assets: In a nut shell, Non-Probate assets are assets the deceased person owned at the time of death which were joint with another person or which have a beneficiary designated on the account. In the example above, the account with Bank X is a Non-Probate asset, because it's a joint bank account. The same is true for "In Trust for," or ITF, accounts.

Note that all of a deceased person's assets, be they bank accounts, brokerage accounts, IRA accounts, life insurance policies, pension accounts, etc. will either fall into the category of Probate Assets or Non-Probate Assets.

So, to get back to the question: in a Surrogate's Court proceeding, what assets can a creditor reach, the first answer to this question is all Probate Assets, subject to certain set-offs for surviving spouses. Probate Assets, no matter what type of assets they may be, are fully reachable by creditors, even if this means that a creditor will end up taking 100% of the deceased person's estate.

So are Non-Probate assets protected from creditors? Well, the answer to this question is, it depends on the type of Non-Probate asset. Without getting into too much detail, the following Non-Probate assets tend to be protected from the claims of creditors:
 
    1) Life insurance policies;
    2) Pension benefits;
    3) IRA accounts; and
    4) Irrevocable trust assets.

While the following Non-Probate assets tend to be subject to the claims of creditors:

    1) ITF accounts;
    2) Revocable trust assets;
    3) Joint accounts; and
    4) POD accounts.



July 26, 2015

Tax: Are Lawsuit Settlements/Judgments Taxable/Deductible?

For the Defendant to the lawsuit, the answer to this question is, it depends. If the Defendant is a business, then the answer is more straightforward, as nearly all lawsuit/litigation costs are deductible as a business expense (including payment of court fees, attorney's fees and payment of the settlement/judgment). When the Defendant is an individual, the rules as to what is deductible on the Defendant's tax return vary greatly, depending upon the type of case and other factors.

For the Plaintiff to the lawsuit, the answer to this question is also, it depends. When the Plaintiff recovers money from the Defendant, by way of settlement/judgment, it is important to identify what "type of damage" is being paid to the Plaintiff. If the damage being paid is a "punitive damage," which is a damage meant to punish the Defendant for the Defendant's behavior, the Plaintiff will always have to pay income tax on the money received. The same is also true when the Plaintiff collects a settlement/judgment where the Defendant is forced to pay the Plaintiff interest on the settlement/judgment and when the Defendant, typically in a workplace lawsuit, pays the Plaintiff money to compensate the Plaintiff for lost wages when the Plaintiff did not suffer physical harm in relation to the lawsuit. The Defendant's payment to the Plaintiff for other damages, however, are not taxable, such as damages paid to compensate the Plaintiff for pain and suffering.

July 15, 2015

Surrogate's Court: Advance Distributions

Elder Law attorneys are frequently asked the question: "Mom/Dad gave Charlie $20,000 to help pay Charlie's mortgage; shouldn't this reduce his share of mom/dad's Estate?"  The answer to this question is: "It depends."

In the scenario outlined above, if mom/dad intended the $20,000 gift to Charlie to be an "Advancement" of Charlie's share in mom/dad's Estate, then the answer is "yes"; however if mom/dad did not intend the $20,000 gift to be an Advancement of Charlie's share in mom/dad's Estate and/or if mom/dad did not make a note or contract with Charlie indicating that such $20,000 gift was an Advancement, then the answer is "no."

What is an Advancement: the EPTL defines an advancement as "an irrevocable gift intended by the donor as an anticipatory distribution in complete or partial satisfaction of the interest of the donee in the donor's estate, either as distributee in intestacy or as beneficiary under an existing will of the donor. . . . No advancement shall affect the distribution of the estate of the donor unless proved by a writing contemporaneous therewith signed by the donor evidencing his intention that the gift be treated as an advancement, or by the donee acknowledging the such was the intention."

Put simply, in order for the $20,000 gift to Charlie to be considered an Advancement, mom/dad must have intended that the $20,000 gift to Charlie be an Advancement and either mom/dad or Charlie must have acknowledged, in writing, that such $20,000 gift was an Advancement.

To take things one step further, let's presume that mom intended the $20,000 gift to Charlie to be an Advancement and left a writing indicating as much, and let's also presume that when mom died she left a bank account with $10,000 in it and a Last Will and Testament which provides that each child of her's, who are Charlie and Alfred, will each get 1/2 of her estate. In this example, in order to calculate the share of mom's estate that both Charlie and Alfred are entitled to, we need to "add back" Charlie's Advancement to mom's estate ($10,0000 bank account + $20,000 Advancement = $30,000 estate) and then divide mom's estate between Charlie and Alfred pursuant to her Last Will and Testament ($30,000/2 = $15,000 for each Charlie and Alfred).

The math above shows what each son would be entitled to if the Advancement was not made to Charlie, but because the Advancement was made, we, quite obviously, cannot not provide each Charlie and Alfred with $15,000 from mom's actual estate (from mom's $10,000 bank account).  Instead, because Charlie would have been entitled to $15,000 had the Advancement not been made, and because Charlie actually got $20,000 as an Advancement, Charlies is not entitled to share in his mother's estate - he is entitled to none of his mother's $10,000 bank account. Despite having received $5,000 more than he should have if the advancement was not made, Charlie is not required to "pay back" the $5,000 to the estate or to Alfred. Instead, Alfred will simply get all of mom's estate - Alfred will get all of mom's $10,000 bank account and nothing more despite being "short changed" by $5,000.

Surrogate's Court: Service of Process/How to Serve a Citation/Order to Show Cause

Unless the Court provides otherwise, in all Surrogate's Court proceedings, there are only 3 permissible ways to serve "process," i.e., the Court's Citation/Order to Show Cause, upon a Respondent to the proceeding:

   1) Service by Personal Delivery: Commonly referred to as "in hand service," serving a Respondent by personally handing him/her the Court's Citation/Order to Show Cause is always a permissible way to effectuate service and is, perhaps, the preferred way to serve a Respondent with process. Note that if the Respondent to be served lives anywhere in New York State, service by personal delivery is the only permissible way to effectuate service on the Respondent. When personally serving a Respondent with process, it is always best to use the services of a professional process server to avoid any potentially unpleasant encounter. If serving a Respondent who resides in New York State by personally delivery, the Respondent must be handed a copy of the Court's Citation/Order to Show Cause no less than 10 days before the return date/hearing date specified in the Citation/Order to Show Cause.

   2) Service by Certified Mail, Return Receipt Requested: If the Respondent to be served lives outside the State of New York, but within the United States, the Surrogate's Court will allow the Petitioner to serve this Respondent by simply mailing a copy of the Court's Citation/Order to Show Cause to the out-of-state Respondent's residential address via Certified Mail, Return Receipt Requested. With this type of service, as soon as the package containing the Court's Citation/Order to Show Cause is dropped in the mail service is complete upon the Respondent - nothing further must be done. If effectuating service by Certified Mail, Return Receipt Requested, the mailing, as outlined above, must be done no less than 20 days before the return date/hearing date specified in the Citation/Order to Show Cause.

   3) Service by Registered International Mail, Return Receipt Requested: If the Respondent to be served lives outside the United States, the Surrogate's Court's Citation/Order to Show Cause should be served upon the Respondent by mailing the Court's Citation/Order to Show Cause to the Respondent at his/her last known residential address via Registered International Mail, Return Receipt Requested. As with service via Certified Mail, Return Receipt Requested, discussed above, as soon as the package containing the Court's Citation/Order to Show Cause is dropped in the mail service is complete upon the Respondent - nothing further must be done. If effectuating service by Registered International Mail, Return Receipt Requested, the mailing, as outlined above, must be done no less than 30 days before the return date/hearing date specified in the Citation/Order to Show Cause.

Note that in certain circumstances, such as when you cannot personally serve a New York State resident because they are purposely avoiding service of the Court's Citation/Order to Show Cause or when you are required to serve process on a Respondent whose residential address is unknown, the Surrogate's Court is permitted to deviate from the methods of service outlined above and may allow service by "nail and mail," service by publication or service by other means.

July 11, 2015

Surrogate's Court: Important Documents & Time Frames

By far the most important documents in any Surrogate's Court proceeding are the Petition, Answer/Objections and Account, documents which are collectively referred to as "Pleadings."

Petition - A Petition is the first documents filed in any Surrogate's Court proceeding. It is the document which tells the court what the person filing the Petition, referred to as the Petitioner, is asking the court to do (typically to appoint the Petitioner as the Executor or Administrator of a deceased person's Will/Estate). The Petition is always the first document filed with the Surrogate's Court, and the filing of the Petition starts/begins the Surrogate's Court proceeding.

Answer/Objections - Answer/Objections are documents filed after, and in response to, the Petition in which a person, referred to as the Respondent, states why he/she thinks that the Petition should not be granted. If an Answer or Objections are filed within the time frame set by the court, the court will hold a conference with the Petitioner and Respondent, during which time both the Petitioner and Respondent will have the opportunity to express to the Court's staff why the Petition should/should not be granted, and, if all outstanding issues cannot be resolved at this conference, the court will take note that the proceeding is contested and the matters will slowly proceed to the point of trial. Note that unless the Court provides otherwise, Answers/Objections must be served upon the Petitioner, and any known Respondent(s), on or before the first Court hearing.


Surrogate's Court: Where Should I File My Petition


Any Surrogate's Court within the State of New York has "jurisdiction over the estate of a decedent who was a domociliary of New York at the time of the person's death." A person is deemed to be a domociliary of New York when such person has a "fixed, permanent and principal home in New York to which the person, whenever temporarily located, always intends to return" - in short, the person must have a home in New York and consider New York his/her permanent home.

Despite that every Surrogate's Court in the State of New York has the power/jurisdiction to make a ruling on any Petition filed with it in regard to a deceased person's estate, only the Surrogate's Court located in the county where the deceased person lived has proper venue, and, in order to avoid a long and costly delay, always file any petition relating to a deceased person's estate with the Surrogate's Court located in the deceased person's county of domocile.

Surrogate's Court: What is the Surrogate's Court


According to statute/law, the Surrogate's Court is the court authorized to "exercise general jurisdiction in law and equity to administer justice in all matters relating to estates and the affairs of decedents." Another, simpler, way of  thinking of the Surrogate's Court is to think of it as the "dead people" Court, as nearly all client contact with the Surrogate's Court is in relation to the estate of a deceased person.

The Surrogate's Court is the court where people file legal papers, called petitions, seeking to be appointed as Executor of a deceased person's estate (when the person died leaving a Will) or seeking to be appointed as Administrator of a deceased person's estate (when the person died without leaving a Will). Note that besides these petitions, the Surrogate's Court will also take petitions relating to trusts, trust management, estate management and the need/desirability of appointing a guardian to manage the financial and health care affairs of an incapacitated person.

July 7, 2015

Surrogate's Court: Definitions


When trying to find the definition of a word or phrase used in a Surrogate's Court proceeding, it's always best to start on page 1. By far the most important statues/laws applicable to Surrogate's Court proceedings are the Surrogate's Court Procedure Act, or "SCPA," and the Estates, Powers and Trusts Law, or "EPTL," both of which contain a definitions section in Article 1 of the statue/law.

While, especially in legal proceedings, it's always a good idea to look-up the definition of a word which you do not understand, some on the most commonly used words/phrases in Surrogate's Court proceedings, other than the words which we all know and understand, include:

   1) Administrator - Any person to whom letters of administration have been issued (note that an Administrator is essentially the same as an Executor, except that an Administrator is the person who is in charge of a deceased persons estate when the deceased person did not have a Will).

   2) Distributee - Any person entitled to take or share in the property of a decedent under the statues governing descent and distribution (or, in other words, any person who would be entitled to a deceased persons property if the deceased person died without leaving a Will). Persons typically thought of as being the "heirs" or "next of kin"of a decedent are, more often than not, distributees of the decedent's estate.

   3) Estate - Depending upon the context, "estate" may mean . . . the aggregate of property which a person owns.

   4) Executor - Any person to whom letters testamentary have been issued (person who is in charge of a deceased person's estate when the deceased person died leaving a Will).

   5) Intestate - A person who dies without leaving a valid Will.

   6) Issue - Unless a contrary intention is indicated: (1) Issue are the descendants in any degree from a common ancestor (typically: grandparents - parents - children - grandchildren - great grandchildren).

   7) Person Interested - Any person entitled or allegedly entitled to share as beneficiary in the estate.

   8) Petition - A verified application . . . requesting action upon a matter or relief provided for in the Estates, Powers and Trusts Law (EPLT) or in the Surrogate's Court Procedure Act (SCPA). **Typical Petitions include a petition for the probate of a Will and a Petition seeking letters of Administration for the estate of a person who dies without a Will**

    9) Process - Citation, order to show cause, subpoena and any other mandate of the Surrogate's Court by which jurisdiction is obtained over a party.

   10) Respondent - Every party to a proceeding except a petitioner.

   11) Testamentary Trust - A trust created by Will.

Surrogate's Court: What is a Citation?

If you have been served with a Citation, you are a party to a Surrogate's Court proceeding. The Surrogate's Court is the court which has jurisdiction over a deceased person's financial affirs and is the Court which a person must petition when seeking to either admit a Will to probate, is seeking to be appointed as the Administrator of a deceased persons Estate (when a person dies without leaving a Will) and the Court which has jurisdiction to hear matters relating to Trusts and Guardianships.

Therefore, if you have been served with a Citation, you are being put on notice that you have an interest, typically a pecuniary or "money" interest, in a Surrogate's Court proceeding relating to a dead person's Estate, Trust or other property.

As a rule, you should always appear, or show-up, at the date, time and Court which appear in the Citation, as this is the time and place where you will be advised of your interest in the proceeding, typically your share in a deceased person's Estate or Trust. In my experience, this is the closest that you will ever come to a "reading of the Will" of the dead person, so it's always suggested that you take the time to appear on the Citation return date.