New York Probate & Estate Litigation Blog

Divorce Requires You To Revise Your Will

philaw@optonline.net (Philip Bernstein) — Sat, 28 Apr 2012 09:51:52 -0500

An article in today'sSan Antonio Express News gives an important reminder to revise your Will (and revocable trusts where applicable) when you are divorced. As in Texas , New York law provides that an immediate legal consequence of a judgment of divorce is that each party automatically disinherits the other. Numerous legal relationships are instantly extinguished. Joint accounts with right of survivorship are converted into joint accounts in common. Ownership of real property which was originally as tenants by the entirety (where there is an automatic right of survivorship between husband and wife) are converted into tenancies in commnon,.Certain provisions in a Will or revocable trust may not longer be desirable.

As the author points out, there may be a considerable passage of time between the settlement of a divorce and the execution of a stipulation settling the action or the issuance of a judgment of divorce. Here in New York, budget cuts have delayed the issuance of a divorce judgment for more than eight months in certain instances. In the absence of a stipulation of settlement which provides for mutual disinheritance and is signed and notarized and in "recordable form" (which means that it is in a form that would qualify it to be recorded with the county clerk just as one might record a deed or a mortgage), spousal rights would not be extinguished if one of the parties died prior to the divorce being issued.

The effect of this would be that the action for divorce would abate as if it had never been commenced. The surviving spouse would retain all joint assets such as the house, bank accounts, etc . In a situation where the divorce was to end a second marriage, the children of the deceased spouse could be out in the cold as their step parent would wind up with most, if not all of the estate.

In the course of my practice, three clients have died suddenly between the date we walked out of the courthouse with a "handshake" agreement which needed to be reduced to writing and signed. The last time this happened was literally the night of the settlement. On each of these times, not only did children of first marriages lose out but also legal fees which were owed were never paid . (Somehow, the surviving spouse never felt the responsibility to cover her late husband's obligations for his legal fees!). While it is sometimes just plain impossible to get the job done in time to beat the grim reaper, the final settlement documents should be done as quickly as possible.

While a divorce often leaves one not only short on funds but also just plain disgusted with the idea of spending even one more penny on legal fees, the review and revision of Wills and trusts should be done at the same time that the divorce is being completed. Just bite the bullet and do it.

New York's Expanded Medicaid Regulations Repealed

philaw@optonline.net (Philip Bernstein) — Fri, 30 Mar 2012 11:14:41 -0500

It isn't every day that the State of New York gives residents a break but that is what happened on March 27th with the repeal by the state legislature of the new medicaid regulations which expanded the definition of an "estate" for the purposes of medicaid recovery. We now return to the prior definitions in effect prior to last September which limit assets subject to recovery to those within the estate of a decedent which would pass either by will or by intestacy. Additionally, the proposed elimination of spousal refusal was eliminated.

The significance of this development is hard to overstate.In the absence of repeal, the difficulty of protecting the assets of New York residents who require skilled nursing care would be daunting, if not impossible in many cases. We now return to the system that was in effect prior to the implementation of the more onerous regulations this past September.

Brooke Astor's Estate Is Settled

philaw@optonline.net (Philip Bernstein) — Thu, 29 Mar 2012 10:01:29 -0500

As reported in today'sWall Street Journal , the hundred million dollar estate of socialite Brooke Astor, who died in 2007, has finally been settled after what can only be seen as a "long strange trip". Ms. Astor's case first hit national headlines when her son Anthony Marshall was accused of the most egregious acts of elder abuse after it was found that he literally kept his mother in abject squalor on her Westchester County estate. Later events ultimately led to the conviction of both Marshall and his lawyer Frank X Morrissey on multiple felony charges for their scheme to loot her estate. Most of the estate has been left to various charities including the New York Public Library, New York University, and the Metropolitan Museum of Art among others.

A signature part of Ms. Astor's legacy was designed by her to improve education in New York. This consists of a thirty million dollar fund to be administered by the estate as the Brooke Astor Fund For New York City Education. Meanwhile, her son Anthony Marshall, who is now eighty eight, will still receive approximately fourteen million dollars from his mother's estate as part of a settlement which cut his inheritance in half.

Whitney Houston Planned Ahead And Created Trust For Her Daughter

philaw@optonline.net (Philip Bernstein) — Tue, 27 Mar 2012 06:44:45 -0500

In spite of all of the claims and controversy swirling around the death of the entertainment icon Whitney Houston, her will shows that she planned ahead and took steps to insure that her daughter Bobbi Kristina would be financially protected and provided for. As fellow blogger Bradley Anderson reports here, Houston was aware that her eighteen year old daughter was already dealing with many of the same demons which plagued her own life, having had bouts with the effects of drugs and alcohol. Add to that the real possibility that one of the less reliable and trustworthy folks in the circle surrounding Houston could gain control of the singer's estate and dissipate the assets, she chose the route of a testamentary trust. Thus she sidestepped the dangers of an estate fight with ex-husband Bobby Brown. While our reach from the grave to protect our loved ones is indeed finite, a well-constructed trust can help focus and safeguard assets for the benefit of a child already deprived of the guidance of a loving parent.

Probate Judge Orders Rosa Parks Estate Not To Dispose Of Property Without His Permission

philaw@optonline.net (Philip Bernstein) — Mon, 26 Mar 2012 21:36:10 -0500

The Detroit Free Press reports on the the latest twist in the continued litigation involving the Rosa Parks estate. Since her death in 2005, Ms Parks' nieces and nephews have been at odds with the estate's personal representatives about the disposition of her property, papers, photos and other mementos with an estimated value as high as ten million dollars although the estate is valued by some to be at no more than four million dollars.

Ms. Parks' relatives asked for the probate court to order that the estate's personal representatives post a bond of eight million dollars to protect them against the possibility that items might be improperly sold. The court refused, the judge choosing instead to be personally involved in the estate's administration. Rather than give the representatives the ability to dispose of the property on their own, he directed that he be advised of all proposed asset sales and that nothing be sold without his permission. There have been charges and counter charges going back and forth concerning concerning the various rights of the family members and the legal representatives who claim eighty percent of the value of the estate based upon a settlement agreement the parties entered into prior to the start of a trial in 2007.

While the judge declined to order the posting of the bond, this does raise some interesting issues. In New York, it is common for folks to provide in their wills that there be no bond or undertaking required of their executors and trustees. While that can save considerable expense (the annual premium on a bond for a relatively modest estate can cost thousands of dollars), there is something to be said for attorneys not slavishly including this proviso --at least without first conferring with the testator. Even the personal involvement of an interested jurist is not always enough to thwart a dishonest or incompetent fiduciary. When we draw our wills, we can not always accurately predict how our executors and trustees will act long after we are gone. The addition of a surety bond will come at a financial burden to the estate , but will also provide a level of protection of hard-earned assets which better insures that the testator's intent will be carried out.

351 Year Old Estate Continues to Stir Up Controversy

philaw@optonline.net (Philip Bernstein) — Sun, 04 Mar 2012 23:53:43 -0500

For those clients who have been known to complain that their legal matters have dragged on interminably, your faithful lawblogger brings you a story about an estate that has yet to be settled after a mere 351 years! As the law blog of the New Jersey firmDonnelly Ritigstein reports, there is major litigation going on in the estate of John Payne who died long before our nation was born.

Apparently, Mr. Payne left some 35 acres to be developed for the good of public education and the rent from167 cottages constructed on the land have provided a steady income stream for that end. The trustees of the estate have petitioned the court to sell the individual units as condominiums and to settle the estate. Others, however, have joined in a series of actions to try and block this from happening, claiming that the testator's intent to benefit public education would be thwarted.

How will all of this turn out? Hopefully, we will not have to wait another 351 years to learn the outcome of this one!

Circumstantial Evidence Leads To Finding Of Triable Issues Of Fact In Undue Influence Claim

philaw@optonline.net (Philip Bernstein) — Tue, 17 Jan 2012 23:09:09 -0500

The Appellate Division has reversed a decision of New York County Surrogate Nora Anderson in the Will of Robin Moles reported at 933 N.Y.S.2d 685 (A.D. 1Dept 2011). She had originally granted the proponent's motion for summary judgment , dismissing the objections of the decedent's nephew who claimed undue influence and a lack of testamentary capacity.The Will disinherited the longstanding beneficiaries of the decedent's longstanding earlier will.

In reversing, the Appellate Division noted issues of fact as to whether or not the decedent actually understood that the new will would result in the disinheritance of those she had long favored. It was further determined that there was substantial circumstantial evidence which surrounded the will signing . These issues included the condition of the decedent's health, family relationships and events indicating that there might have been undue influence exerted upon her. An earlier report of the Adult Protective Services had also found that decedent's judgment had been "impaired" and a guardianship proceeding was recommended to "safeguard her".

The court found that circumstantial evidence may demonstrate undue influence in executing a will , provided that the evidence is substantial.In reviewing this case, however, it should be kept in mind that proving undue influence is the legal equivalent of climbing a mountain. It is always a difficult challenge. There is almost always influence involved in the making of a will but that does not mean that it is "undue" influence. It is always necessary to show that the intention and will of another was substituted for the free will of the decedent. That may be possible to do in cases where ample medical evidence exists to show a diminished capacity coupled with a testator who was visibly under the control of a person benefiting from the new will which has substantially altered an established testamentary scheme.

This case has been remanded to the Surrogate for trial. If there is no settlement, we may get to learn of the outcome sometime later this year.

Petitioners Establish Prima Facie Case To Admit Will To Probate-- But Triable Issues Of Fact Based Upon Medical Evidence Lead Appellate Division To Remand For Trial

philaw@optonline.net (Philip Bernstein) — Tue, 20 Dec 2011 15:03:15 -0500

The Matter of Lena A. Greene 932N.Y.S.2D 544 which was decided by Dutchess County Surrogate Pagones and subsequently reversed by the Appellate Division of the Supreme Court would seem to be pretty close to the model case for a successful will contest. The Appellate Division rightly points out that since the Will contained a self-proving affidavit attesting to the conditions under which it was executed, the petitioner's had met their burden of proof to establish a prima facie case that the Will had been duly executed. The Court goes so far as to opine that even though "the record does not indicate that the will execution was supervised by an attorney, or even that an attorney drafted the will" and that there was therefore no "presumption of regularity" the combination of the fact that the Will contained an attestation clause and a self-proving affidavit was sufficient to establish a prima facie case.

That, however, is where things started to unravel for the petitioners. Evidently the objectant --who was not left as much money as petitioners-- was able to introduce uncontroverted medical evidence that the decedent was unable to execute documents either before or after the date on which it was alleged that she had signed her will. This medical proof creates a triable issue of fact for a jury to decide just how genuine the decedent's will might be.

Juries make these decisions after hearing the testimony of all parties and available witnesses. They also may get to evaluate medical records and listen to expert medical testimony. On November 15, 2011, this case was remanded back to the Surrogate's Court for what will, in all probability be a very expensive trial.

What a jury will do is often impossible to predict and it's usually a good idea to hedge one's bets. One would think that sometime before that takes place, the parties will settle their case. Whether or not this sensible solution is reached here , only time will tell.

New Medicaid Regulations Create Confusion And Require Revision Of Financial Plans In New York

philaw@optonline.net (Philip Bernstein) — Mon, 07 Nov 2011 21:36:55 -0500

New York has revolutionized its medicaid laws and we all have to go back to school! Lawyers and financial planners have always operated upon the assumption that only testamentary assets are subject to claims by medicaid. That is no longer true. The medicaid law revisions now go beyond the probate and intestate estate to include “any other property in which the individual has any legal title or interest at the time of death, including jointly held property, retained life estates, and interests in trusts, to the extent of such interests.” . No longer can assets be easily shielded by a trust, or by deeding the house to a family member and reserving a life estate. Joint bank accounts appear to be fair game for recovery efforts by the state.

At this time, it is difficult to ascertain whether or not trusts established years ago which are outside of the five year look back period will be targeted. The long range planning for Alzheimer's patients will almost certainly be affected. There are conflicts between the new state law and retirement accounts created under ERISA which would seem to be immune from attack -- but no one knows for sure at this point.

There are now real questions as to the future of elder law and estate planning as these areas pertain to asset protection from medicaid liens. We are certain to experience a flood tide of litigation on these issues and some predict that the cost to the state will outweigh any financial benefits. I have begun to see an influx of releases in personal injury settlements that contain representations that the recipient is not subject to a medicaid lien and will hold the payor harmless against any claims asserted by medicaid. It is likely that real estate transactions will include such representations made to title insurance companies since the proceeds of a sale by a homeowner who has been a recipient of public assistance or medicaid may now be targeted as well.

Until things settle down and court decisions in cases not as yet commenced give us a better sense of the direction of enforcement and the limitations which may be placed upon state collectors, care and vigilance will almost certainly be the watchwords.

Death Has Turned Out To Be Less Profitable For James Brown Than It Has Been For Michael Jackson

philaw@optonline.net (Philip Bernstein) — Tue, 01 Nov 2011 22:23:39 -0500

It is generally well known that when Michael Jackson died, he was on the brink of bankruptcy. Since his death, however, his estate has grown by tens of millions of dollars. For the heirs of James Brown, death has not been nearly as profitable an experience.

As Forbes reports here, unlike the King of Pop, the Godfather of Soul did not pay too much attention to estate planning. Not updating his estate plan was a serious blunder when one considers the turmoil in a life with multiple marriages and a child born late in life. This was compounded by a failure to properly set out his plan for the distribution of a large portion of his wealth to worthy charitable causes.

You may recall that the estate has always had a serious problem getting itself together. After Brown died on Christmas Day 2006, there was a long battle to determine how he would be laid to rest and, until things were settled, poor Mr. Browns body lay in refrigeration. Since then, court fights and mismanagement have depleted the once hundred million dollar estate to as little as $14,000 with about twenty million dollars in debts.

The estate's ultimate hope lies in whether or not it can properly capitalize on Brown's large, valuable and popular body of work. Perhaps the proper marketing of Brown's music can still enable his estate to achieve his charitable aims.

Steve Jobs' Estate Plan Was As Inventive As He Was

philaw@optonline.net (Philip Bernstein) — Sat, 29 Oct 2011 21:56:11 -0500

Steve Jobs was not able to avoid death but he had considerably better luck with taxes. As John Palley reports in his firm'sProbate Information Blog, without estate planning, Jobs' estate would have had probate and tax expenses upwards of 3.5 billion (that's BILLION with a "B") dollars but that the judicious use of trusts could have avoided most, if not all, of that amount. Although it is impossible to know exactly what was done to minimize the tax burden on the estate,Palley reports that public property records reveal that various parcels of real property were purchased in the JOBS TRUST and the JOBS, STEVEN P. TRUST.

While the details of Steve Jobs' financial records are well-shielded from prying eyes ,this would not be the case if there had been a Will to be admitted to probate where court filings and proceedings are public record. What we have learned is that Jobs and his attorneys were able to avoid substantial estate taxes by using means which you, too might employ simply by planning ahead and contacting a competent estate planning professional. He who waits until the last minute --and we almost never know when that is going to be -- will invariably leave headaches of incalculable proportions in , and after, his wake.

A Humerous Twist On An Interrorem Clause (With A Not So Humerous Downside)

philaw@optonline.net (Philip Bernstein) — Mon, 26 Sep 2011 21:23:15 -0500

The interrorem clause --also known as the "no contest" clause --is not favored in many states. It is not enforceable everywhere. But in New York, it is an often- utilized poison pill used to discourage disgruntled relatives from challenging grandpa's Will.

Since there is humor everywhere, even occasionally in death, it should be no surprise that some legal bards have tried to inject a bit of doggerel into the documents they draft. One such example is this interrorem clause which Glenn Witecki Esq. of Syracuse stumbled across a no-contest clause which he was good enough to post on the trusts and estates listserve maintained by the state bar association:

"Don’t challenge my Will that states my intent

In clear lucid language I said what I meant

And if you Object to bequests I have made

I will haunt you and hound you from inside my grave

So if you decide to Contest or impede

Or somehow express your distress and your greed

Then prepare yourself soundly to suffer defeat

All you’ll get from my Will is a trick with no treat"

Another attorney on the listserve, Paul Forster of Staten Island immediately noted that the word "intent" is "precatory" in nature and might therefore be seen as a mere "wish" word which states a preference but is not a flat-out directive. He quite clearly points out that the use of a precatory word might well make the clause unenforceable and thereby deny the testator the benefit of having his or her Will carried out in the way it was intended (there's that word again!) to be done.

Given that many judges aren't fond of interrorem clauses and may try to disallow them where at all possible, it is good to keep in mind that humor has its place -- which is probably not in a last Will and Testament.

Michael Jackson's Estate Pays 30 Million Dollars To His Children's Trust

philaw@optonline.net (Philip Bernstein) — Wed, 14 Sep 2011 21:28:17 -0500

It isn't often that one makes more money in death than in life but apparently that is what has happened with Michael Jackson. The rock icon died broke but, as of last December 31, his latest estate accounting revealed assets of more than three hundred million dollars according toAll Night Spots. As a result of this, his executors are now asking for permission to fund the trust created for the benefit of his mother Kathryn and his three children to the tune of thiry million dollars.

Appellate Court Rules That Legal Fee Is Excessive

philaw@optonline.net (Philip Bernstein) — Sun, 28 Aug 2011 20:47:15 -0500

Writing for the Appellate Division's Third Department, Justice E. Michael Kavanagh has ruled that the Albany County Surrogate erroneously approved an attorney's fee of $58,000 in the Estate of Iris H. Benware reported at 927N.Y.S.2d 173. Although the Surrogate has found the fee to be reasonable, the Appellate Division noted that the amount exceeded the amount agreed to by the parties in the retainer agreement. The Court further observed that there were "no extenuating circumstances in providing legal services to the estate"

Apparently, the parties had agreed to pay their lawyer a fee equaling 5% of the estate and a co-executor objected to the fee being in excess of that amount. There was no further agreement with counsel providing for additional legal fees . In his application for the additional fees, counsel failed to claim that he had consulted with the executors or sought their approval prior to providing additional legal services to the estate -- and failed to identify those services which might have justified the additional fees.

It is important to know that, in all estate matters, the Surrogate approves the legal fees to be charged and may determine their reasonableness. In this case, however, when one of the parties disagreed with the Surrogate, the matter was properly taken to the appellate court where four appellate justices could further review the reasonableness of the fee.

Time To Review Your IRA And 401k Designations

philaw@optonline.net (Philip Bernstein) — Sun, 14 Aug 2011 10:57:29 -0500

For years, you have contributed to your IRA and your 401k with the intention of reaping the benefits of these tax-deferred savings. In doing so, it is easy to lose sight of your designated beneficiaries who will inherit these funds should you not live long enough to spend them. Here is an article in the Metro West Daily News that provides important information so that you can keep these important keystones of both your retirement and your estate in order.

One thing that many fail to realize is that the financial institutions which administer these plans sometimes lose these important designations over the years. It is a good idea to review these plans every couple of years to make sure that your original designations of beneficiaries are still in place. Equally important is that this gives you the opportunity to reconsider your choices and to make the amendments that your own family's life changes necessitate.