You’ve probably heard some horror stories about how long it takes someone to be appointed the fiduciary of an estate. It’s true. Probate can be stressful and time consuming at the least.
We’ve seen some estates take years before someone gets appointed as the fiduciary (this is not typical, it shouldn’t take more than a few months in an uncontested proceeding if the Court processes the paperwork quickly.) Probate can be costly and is not private. The world can see what has been filed with the Court. The attorneys here at Sugarman Law, focus on ways to simplify, or avoid, the probate process completely.
Some Key Terms and Process:
Probate is the legal process that takes place after someone dies to validate their will and oversee the distribution of their assets. If there is no will, the estate goes through a process called administration, and assets are distributed under New York’s intestacy laws. (I am going to focus mainly here on probate rather than administration, but know that the process is similar).
In New York, the Surrogate’s Court is the Court which has jurisdiction over estates and the probate process.
The first step is for the nominated executor to file a petition to be appointed with the Court. To do this, we need the original will, all the beneficiaries’ information, original death certificate, all names and addresses of the person’s natural heirs and a paid funeral bill.
We need to know the approximate value of the Estate, as well as possible debts. The Court requires a filing fee, based on the value of the estate. Most estates are over $500,000, so the fee in NY is $1250.00.
If there are minor children, the Court will appoint a guardian ad litem (GAL) to protect the interests of the minors (yes, the estate has to pay for that too!) If people do not consent to the appointment of the named fiduciary, a process server will have to serve a copy of the documents on that person. If someone decides to contest the Will, it could take months to resolve, and a hearing could be involved if it is not settled. How many times have you driven through your neighborhood and wondered why that house has been vacant for years?
Contesting a Will. The Court will review the will to ensure that it is valid, meaning the testator (person who signed the will) was over the age of 18 and of sound mind when they executed it. If everyone with an interest in the estate signs a consent to the appointment of the executor, then the Court will approve the appointment of the executor. But there is always a chance that someone will contest the will. There are few reasons to contest a will but it can be costly to defend it, even if there is no evidence to support their claims.
Some of the reasons to contest are as follows:
If the testator was forced to change their will or give someone something in their will, this is called Undue Influence. This might be a family member or even a caregiver manipulating an elderly person to put things into the will for their benefit. Improper Execution (not having two witnesses present, not signing at the bottom, etc.) is another common reason a will is not validated. Holographic wills (a handwritten will) is generally not valid in NY, with few exceptions. A third way to contest is whether the testator lacked capacity to sign a will (potentially struggling with dementia, for example). This is hard to prove without medical or other evidence that the person did not understand what they were signing.
Once an executor or administrator is appointed by the Court, that fiduciary is allowed to marshall the estate (collect the assets), pay the bills, and distribute the assets to the beneficiaries. If the estate has real property (like many people in NY) the fiduciary cannot act until they have been appointed.
So what do you do about this? How can you make it easier for your family when you pass?
Here are four ways to ease that stress and keep the transfer of assets straightforward:
- Use Beneficiary Designations
Keep your beneficiaries up to date on all of your financial accounts. Think about everything you have: insurance policies, retirement accounts, investments, etc. Many can be transferred automatically to a named beneficiary upon your passing. This is called “passing outside your estate.”
New York also allows POD (Payable on Death) and TOD (Transfer on Death) designations for certain accounts. These actually override your will so you need to review them when life events change. Think about people getting married, children being born, people getting divorced, etc.
- Create a Trust
We have covered trusts a lot in our posts and they are a key estate planning tool to avoid probate. You can create a revocable trust or an irrevocable trust. Trusts are not public, so they are more ideal for people looking to keep things private. With no court involvement, assets can be distributed a lot faster since the trustee has already been named.
Trusts are effective for avoiding probate because assets are no longer legally owned in your individual name. The trust itself is the owner. Trusts also offer control, allowing you to set conditions on how and when assets are distributed, while avoiding the time and expense of probate.
- Look at Joint Ownership and TOD for Property
If you live with a significant other but aren’t married, live with a roommate, etc., you can do a joint tenants with rights of survivorship (JTWROS) so the house you both live in can go automatically to the surviving owner.
New York also permits Transfer on Death (TOD) registration for certain types of property, like a car, allowing them to bypass probate. New York does not allow TOD deeds for real estate.
4. Create a Solid Will
Make sure you choose an executor who is willing to be clear on how you would like your assets distributed. Family members can get into disputes when they think they are owed something and there isn’t a clear direction on what should happen. I see it happen far too often that someone passes away and not only does the family deal with the grief and loss of a loved one, but also the pain of family arguments over assets.
Planning is a part of our everyday lives. We plan social events and holidays. We plan for vacations and trips. We plan meals and daily tasks. Estate planning often gets pushed to the back burner and then it’s too late to put the necessary policies in place. As we enter a new year, this is the perfect time to get your estate planning documents in order.
If you are interested in discussing more about estate planning, reach out to us here at Sugarman Law. We can answer all the questions that will come up in the process, explain the specifics thoroughly, and ensure your documents are properly executed when the time comes.
