NBI National Business Institute, White Plains, New York

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NBI National Business Institute, White Plains, New York May 16, 2017

ESTATE PLANNING AND

ADMINISTRATION: THE

COMPLETE GUIDE

PROBATE PROCESS OVERVIEW

Leslie Levin, Esq.

Special Counsel

Cuddy & Feder LLP

445 Hamilton Avenue

14th Floor

White Plains, NY 10601

Phone: 914-761-1300

Fax: 914-761-5372

[email protected]

www.CuddyFeder.com

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CRUCIAL DUE DATES TIMELINE

Following the death of a client, the attorney should be notified by the family and a

meeting can be put on the calendar for when the family wishes to meet to discuss the

administration of the decedent’s estate and arrange to probate the Will. Best practice is

for the attorney to retain the original of the Will for safekeeping. Then upon the death of

the client, the attorney knows the location of the Will. If the client retains possession of

the original, there is a great possibility that the client will lose the Will or forget the

location of the original Will. If the Will cannot be found, the family should consult with

the attorney who drafted the Will, look in the decedent's personal papers, check the safe

deposit box, ask a bank which has been named as fiduciary, look in the decedent's

residence (and if there is more than one residence, a search should be conducted of all

such residences) and the Court which may be holding the Will (New York Surrogate's

Court and Procedure Act ("SCPA") §2507). A Will which cannot be found is presumed

to be destroyed or revoked by the testator. Pursuant to SCPA §1407, a lost Will can be

admitted in probate only if it can be established that it has not been revoked, execution of

the Will is proved that it was in compliance with the New York Estates, Powers and

Trusts Law ("EPTL") §3-2.1, and all of the provisions of the Will are proved by two

witnesses or by a true and complete copy of the Will. The EPTL provides that a Will

must be in writing, signed by the testator in the presence of at least two witnesses who are

at least 18 years of age and competent. Establishing these factors can be very difficult.

Often, probate is not an option and the client's family must choose intestate

administration.

If the Will is in the safe deposit box of the decedent, then a petition may be

brought and the Court may issue an ex parte order (also known as a will-search order)

directing that the safe deposit box be opened and that such person named in the order

inventory the contents of the box in the presence of an authorized person at the institution

wherever such safe deposit box is located (SCPA §2003, 20 NYCRR §360.2). The Will,

if found, should be delivered personally or by registered mail to the Surrogate's Court

clerk.

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If a Will is withheld, a proceeding may be brought to compel production of the

Will under SCPA §1401 if there is reasonable ground to believe that a person has

"knowledge of the whereabouts or destruction of a will of a decedent." Under the New

York Penal Law §190.30, it is a felony to conceal a Will or to mutilate or destroy it with

the intent to defraud.

Family members may believe that a Will exists even thought the decedent

revoked the Will prior to his or her death. A Will may be revoked by the testator signing

a new Will, stating in writing the intent to revoke the Will, the testator burning, tearing,

cutting, cancelling, obliterating, mutilating, destroying the Will (or someone else doing

so under the direction of the testator) (EPTL §3-4.1). Confusion about whether the

decedent had or did not have a Will can lead to unexpected delays and costs upon the

death of the decedent. Therefore, the attorney should stress to the client the importance

of family members knowing whether or not the client has a Will and if such client has a

Will, then the location of such Will.

When the client dies and the Will is reviewed, the attorney will be able to identify

the Executor from the clause in the Will which names the fiduciaries. If the person

named in the Will is eligible to serve, the attorney should contact the individual and

arrange for a meeting. At the meeting, the attorney should review the procedure for

probating the Will and the timeline for the estate administration. The attorney should

convey that the person designated must be capable of handling the responsibilities to

which he/she will be assigned and must have the time and ability to carry out the estate

administration. Please see “Executor’s Duties and Powers” section in this article for

additional details.

A probate proceeding's purpose is to authenticate the Will so that the decedent's

property may be disposed, to appoint and empower the executor to administer the

decedent's estate and to appoint trustees if any are nominated under the Will. SCPA

§1402 (1)(a) provides that any person in a Will designated as "legatee, devisee, fiduciary

or guardian or by the guardian of an infant legatee or devisee or the committee of an

incompetent legatee or devisee, or the conservator of a legatee or devisee who has been

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designated a conservatee pursuant to article seventy-seven of the mental hygiene law"

may bring a probate petition. The probate petition is a written pleading which is verified

in accordance with CPLR §3020 and contains the information delineated in SCPA §§304

and 1402(2).

The complete probate petition is filed together with 1) original Death Certificate,

2) original of Last Will and Testament and Codicil, if any, 3) copy of Last Will and

Testament together with Affidavit of Comparison (22 NYCRR §207.19), 4) Attorney

Certification (22 NYCRR §207.4), 5) Notice of Probate (SCPA §1409) together with

Affidavit of Mailing (if there are charitable bequests to an unnamed charity or of an

unspecified amount, then the Attorney General must also get Notice), 6) Proposed

Decree, 7) Self-addressed stamped envelope in which to forward the copy of the Decree

and Letters Testamentary to the attorney's office, 8) Check representing the filing fee and

9) Check representing the fee for Letters Testamentary and Letters of Trusteeship, if

necessary (current fee is $6 per letter). The Surrogate's Court has official forms which

can be found in the "Green Book" or by using HotDocs. Additionally, a link to many of

these forms can be found at http://www.nycourts.gov/forms/surrogates/index.shtml. A

sample Probate Petition, Affidavit of Comparison, Attorney Certification, Notice of

Probate, Affidavit of Mailing and Decree are attached as Exhibit A. Beginning May

2017, Westchester County requires E-Filing for Surrogate’s Court which includes

Probating a Will. The filing fee schedule can be found at SCPA §2402 and is currently:

Value of Estate or Subject Matter Fee Rate

Less than $10,000 ........................................... $ 45.00

10,000 but under 20,000 ................................. 75.00

20,000 but under 50,000 ................................. 215.00

50,000 but under 100,000 ............................... 280.00

100,000 but under 250,000 ............................. 420.00

250,000 but under 500,000 ............................. 625.00

500,000 and over ............................................ 1,250.00

The attorney should verify that the Will does not have any staples removed,

different paper, text added between the lines, or erasures before filing the Will. If it does,

an explanation must be furnished to the Court for the condition of the Will. For this

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reason, the staple should never be removed from the original Will when making copies.

The Court has the duty to determine the genuineness of the Will, the validity of its

execution, whether or not the testator had capacity even if no objections are brought at

the time of probate.

Pursuant to SCPA §708 the designated fiduciary must file an oath stating that

"the fiduciary will well, faithfully and honestly discharge the duties of the office and the

trust reposed in him or her and duly account for all moneys or other property which may

come into his or her hands. The oath shall also describe the office, and state that the

fiduciary is not ineligible to receive letters." Typically this Oath and Designation is

attached to the back of the Probate Petition. A sample is attached as part of Exhibit A.

All distributees must be served and the process must include the name of the

petitioner and if the Will is nuncupative (SCPA §1403). Preferably, the distributees will

sign a Waiver of Process and Consent to Probate which avoids the need to serve them and

having a citation issued. A sample Waiver and Consent is attached as Exhibit B. If the

decedent is not survived by any distributees is survived by only one distributee, or if the

distributees are more remote than the issue of the decedent's siblings, then an Heirship

Affidavit or Affidavit of Kinship must be filed by a disinterested person. A family tree is

required for filing when the distributee relationship exists to the death of another person

(22 NYCRR §207.16). A sample Heirship Affidavit is attached as Exhibit C. The

Attorney General and the Public Administrator must be cited if there are no known

distributees.

A self-proving affidavit for subscribing witnesses usually found as a separate

sheet at the end of the Will avoids having to search for witnesses at time of testator's

death (SCPA §1406). If there is not a self-proving Will, at least two witnesses must file

affidavits providing "such facts as would if uncontradicted establish the genuineness of

the will, the validity of its execution and that the testator at the time of execution was in

all respects competent to make a will and not under any restraint." A copy of such

Affidavit is attached as Exhibit D. Alternatively, if the witnesses will not provide

affidavits, then they must be examined before the Court (SCPA §1404).

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Under SCPA §2307-a, when a client nominates the attorney as executor, the client

must sign an acknowledgment of disclosure (Exhibit E) stating that the client was

informed that:

 Any person can serve as an executor;

 Any person serving as an executor is entitled to statutory commissions;

 Any attorney, including the attorney-executor, is entitled to legal fees for legal

work performed on behalf of the estate; and

 Absent execution of the acknowledgment of disclosure, an attorney who serves as

executor will be entitled to only one-half of the statutory commissions he would

otherwise be entitled to receive.

This disclosure must also be filed at the time of probate. Additionally, the executor must

file a statement that the executor is an attorney, whether such person (or such person's

law firm) will act as counsel and whether such executor was the draftsman of the Will (22

NYCRR §207.17). A Putnam Affidavit is needed whenever there is a bequest to a person

in a confidential relationship to the decedent such as an attorney, doctor, accountant or

clergy. In such a case, the attorney should also submit a Putnam Affidavit to explain the

circumstances surrounding the gift (see In re Putnam's Will, 257 NY 140, 177 N.E. 399

(1931). Also, if the attorney is designated as the fiduciary, a Weinstock Affidavit may be

needed to explain why the decedent appointed the attorney in such capacity (see Matter

of Weinstock, 40 NY2d 1, 351 NE2d 647, 386 NYS2d 1 (1976)).

Any person who is adversely affected by the probating of the Will may file

objections to probate (SCPA §1410, 22 NYCRR §207.26). For this reason, the practice

of drafting Codicils should be discouraged. If a Will is modified through use of a

Codicil, then both the Will and the Codicil must be offered for probate. Anyone whose

interest was adversely affected by the Codicil now has standing to object to probate. If

instead, a new Will was signed, then the parties adversely affected by the change would

not have standing to object since the old Will is not offered for probate. Such party, if

not a distributee, will not receive a Notice of Probate and may not discover that he or she

has been disinherited. It should be noted that such party will still have standing if he or

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she is a distributee and will inherit less than his or her intestate share under the Will. In

all cases, process must issue to the distributees (or they may be asked to sign a Waiver of

Process).

Adversely affected parties and distributees may contest a Will on the following

grounds:

 Capacity - standard is that the testator:

o Understood the nature and extent of his or her assets

o Knew who he or she would normally be expected to provide for, such as a

spouse

o Knew what his or her Will provides.

 Fraud, duress or undue influence

 Forgery

 Will executed without valid Will formalities

 Existence of a later Will

Therefore, to protect the remaining beneficiaries from an expected Will contest, the

testator should consider giving the intended disinherited distributee a small bequest in

conjunction with including an interrorem provision in the Will (EPTL §3-3.5(b)). By

contesting the Will, the person stands to lose the small bequest. In making this decision,

the testator should consider that a Will contest will lead to increased legal fees and delays

in making distributions to beneficiaries. It should be remembered that all distributees

receive a notice of probate. Therefore, there is no way to avoid a distributee discovering

that he or she has been disinherited, since such distributee will have the right to see the

Will, will know who did inherit and will have the right to contest the probate of the Will.

An interested party as defined in SCPA §103(39) may object to the nominated

fiduciary by filing objections (SCPA §709). Such document shall indicate why the

nominated individual is not qualified and must state the interest of the objecting party.

The executor cannot dispose of any assets before letters testamentary are issued

except for the purpose of paying funeral expenses. In such a case the executor can also

take necessary action to preserve the estate's assets (EPTL §11-1.3). Therefore, an

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executor may also file a request for issuance of preliminary letters testamentary which

give the preliminary executor all of the fiduciary capacities of an executor with full letters

testamentary other than the power to pay or distribute assets to beneficiaries (SCPA

§1412). Such a request may be useful when the interested parties are eager to begin the

administration process of gathering the assets and paying bills and must act before

probate of the Will is complete due to a delay (i.e. parties must appear in Court on return

date due to issuance of citation, infants are involved and the Guardian-ad-litem must file

a report or the nominated executor cannot determine necessary parties). The decree

granting probate will include a provision revoking the preliminary letters.

After the Executor is granted Letters Testamentary by the Court, the attorney

should advise the Executor that EPTL §11-1.5(a) provides that an executor is “not

required to, pay any testamentary disposition or distributive share before the completion

of the publication of notice to creditors or, if no such notice is published, before the

expiration of seven months from the time letters testamentary or of administration are

granted.” The reason for this rule is to ensure that there are sufficient assets to pay the

administration expenses, funeral expenses, debts of the decedent and taxes. Even

following the expiration of the seven months, the executor may not know of all of the

estate’s liabilities. Therefore, the executor can partially satisfy the bequests or

distributive share and ensure a reserve large enough to cover anticipated and

unanticipated claims and expenses.

When making a partial distribution to a beneficiary, the executor should first

require the beneficiary to execute a receipt and release indicating receipt of the payment.

A second receipt and release agreement should be signed by the beneficiary upon receipt

of the final payment. If the beneficiary believes that the executor is unduly delaying

distribution of the assets, the beneficiary can bring a proceeding under SCPA §2102(4) to

require the executor to pay the legacy or distribute share. Such a proceeding can be

avoided by ensuring good communication between the executor and the beneficiaries.

The executor should document the reasons for the delay in payments and the predicted

payment schedule to show good faith and due diligence in carrying out fiduciary duties.

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The executor can commence an action for wrongful death but it must be brought

within two years of the decedent's death (EPTL §5-4.1). If the estate has a charitable

interest, other than a specific legacy, it must register with the New York State Attorney

General's Charities Bureau pursuant to EPTL §8-1.4 and 13 NYCRR §92.2 within six

months of Letters Testamentary being issued.

The attorney should also discuss whether or not the beneficiaries wish to disclaim

any part of or all of the inheritance. Disclaimers are a form of post mortem planning

which allow for altering the beneficial interests of the beneficiaries by the beneficiary

refusing to accept the bequest. Disclaimers are often used to balance out estates for estate

tax purposes and to pass wealth to a lower generation due to the wealth of the intervening

generation. The reasons for wanting to make a disclaimer are numerous. Chief among

them is the need to utilize the decedent’s unified credit. Currently, the applicable

exclusion amount, or unified credit, is $5,490,000. The available applicable exclusion

upon death will be reduced by the amount used to shelter lifetime gifts from federal gift

tax. Because the law is so much in flux and the credit so high, many estate planners are

using Disclaimer Trusts in place of the mandatory Credit Shelter Trust. Therefore, the

Will may include a provision that allows the surviving spouse to disclaim inherited

property, real or otherwise (whether by operation of law or through the Will), so that it

can be added to a Disclaimer Trust which would use the testator's applicable exclusion

amount. Please see Article V “Common Trust Structures and Their Tax Consequences”

in these materials for a discussion of Disclaimer Trusts.

The requirements for a qualified disclaimer are contained in EPTL §2-1.11(c)(2),

the Internal Revenue Code of 1986, as amended (the “IRC”), §2518(b) and in Treas. Reg.

§25.2518-2 and a form of disclaimer is attached hereto as Exhibit F:

 Irrevocable

 In writing.

 Within 9 months of taxable transfer.

 No acceptance of interest or benefits

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 Disclaimed interest passes without direction and pass to someone other

than disclaimant (unless it is for the benefit of the surviving spouse).

A beneficiary may elect to disclaim his or her right to inherit (EPTL §2-1.11 and

IRC §2518). The final treasury regulations were issued on December 31, 1997. A

qualified disclaimer must be made in writing and filed within nine (9) months of the

decedent's date of death or nine (9) months after the taxable transfer occurs in the case of

a disclaimer not related to the death of a decedent (EPTL §2-1.11(b)(2) and §25.2518-

2(c)). A beneficiary can disclaim interests under the decedent’s Will or any other non-

testamentary assets (i.e. trust agreement, life insurance, retirement accounts and plans,

joint or totten trust accounts, etc.). Additionally, powers of appointment can be

disclaimed as can a distributive share under EPTL §4-1.1 and Treas. Reg. §20.2041-3(d).

Such an interest can be pecuniary (Treas. Reg. §25.2518-3(c)), an interest in a trust, a

specific asset, life insurance and retirement benefits (PLR 200105058). See also, EPTL

§2-1.11(b)(1).

A qualified disclaimer must be in writing. The writing must identify the interest

in property being disclaimed and be signed either by the disclaimant or by the

disclaimant’s legal representative (Treas. Reg. §25.2518-2(b)(1)). It must be delivered to

the transferor of the interest, the legal representative of the transferor or the holder of

legal title to the property to which the interest related (Treas. Reg. §25.2518-2(a)(3) and

(b)(2).

The effect of a qualified disclaimer for a Federal estate, gift and generation-

skipping, transfer tax, is that the property is treated as if it had never been transferred to

the person making the qualified disclaimer. Instead, it passes directly from the transferor

of the property to the person entitled to receive the property as a result of the disclaimer.

Treas. Reg. §25.2518-1(b).

Once the completed gift is made, the disclaimant has nine (9) months to make the

disclaimer (see Treas. Reg. §25.2518-2(c)(3) and (c)(5) at example 6 and

EPTL §2-1.11(c)(2).) When the beneficiary is a minor, the disclaimer must be filed

within nine (9) months after the disclaimant attaining the age of twenty-one (21) years

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(see Treas. Reg. §§§25.2518-2(c)(1)(ii), (d)(3) and (d)(4) at examples (9) and (11)). The

Courts have held that an extension of time to file an estate tax return does not extend the

nine (9) month period for filing a disclaimer. This nine (9) month time frame is hard and

fast for filing qualified disclaimers. It is important to note that a disclaimer can be made

after the nine (9) month period by filing a petition with the court showing reasonable

cause for the extension (EPTL §2-1.11(c)(2)). However, it will not be considered a

qualified disclaimer and a taxable gift will occur upon the passing of the interest from the

disclaimant to the next interested party.

Disclaimers are irrevocable once they are made (EPTL §2-1.11(h) and Treas. Reg.

§25.2518-2(a)(1)). The beneficiary cannot disclaim any asset which such beneficiary

already accepted (Treas. Reg. §25.2518-2(d) and EPTL §2-1.11(g)). Accepting income

from the property also will disqualify the disclaimer (see PLR 9243024). However,

continuing to live in the residence which was jointly held does not constitute the

acceptance of the decedent’s half of the joint interest, whether as tenants-by-the-entirety

or as tenants-in-common (Treas. Reg. §25.2518-2(d)(4) at example (8), PLR 8508079).

The IRS has found that in the case where the residence was owned solely by the decedent

and the surviving spouse continues to live it, such continued residency constitutes

acceptance of the asset (PLR 8817061).

In general, under Treas. Reg. §25.2518-2(c)(4)(i), a disclaimer of an interest in

joint tenancy must be made within nine (9) months of the transfer creating the joint

tenancy not at its vesting (see also, Estate of Edward J. O’Brien, T.C. Memo 1988-240

(May 26, 1988). However, a qualified disclaimer can still be made of the survivorship

interest passing by operation of law upon the death of the first joint tenant so long as it is

within nine (9) months of the death of the joint tenant and is severable. This result was

due to the IRS issuing an Action On Decision 1990-06 when it acquiesced in McDonald

v. Comm’r, 853 F.2d 1494 (8

th

Cir. 1988). In this Decision, the IRS stated that:

Where a joint tenant has the right to sever the joint tenancy or cause the

property to be partitioned under state law, the Service will no longer

litigate that the transfer relative to which the timeliness of the disclaimer

of a survivorship interest is measured refers to the transfer creating the

joint tenancy. The Service will also no longer contend that a joint tenant

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cannot make a qualified disclaimer of any portion of the joint interest

attributable to consideration furnished by that joint tenant.

The final regulations reiterated this decision in Treas. Reg. §25.2518-2(c)(4)(i)-(iii) and

adopted the rationale of the Fourth, Seventh and Eight Circuits laid out in Kennedy v.

Commissioner, 804 F.2d 1332 (7

th

Circuit 1986), McDonald v. Comm’r, 853 F.2d 1494

(8

th

Cir. 1988) and Dancy v. Commissioner, 872 F.2d 84 (4

th

Circuit 1989). Additionally,

tenancy-by-the-entirety was given the same treatment as a joint tenancy with right of

survivorship because of the concern that couples do not focus on the impact of their

decision on their future ability to disclaim when they buy a home (see also Treas. Reg.

§25.2518-2(c)(4)(ii)).

If the person funding a joint bank account can withdraw all of the money then

there is no completed gift to the other joint tenant (Treas. Reg. §25.2518-2(c)(4)(iii)).

The surviving joint tenant can disclaim the entire account within nine (9) months of the

death of the funding joint tenant (Treas. Reg. §25.2518-2(c)(5) example (9)). However,

if the surviving joint tenant contributed assets to such account, then such contributed

property may not be disclaimed. Under Treas. Reg. §25.2518-3(b), the disclaimant can

disclaim an undivided portion. EPTL §2-1.11(c)(1) covers disclaimers of jointly held

interests.

The final component to the disclaimer is that the disclaimed interest must pass

without any direction on the part of the disclaimant (Treas. Reg. §25.2518-2(e)).

Additionally, it cannot pass in any form to the disclaimant. For example:

$100,000 is left in trust for John but if he predeceases, the bequest lapses and

becomes part of residuary. The residuary is left to the Decedent’s two children,

one of whom is John.

John cannot receive his share of the $100,000 as part of the residuary. He would

need to file a second renunciation disclaiming his one-half interest in the

$100,000 under the residuary clause.

There is an exception to this criteria and that is if the disclaimant is the spouse (Treas.

Reg. §25.2518-2(e)(2)). For example:

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Residuary is left entirely to the surviving spouse. If spouse disclaims some or all

of the residuary, then disclaimed amount passes into disclaimer trust for benefit of

surviving spouse. However, the surviving spouse cannot retain the right to direct

the beneficiary enjoyment of the property. Therefore, the disclaimer trust cannot

contain a power of appointment exercisable by the spouse. Treas. Reg. §25.2518-

2(e)(2) and §25.2518-2(e)(5) example (4) and EPTL §2-1.11(f).

Disclaimers are filed in Surrogate’s Court and must be accompanied by an

affidavit of the disclaimant that he or she has not received any consideration for making

such disclaimer from someone whose interest is accelerated by the disclaimer (a copy of

which is attached hereto as Exhibit G). Notice of the renunciation, including a copy of

the renunciation, must be served personally on the fiduciary directed to make the

disposition or upon the person or entity having custody of the disclaimed asset(s) and by

mail on all persons interested in the matter (a copy of which is attached hereto as

Exhibit H together with an affidavits of service). Once the disclaimer is accepted by the

Court, the filing of the disclaimer has the same effect as those the disclaimant had

predeceased the creator of the interest or the decedent, as the case may be (EPTL §2-

1.11(e)).

In addition to the person with the interest in the asset to be disclaimed, when

authorized by the Court a renunciation may be made by the guardian of an infant, a

committee of an incompetent, the conservator of a conservatee, a guardian under MHL

Article 81 and by the personal representative of a decedent (EPTL §2-1.11(d)) (a copy of

a Petition requesting permission to file a disclaimer on behalf of a decedent is attached

hereto as Exhibit I). Additionally, if a power of attorney gives the attorney-in-fact the

authority to make a disclaimer, then such a disclaimer is authorized. However, if the

grantor of the power of attorney is disabled at the time of the disclaimer, then Court

permission is required under EPTL §2-1.11(d)(6).

Treas. Reg. §25.2518-3(a) covers partial disclaimers as does EPTL §2-1.11(c)(1)

and (f). Additionally, a disclaimant may accept one disposition and disclaim another.

Renouncing a fractional interest only serves to renounce that specific part of the interest

and not the entire interest. For example:

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$100,000 is bequeathed to John but if he predeceases, the bequest lapses and

becomes part of residuary. John can renounce $50,000 and accept $50,000.

Additionally, if an income interest and a remainder interest are bequeathed to a person,

such person can disclaim the income interest and keep the remainder interest. If the

beneficiary disclaims an income interest and a remainder interest in specific trust

property, then those specific assets must be removed from the Trust in order for the

disclaimer to be qualified (Treas. Reg. §25.2518-3(a)(2)). The examples found at Treas.

Reg. §25.2518-3(d) illustrate the provisions of partial disclaimers.

COMMUNITY PROPERTY LAW IN ESTATE ADMINISTRATION

While New York is not a community property state, it adopted the Disposition of

Community Property Rights at Death statutes on September 1, 1981 (EPTL §6-6.1, et.

seq.) to cover the disposition of assets of New Yorkers who moved to New York after

having resided in and acquired property in a state recognizing community property rights.

For example, if the client sells real property in California and then moves to New York

where the client uses the sale proceeds to purchase a new home, the client can invoke

community property rights as to the new home even though it is New York real property.

As a result, the decedent is deemed to own 50% against which the surviving spouse

cannot elect to take an elective share. The remaining 50% passes to the surviving spouse

(EPTL §6-6.3).

INTESTACY RULES

An administration proceeding's purpose is to dispose of the decedent's property

when he or she dies without a Will and to appoint and empower the administrator to

administer the decedent's estate. When a person dies without a Will, such person is

considered to have died intestate (SCPA §103(28)). Article 4 of the EPTL governs this

situation and the administration petition can be found at Exhibit J. The Surrogate's Court

has official forms which can be found in the "Green Book" or by using HotDocs.

Additionally, a link to many of these forms can be found at

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http://www.nycourts.gov/forms/surrogates/index.shtml. The mandatory E-Filing will

also apply to administration proceedings in Westchester County. The filing fee schedule

can be found at SCPA §2402(7) and is currently:

Value of Estate or Subject Matter Fee Rate

Less than $10,000 ........................................... $ 45.00

10,000 but under 20,000 ................................. 75.00

20,000 but under 50,000 ................................. 215.00

50,000 but under 100,000 ............................... 280.00

100,000 but under 250,000 ............................. 420.00

250,000 but under 500,000 ............................. 625.00

500,000 and over ............................................ 1,250.00

Under intestacy, the decedent's assets pass to such person's distributees. Pursuant

to EPTL §4-1.1(a)(1), if a decedent is survived by a spouse and issue, the spouse inherits

the first $50,000 plus 50% of the balance of the decedent's estate and the issue inherit the

remaining 50% of the balance of the decedent's estate. In most cases, this distribution

plan is not the plan desired by the decedent. If a proceeding is needed to determine who

are the distributees, a petition can be brought under SCPA §2225 to show that all efforts

have been made to locate distributees. In order to avoid having a client die intestate, the

attorney must remind clients to come in to meet, review drafts and schedule a time to sign

the Will.

A further complication is the appointment of an administrator to handle the

administration of the decedent's intestate estate. Pursuant to SCPA §1002(1), any person

who is interested in the estate, any person agreed upon by all distributees, public

administrator, chief fiscal officer of the county, a creditor or a person interested in an

action in which the decedent is a party may bring a petition to serve as administrator.

This large class of potential appointees can lead to the appointment of someone not

familiar with the estate, can lead to litigation if multiple parties wish to serve, can lead to

delay as the decision is made as to who will serve and can cause unnecessary expenses

due to the delays and litigation. A Will would avoid this problem since the Will appoints

an Executor. Certainly the interested parties in a probate proceeding can also litigate.

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However, the risk is minimized as compared to an administration proceeding. It should

be noted that SCPA §1001 provides an order of priority to those who are eligible to

receive Letters of Administration. The surviving spouse, followed by the children, is

given preference. However, it is possible that had the decedent drawn a Will, he or she

would not have named the surviving spouse as his or her personal representative. This

fact again highlights the importance of clients making educated choices as to who is best

to serve in fiduciary capacities rather than leaving the decision to the Courts which are

governed by Article 10 of the SCPA.

Pursuant to SCPA §708 the designated administrator must file an oath stating

that "the fiduciary will well, faithfully and honestly discharge the duties of the office and

the trust reposed in him or her and duly account for all moneys or other property which

may come into his or her hands.” The oath shall also describe the office, and state that

the fiduciary is not ineligible to receive letters. Typically this Oath and Designation is

attached to the end of the Administration Petition. A sample is attached as part of Exhibit

J.

All distributees must be served and the process must include the name of the

petitioner (SCPA §1005). See Notice of Application and Affidavit of Mailing attached as

Exhibit K. Preferably, the distributees will sign a Waiver of Process and Consent to

Administration which avoids the need to serve them and having a citation issued. A

sample Waiver and Consent is attached as Exhibit L. If the decedent is not survived by

any distributes, is survived by only one distributee, or if the distributees are more remote

than the issue of the decedent's siblings, then an Heirship Affidavit or Affidavit of

Kinship must be filed by a disinterested person. A family tree is required for filing when

the distributee relationship exists to the death of another person (22 New York Uniform

Rules for Surrogate’s Court (“NYCRR”) §207.16). A sample Heirship Affidavit is

attached as Exhibit C. The Attorney General and the Public Administrator must be cited

if there are no known distributees.

Once an administrator is appointed by the Court, he or she will have to be bonded

(SCPA §805). Had the decedent had a Will, the surety bond requirement could have

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been waived. Such a waiver would have reduced the cost of administration and is often a

"boiler plate" provision in a Will.

If a minor child inherits from a deceased parent, the Court will appoint a guardian

of the property of the infant, who can be the surviving parent, and upon the person of the

infant if there is no surviving parent (SCPA §1702) upon petition by a person on behalf

of the infant (SCPA §§1703, 1704). If there are multiple children under the age of

eighteen years, then a separate petition must be brought on behalf of each such infant (22

NYCRR §207.11). A bond is required for the property of the infant (SCPA §1708). If

there is no surviving parent, multiple petitions could be brought by various family

members and friends of the infant. The Court will then be forced to decide a matter that

would have been better decided by the parents in a Will. Once a guardian is appointed,

inherited funds will be held for such child in a guardianship account. Whenever funds

are needed for such child, a petition must be made to the Court by the guardian

requesting such funds for the support and education of the child (SCPA §1713). The

Court in its discretion does not need to grant such request or can opt to grant such request

in part. The process is lengthy and costly and can have the disastrous result of the Court

denying funds that the infant's parent may have wished such infant to have. Again, the

Court is forced to decide a matter that would have been better decided by the parents in a

Will or by designated Trustees of a trust for the benefit of such infant. Additionally, the

guardian must file an annual account with the Court (SCPA §1719). Such a requirement

causes unnecessary costs.

The executor cannot dispose of any assets before letters of administration are

issued. Therefore, the Court can grant temporary letters of administration when there is a

delay, an interested party cannot be found or when an interested party is a prisoner of war

(SCPA §901). Temporary letters of administration give the temporary administrator all

of the fiduciary capacities of an administrator with full letters of administration with

whatever limitations are imposed by the Court (such as distributing assets) (SCPA §903).

Under SCPA §1007, when an administrator fails to complete his or her duties and

then ceases to serve, the court can appoint letters of administration de bonis non

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(“d.b.n.”) to an eligible person. The proceedings are the same as the application for the

original letters of administration. However, the court may refuse to issue letters of

administration d.b.n if distribution of the estate is possible under SCPA §2207 which

governs the situation where a fiduciary dies while in office, even to the point of allowing

the fiduciary of a deceased fiduciary the rights and powers of such deceased fiduciary.

EXECUTOR’S DUTIES AND POWERS

In New York, a personal representative "is a person who has received letters to

administer the estate of a decedent" (EPTL §1-2.13). If there is no Will, the personal

representative is the Administrator and if there is a Will then this person is called the

Executor. Typically, the decedent's Will contains an article which names the executor.

The executor (or executrix in the case of a woman, although the term executor is often

used for both genders) is the person who carries out Testator's wishes upon death of

Testator upon receipt of Letters Testamentary from Surrogate's Court (SCPA §103(20)).

All persons are able to qualify as executor, except for infants, incompetents, non-

domiciliary alien (other than a foreign guardian under SCPA §1716(4) or one who serves

with multiple fiduciaries at least one of whom is a New York resident), felon, someone

who has a history of substance abuse, dishonesty, improvidence, want of understanding

or otherwise unfit for office or someone who cannot read and write English (SCPA

§707). If the person is eligible to serve, the attorney should contact the individual and

arrange for a meeting.

When a fiduciary has an interest in the estate or trust, all transactions must be

treated with extra care to avoid the appearance of self-dealing. In Matter of Kinzler, 195

A.D.2d 464, 600 N.Y.S.2d 126 (2d Dep’t 1993) the Court reviewed the sale of the

decedent's residence to one of the beneficiaries, who was also a testamentary trustee

under the Will. In this case, the Court found that the executor had a conflict of interest

with regard to the sale of real estate and found evidence of self-dealing. The Court stated

that “[a] person standing in the relation of a fiduciary capacity, cannot deal with or

purchase the property, in reference to which he holds that relation.” Id. at 466, 600

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N.Y.S.2d 126 at 126. The court further noted that the executor’s cash distribution of

$50,000 to his wife, and only the assignment of a purchase money mortgage for the

property to the trust was prejudicial and discriminatory because “[a]n executor must at all

times discharge his fiduciary duties so that all legatees are treated in like manner and

without prejudice or discrimination.” Id.

The executor's powers are outlined in EPTL §§11-1.1, 11-2.1, 11-2.2, 11-A-1.3

and are extensive. In addition to these powers, the decedent's Will can give the executor

(and other fiduciaries such as trustees) additional powers or can limit the executor's

powers. In general, the executor is responsible for gathering all assets, preserving the

assets, closing all of the decedent's accounts, collecting and paying bills presented to the

estate, filing paperwork, disposing of tangible personal property, distributing assets

according to the Will and preparing tax returns. The executor is also responsible for

obtaining a tax identification number for the estate. However, more often than not, the

executor hires an attorney and/or accountant to handle such actions. The executor may

find it makes sense to also hire brokers and investment advisors.

The executor has the authority to continue the decedent's business under SCPA

§2108. He or she may petition the Court if the decedent was the sole owner and the

business should be continued in the best interest of the estate. Additionally, the executor

has sixty days from the earlier of being appointed as executor or the last day of the

company's fiscal year of the year in which the decedent died to decide whether or not to

terminate the decedent's Subchapter S Corporation.

Provisions in Wills and Trusts granting the fiduciary the sole and complete

discretion to distribute all estate and trust assets to the beneficiaries are generally not

subject to judicial review when the fiduciary is acting properly and in good faith. In In re

Jas’ Will, 132 N.Y.S.2d 659 (1954), the Will provided that the income of the trust be paid

in the “sole and uncontrolled judgment and discretion of my trustees.” The court held this

provision was valid and the courts cannot interfere with a proper exercise of this

discretion. This standard has been upheld time and again in New York (see In re

Lifschutz’ Will, 220 N.Y.S.2d 617, 618, citing Matter of Connolly, 130 N.Y.S. 194

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(1911), New York Trust Co. v. Black, 164 N.Y.S. 967 (1917), In re Hayden’s Estate, 16

N.Y.S.2d 119, 122, 126 (1939), and Matter of Brettell’s Estate, 29 N.Y.S.2d 219 (1941)).

In instances where there are allegations of bad faith, abuse of discretion, arbitrary

action, or fraud, the court may review the fiduciary’s discretion (see In re Carter’s Estate,

182 N.Y.S.2d 599, 601 (1958)). However, even in these instances, the court may not

interfere and exercise this fiduciary discretion (Matter of Messer, 231 N.Y.S.2d 201, 205

(1962)). The Court may not rule on whether it finds payments made (or not made) in

carrying out the discretionary distribution to be merely “unreasonable.” The Court may

only apply the higher standard of an “abuse” of discretion (see Re. 3d Trusts § 50 (West

2015)).

While the clause “…in [the Trustee’s] sole discretion” is not subject to judicial

review, the fiduciary is still responsible for acting appropriately. The clause merely

signals to the Court that the testator intended to grant the fiduciary “the greatest latitude

permitted by law in exercising discretionary judgment” (In re Trusts for McDonald, 100

A.D.3d 1349, 1350 and 1351 (2012)). The Court understands that the fiduciary is to have

the broadest discretionary power and that proper application of this power is not an abuse

of power or cause for judicial review.

Pursuant to SCPA §103(19), the estate is "[a]ll of the property of a decedent, trust,

absentee, internee or person for whom a guardian has been appointed as originally

constituted, and as it from time to time exists during administration." EPTL §1-2.63

defines estate as "(a) [t]he interest which a person has in property. (b) The aggregate of

property which a person owns." Following the client's death, the executor should prepare

a list of all of the decedent's 1) real estate, 2) stocks and bonds, 3) mortgages, notes and

cash, 4) insurance on the decedent's life, 5) jointly owned property, 6) trust assets, 7)

annuities and retirement accounts and 8) any other assets. Each asset will need to be

valued as of the decedent's date of death and on the sixth month anniversary of the

decedent's date of death for alternate valuation purposes. The assets and their values will

be accounted for on the decedent's federal estate tax return and on the decedent's New

York estate tax return. Additionally, an inventory of all of the assets and their values is

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required for the Inventory which must be submitted to Court within nine months from the

date Letters Testamentary are issued (See New York Uniform Rules for Surrogates Court

at 22 NYCRR §207.20). This Inventory contains both probate and non-probate assets.

See sample form of Inventory attached as Exhibit M.

When meeting with the executor, asking for this detailed asset list is crucial.

Therefore, attorneys should be provided with a list of all of the decedent’s assets

including brokerage accounts, cash, house/apartment., life insurance, IRAs, etc. including

approximate values and current beneficiaries and how they are owned (i.e., client's name,

joint, in trust, etc.). The executor should provide copies of insurance policies (life,

disability, etc.), current insurance beneficiary forms and current retirement account

beneficiary forms. If the decedent had a mortgage or a loan, the executor should provide

a copy of all documentation pertaining to it. If the decedent owned real property, a copy

of the deed should be given to the attorney. An essential item is a copy of the decedent’s

most recent income tax return. The tax return provides clues to assets clients have all but

forgotten. An inventory of items in the decedent’s safe deposit box should be given to

the attorney, and the location of the safe deposit key should be divulged. If the decedent

owned an interest in a corporation or partnership, the executor should provide the

attorney with copies of all documents relating to such entity, including, but not limited to,

operating agreements, shareholder agreements, partnership agreements, certificates of

incorporation, by-laws and recent income tax returns. The attorney should inquire as to

whether the decedent had any patents or copyrights. Also, documentation should be

given to the attorney with regard to all non-US assets. Finally, the executor should

provide copies of any trusts which the decedent created or which were created for the

decedent’s benefit. By having this information before a client dies, the attorney is better

able to assist the executor in gathering assets upon the client's death. The attorney's file

will serve as a roadmap to locate the assets. Also, if there are any complicated assets

such as interests in partnerships or corporate entities, obtaining the governing documents

and valuation information is much easier while the client is alive to assist in the process

versus waiting until after the client dies.

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A review of the Will sometimes yields information about previously unknown

assets. If the executor is aware of property belonging to the decedent but which is not

being turned over to the estate, the executor may bring a petition to discover such

withheld property and/or information about such property (SCPA §2103).