and Your Family
Probate is the legal process of settling your estate. It typically involves filing your will with the New York Surrogate's Court, inventorying the estate's assets, paying estate bills, and finally distributing your estate's assets to your beneficiaries. Depending on the size and complexity of your estate and the terms of your will, probate can be lengthy and complicated. In order for the process of probate to begin a judge in the New York Surrogate's Court must first review your will to determine that it is valid and authentic. The way your will is drafted will have a great impact on how probate. Careful planning and drafting of your last will and testament will help ensure that your wishes are fulfilled and that probate is as quick and painless as possible. To help make sure that your estate is probated in the most efficient manner during such an emotionally challenging time, it is a good idea that you contact a Brooklyn Probate Lawyer to work closely with you as your draft your will to make sure that is clearly written, consistent with your wishes, and executed according to the requirements of New York Estate, Powers, and Trusts law.
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Probate is the legal process through which the executor of your estate winds up your affairs and distributes the assets of your estate according to the provisions of your will. If you do not leave a will, then your assets will be distributed through a process called estate administration.
There are several steps to probate. In order to for probate to begin, your estate must be officially "opened." Typically this is happens when your executor files a petition with the New York Surrogate's Court in the county in which you lived at the time of your death. The petition will include a copy of your will and a copy of your death certificate. Around this time the executor will also notify known creditors and other interested parties of your death and their right to make a claim against your estate.
The Surrogate's Court judge will review your will to confirm that it was executed with the formalities required by New York law. NY EPTL § 3-2.1. For example, New York law requires that you as the testator sign the will at the end, or authorize another person to sign for you if you are unable. In addition, the signing of the will must be witnessed by at least 2 people. Once the Surrogate's Court judge is satisfied that your will was properly executed the judge will issue an order admitting it to probate. At that point your executor will be officially appointed and will have the legal authority to handle the affairs of your estate, including distributing its assets to your beneficiaries.Steps in Probate
Once your estate is open, there are a number of steps that must be completed before your assets are distributed.
Gathering your assets. Your executor will have to identify the property that you owned and have it appraised. This is an important step as this is your executor must determine the value of your estate in order to figure out how much money is available to pay creditors and distribute to your beneficiaries.
Paying your bills. Until estate is distributed, your executor must take care of it. For example, the executor must continue to pay the utility bills associated with your home. Your executor may also be required to pay your outstanding credit card bills and any other bills you may have. If someone makes a claim against your estate, then the executor must respond to it by paying it or challenging it. In addition, your executor must file your final tax return and pay any taxes due.
Distributing your assets. Once your bills have been paid, then your estate can be closed. The court will then give your executor permission to distribute your assets according to the terms of your will.Problems during probate
Probate is not always smooth. Any issues that arise during probate may delay the process and diminish the assets. One issue that may arise is someone such as a creditor claiming that the estate owes the creditor money. This may result in extended estate litigation. Another potential problem is someone objecting to the validity of the will. For example, a family member may feel that you were unduly influenced or forced by another beneficiary into signing the will. Or someone may feel that you were mentally incapacitated at the time he or she signed the will. A will contest may also be based on allegations that the formalities of execution did not occur.Ways to simplify or avoid probate
Even without problems with creditors or challenges to the validity of the will, probate can still be lengthy and expensive. In the meantime the beneficiaries who want to receive your property and who may be relying on receiving it may suffer financially while they wait for your assets to be distributed. Whether it may not be possible to for your estate to completely avoid probate, there are ways to minimize the impact probate will have on your estate and your beneficiaries.
- Transfer property to a living trust. If during your lifetime you transfer property to a living trust, also known as an inter-vivos trust, the property that is placed in the trust is no longer part of your estate that is subject to your will and is therefore exempt from probate. This means that once your pass away, this property will be distributed to your beneficiaries relatively quickly. However, it is important to understand the difference between a living trust and a testamentary trust. If you create a trust through your will, it is a testamentary trust. Your property would be transferred to the trust after your will goes through probate. Thus, creating a testamentary trust will not result in your assets avoiding probate.
- Set up payable-on-death accounts. A payable-on-death (POD) or transfer-on-death (TOD) account is a bank or investment account that includes a designation that upon the account holder's death, the balance of the account is immediately transferred to the person named as the payee. POD and TOD accounts are quite simple to set up. In most cases all you need to do is complete a form indicating who the name of the payee. The assets in a POD or TOD account would not be part of your estate that is subject to probate.
- Give the gift now. An inter-vivos gift is a gift that you give during your lifetime. Any property that you gift during your lifetime will not be part of your estate upon your death. To avoid a gift tax, the law allows you to give up to a certain amount away each year per person with have to pay a gift tax. For example, instead of waiting until you pass away to give your niece a cash gift of $10,000, you give the money to her now. Your niece would now have that money and it would not be part of your probate estate.
- Gift money through your 401(k) account. If you have a 401(k) account, retirement account, insurance policy or other accounts for which you completed a beneficiary designation form, the funds in those accounts go to the person who your named on the beneficiary designation form. Even if you state in your will that the funds in your 401(k) account are to go to a particular person, that clause in your will would fail and the funds would go to the person indicated on the beneficiary designation form.
- Use joint ownership. Property that you own jointly with another person with the right of survivorship will bypass the probate process. For example, if you hold your stocks, real estate, and bank accounts in joint ownership, when you pass away the title of that property will automatically pass to the surviving owner.
If you do not to have a will when you die, New York will essentially write a will for you. This is not the preferred estate planning option. Under New York law, if you pass away without having a will, then you die "intestate." A court will then look to New York's intestacy rules to identify your legal heirs and to determine to what portion of your estate each heir is entitled. NY EPTL § 4-1.1. In leaving the fate of your estate up to intestate succession rules, you give up your right to select beneficiaries, name the executor of your estate, and designate a guardian for your minor children.
New York intestacy laws identify only spouses and select blood relatives as possible heirs. If, for example, you are survived by your spouse, but have no children, your spouse will receive your entire estate. If you are survived by both your spouse and your children, then your spouse will receive the first $50,000 of your estate and the balance will be divided between your spouse and your children, with your spouse receiving 50% and the children sharing the other 50%. Your children will share in 100% of your estate if you do not have a surviving spouse. There are also provisions for when parents, grandparents and other blood relatives will share in an estate. NY EPTL § 4-1.1.
Under the probate laws regarding intestacy, friends, organizations, and even certain blood relatives will not be able to inherit. Furthermore, blood relatives who you do not wish to share in your estate might receive a share if you die intestate. The best way for your wishes to be fulfilled is for you to have a will.
Despite efforts to avoid probate, inevitably there will be some property in your estate that is subject to your will that must go through probate. However, with careful planning, you can minimize the effect probate will have on your estate, and make it difficult for your will to be effectively challenged through a will contest or estate litigation. The staff at Stephen Bilkis and Associates is experienced in representing estates in New York Surrogate's Court. We will help you make the process as simple and painless as possible under the circumstances. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.