and Your Family
The legal process during which your estate will be settled and distributed is known as probate. Probate rules require an orderly administration of an estate, overseen by a New York Surrogate's Court judge. Before your will can be probated, it must be validated. Then, your executor has the responsibility of completing the tasks involved to close your estate. While each estate must go through similar steps in probate the specific tasks involved depends on a number of factors including the size of your estate, the types of assets included in your estate, claims against your estate, and whether there are any disputes during probate. The ultimate goal of probate is to distribute your assets to your beneficiaries. Probate takes time. In some cases it takes years for the process to be complete. However, there are actions you can take during estate planning to minimize potential complications in probate and to minimize the amount of your estate that will be subject to probate. To learn more about how probate works and ensure you have all of the documents you need to reach your estate planning goals, contact a Manhattan Probate Lawyer.
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The job of your executor involves a great deal of responsibility regardless of the size of your estate. After all, on the most general level your executor is charged with managing your estate after you pass away and overseeing the distribution of your property. There are many steps in this process and there may be problems during the process that make the executor's job much more complicated and cause probate to take a lot longer. Thus, it is important that you select someone who is up to the job. Some issues to consider when nominating your executor include:
- Loyalty. Your executor should know both you and your family well and should care about them as it is important that your executor be loyal to your beneficiaries. A loyal executor will have more of an interest in working hard for your beneficiaries and making sure that they are treated as well as possible given the circumstances.
- Fair. It is also important for your executor to be fair. When an executor must address the concerns and interests of several beneficiaries, in order to avoid conflict it is important that the executor is fair minded in fulfilling his or her duties.
- Trustworthy. Your executive will be responsible for managing your estate which may include bank accounts, investment accounts, real estate as well as value personal property. The person charged with this must be someone who can be trusted with these assets and who takes his or her fiduciary duty seriously.
- Practical. The executor of your last will and testament will need to apply common sense and make practical decisions while managing your estate until it is transferred to your beneficiaries.
- Organized. Because of the many tasks which need to get done and the many details involved, the person you select to be your executor will need to be organized. For example, the executor will have to keep track of your estate's bills, balance the estate checkbook, assemble your assets, respond to claims against the estate, and respond to issues that may arise with your beneficiaries. While doing all of these things your executor may also have a full-time job and will have to tend to his or her personal affairs. Thus, the person you select as your executor must be able to successfully tend to each of these responsibilities.
- Strong. You should select a person who is strong and has a thick skin to be your executor. The estate administration process is not always peaceful. You may have to deal with aggressive creditors and claimants as well as difficult and emotional beneficiaries. Conflicts may boil over to the point that a will contest or other estate litigation results.
Most often spouses, adult children or siblings are selected as executors as they tend to be relatives who are closest to the testator and, therefore, the most trusted. However, in some cases it may be a good idea to consider a disinterested, corporate executor. For example, if the executor is also a beneficiary, there is more likely to be distrust among other beneficiaries regarding the management of the estate, possibly resulting in estate litigation. Also, a relative who is close to you may not be able to effectively fulfill the duties of an executor because of the extreme emotional distress your death has caused.
If your estate is large or is complex because, for example, it involves a small business or significant investments, a corporate trustee or a trustee how is an attorney may be a good idea. A administering a large, complicated estate may involve temporarily running a business and overseeing substantial sums of money and investments. An institutional executor may be more equipped to manage such an estate.
It is also a good idea to name a successor executor in the event that the primary executor is unable to serve.The Probate Process
In order for a will to go through probate, there are a few preliminary steps that must occur. These steps are sometimes referred to as "opening the probate estate." First your will must be found. After you execute your will it is a good idea to give a copy to your executor who should keep it in a safe, accessible place. Then your executor will take your will to the New York Surrogate's Court in the county in which you lived at the time of your death and file a Petition for Probate. The petition must include a copy of your will and any amendments, a certified copy of your death certificate, and the filing fee. On the petition you will have to include the names and addresses of the beneficiaries as well as the approximate value of the estate.
A New York Surrogate's Court judge will review the will to determine if it valid. If the court finds that the will is valid, then the judge will issue the person you named as executor in your will Letters Testamentary. In doing so, the executor is given the legal authority to begin managing your estate and ultimately distributing your assets to your beneficiaries.
Managing the estate involves a number of steps:
Locating Assets. One of the first jobs of the executor is to locate all of your assets. This may be as simple as going to your home and inventorying its contents. It may also mean finding bank and investment accounts. In some cases you may have to retrieve assets that have been loaned to family and friends. If you have property in another state, the executor's job becomes more complicated as it may be subject to probate in that state.
However, not all of your assets are subject to your will and probate. Many of your assets may pass to your beneficiaries outside of your will. Examples of such assets include: proceeds of life insurance policies, retirement plans such as pension plans, 401(k) plans and IRAs, property that you own jointly with others, and property that you placed in a trust while you were still living.
Appraising Assets. Essential to administering your estate and distributing you assets to your beneficiaries is figuring out the exact value of the estate. The values of a vehicle, bank account or investment account are fairly straightforward to determine. However, other items such as jewelry and collectibles or a small business may require that the executor hire someone to give an appraisal.
Paying Creditors and Final Bills. The executor must next identify and pay creditors. Such creditors may include utility companies, mortgage companies and credit card companies. Other bills that must be paid out of estate assets include your funeral expenses and expenses related to managing your estate. For example, if the executor needed to hire an appraiser, attorney, or accountant, their fees would be paid by the executor from estate assets.
In addition, claims may be filed against the estate. It is up to the executor to determine which claims are valid and pay them. If the executor concludes that a claim is not valid, then the claim should not be paid. However, refusing to pay a claim may result in the claimant initiating estate litigation.
If there is not enough money in your estate to pay all of your estate's debts, then your creditors are out of luck. However, your beneficiaries are out of luck as well as they will inherit nothing despite what you intended in your will.
Paying Taxes. Your executor must file your final federal, state, and local tax returns and pay any income taxes owed. He or she must also file estate income tax returns, if required.
Closing the Estate. Before assets can be distributed your estate must be closed. The executor will complete a formal accounting of all estate transactions and file it with the Surrogate's Court. Once the court approves the accounting the estate is closed and the executor may distribute assets to the beneficiaries.
Distributing Assets. After all estate debts are paid, then the balance of the estate will be distributed to your beneficiaries. If the property is tangible personal property such as jewelry, clothing or household furnishings, then it can be simply given to the appropriate beneficiary. If the property is real estate, the executor must make sure that the title to the property is properly transferred to the appropriate beneficiary. To fulfill a bequest that is a specific dollar amount, the executor will simply write a check from the estate's account to the appropriate beneficiary.
In some cases the executor may have difficulty locating a beneficiary. The executor must make a reasonably diligent effort to locate a missing beneficiary, including possibly employing an heir finder. If the executor cannot find a beneficiary and the property remains unclaimed, the property will eventually be distributed to the missing beneficiary's statutory heirs according to New York's intestacy laws. EPTL § 4-1.1. If the named beneficiary has no statutory heirs, then the property will become the property of New York state according escheat rules. N.Y. ABP. LAW § 1215.
A New York Surrogate's Court judge will oversee all aspects of the probate process of your estate. The judge will have to sign off on the Petition for Probate and give the executor the authority to manage your estate. The judge will also have to sign off on certain requests such as to sell estate assets and to close the estate. If there is no will contest or other estate litigation, then the judge will have little other direct involvement in the probate process. On the other hand, if there is any sort of dispute involving the estate the judge will have a significant role. The judge will have to resolve challenges to the validity of the will, disputes regarding how the executor and other fiduciaries are managing the estate, and contested claims against the estate.Timeframe for Probate
One problem with the probate process is that it can take a long time. In New York it generally takes at least 9 months, and can take 1 or more years. It will take at least 2 months after the Petition for Probate is filed for the Surrogate's Court to appoint the executor. The executor is then required to wait 7 months before closing the estate even if there is nothing else to do to manage the estate. This 7 month period is required by New York law in order to give any unknown creditors time to file claims against the estate.
If there is a will contest or any type of estate litigation probate will take even longer. A will contest can be brought by a beneficiary, an heir, or any other interested party and may involve a challenge to the validity of the will, a challenge to how the executor has managed the estate, or may involve a claim against the estate that the executor refused to pay.
Delays in liquidating estate assets may extend the time of probate. For example, selling a business or real estate often takes quite a bit of time-- well beyond 9 months.
Another cause for delay in probate is if your estate requires the filing for an estate tax return. New York law requires that large estates with assets worth over $1,000,000 file estate tax returns. If this is the case, your estate will not be closed until you receive notification from the taxing authorities. This can add up to 3 years to the probate timeframe.Consequences if You Do Not have a Will
If you pass away without a will your estate will still have to go through a probate process. However, it is referred to as estate administration. Instead of an executor, the Surrogate's Court will appoint an estate administrator. In addition, since there is no will naming beneficiaries, your property will be distributed to your heirs according to New York's rules of intestate succession.
New York intestacy laws identify only spouses and certain blood relatives as possible heirs. For instance, if you are survived by your spouse but have no children your spouse will receive 100% of your assets. If you are survived by both a spouse and children, your spouse and your children will share in your estate. 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 your children splitting the other 50%. Your children will receive your entire estate if you pass away without 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 New York intestacy rules friends, organizations, and even certain blood relatives will not be able to inherit your property unless you provide for them in a will. Furthermore, blood relatives who you do not wish to share in your estate might receive a share if you die without leaving a will. The best way for your wishes to be fulfilled is for you to have a will.
With proper estate planning you can minimize the amount of your estate that is subject to probate. Using a trust, for example, assets that you have transferred into that trust during your lifetime will pass to beneficiaries almost immediately upon your death, avoiding delays associated with probate. The staff at Stephen Bilkis and Associates is experienced in working with clients to create wills, trusts and other estate planning documents, as well as 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.