Davidov Law Group

E-Book Download

Call for your complimentary assessment

(516) 253-1366
Call Us Now
E-Book Download

NEW YORK LAW AND EXECUTORS’ RIGHTS AND DUTIES: PART 3 OF 3

Estate Planning

by

Continuing the discussion from the first two blogs in this three-part blog series covering the important duties that executors have in New York, this last blog covers the executor’s final duties.

Under New York law, an executor can become personally liable for repaying creditors if they distribute a decedent’s assets before properly accounting for all of the decedent’s creditors. As an executor, you should make sure you receive a written agreement from each beneficiary promising to return any property if you are unable to repay creditors or other debts the decedent was responsible for paying. You must also prepare a written inventory or accounting of the earned assets within the estate and the distributions you’ve made during your administration of the decedent’s estate. However, beneficiaries can waive a formal judicial accounting as long as they are of legal age to make those waivers.

It may be in your best interest as an executor of a decedent’s estate to conduct a formal judicial accounting to obtain a formal discharge from the Surrogate’s Court. Your formal accounting will contain your total commissions earned under the decedent’s will or pursuant to statute unless you waived your commissions. Typically, your formal accounting should be done by your estate planning attorney.

by

Continuing the discussion from the first blog of this three-part series, executors should understand their legal duties. An executor has very significant legal obligations. Under New York law, executors must inventory a decedent’s assets, pay debts and funeral costs, and pay taxes and administration costs. An executor may be liable for several years until they wind up the entire estate and receive a formal discharge of their fiduciary responsibilities. New York law requires executors to consider creditors’ claims within seven months of their formal appointment. The executor will also be responsible for making sure they file the decedent’s final personal tax return and the estate’s final tax return, if necessary.

After notifying potential creditors of the decedent’s death, paying taxes and other expenses, they must distribute the decedent’s assets to the named beneficiaries. If the decedent died without a valid Will, the personal representative or administrator is responsible for locating all of the decedent’s heirs and distributing their assets to their heirs pursuant to the state’s intestacy laws. The intestacy laws dictate which heirs are entitled to receive a decedent’s property if they died without a Will and the amount of each inheritance.

Check our blog tomorrow to read part 3 of New York Law and Executor’s Rights and Duties.

by

An executor is the person or company responsible for administering a decedent’s Will. Sometimes referred to as a personal representative, the decedent has the discretion in appointing a trustworthy person or company to administer his or her last Will and Testament. If you die without a Will, a court will appoint one on your behalf.

Your executor is entitled to receive a reasonable compensation based on the gross value of your estate. However, they may waive their compensation or commissions. Typically, banks and other financial institutions that offer professional services as executors will require the statutory amount for commissions.

Your spouse can serve as your executor and remain a beneficiary under your Will. If you want to appoint your spouse as the executor of your estate, and your spouse is also the sole beneficiary, your spouse can perform their own distribution of your estate as the sole surviving beneficiary and surviving spouse before paying all of your creditors because of their continuing personal liability to remain responsible for paying your creditors. Furthermore, they may not have to conduct a formal judicial accounting as the sole beneficiary and executor of your estate.

Check in with us tomorrow to read Part 2 of New York Law and Executor’s Rights and Duties.

by

Federal gift tax laws play an integral role in reducing an estate’s income tax liabilities. As a taxpayer, making lifetime gifts can reduce your estate’s gross tax liabilities since these gifts are not included as part of your gross estate at your death in most cases. According to the federal Internal Revenue Code, a gift is one in which real or personal property, cash or any other type of property is given away without consideration or payment in return. A lifetime gift is one in which you retain no other control and is complete at the time of your death.

Each taxpayer is able to exclude up to $13,000 in annual gift taxes. This means that neither the gift recipient nor the gift donor pays federal income taxes for gifts of up to $13,000. The annual gift exclusion applies to gifts of up to $13,000 made to each done. This means that if you have three children, you can give each child a cash or property gift of up to $13,000 per year without paying federal income taxes. As you can see, making a lifetime gift may make sense since it will reduce your federal estate taxes, which is important in estate planning. Your beneficiaries will not have to pay federal income taxes on property given away while you were alive. By giving your children money now, you can help them save money on estate income taxes after your death.

This blog is part 1 of 3 on how Federal Gift Taxes cab reduce an estate’s tax liability. Tune in to our blog tomorrow to read Part 2.

by

To create a valid will in New York, you must comply with the New York Estates, Powers, and Trusts Law or “EPTL.” The New York EPTL governs all wills and trusts drafted by New York residents. Once your executor or custodian probates your will, the New York Surrogate’s Court Procedure Act or “SCPA” govern the procedural parts of your estate administration. Other various state, federal and common laws may apply to your will. Generally, the state statute governs most aspects of wills and estates in New York.

What do you need to do to create a valid will in New York? At a minimum, your will must be in writing, and you must comply with the statutory testamentary formalities established by the New York EPTL. In very limited situations, an oral will may be valid, but because of the limitations, we recommend drafting a written will. You must also sign your will in front of two independent witnesses who will also sign your written will. You and your witnesses will include addresses in your will and participate in a “will signing ceremony.” During the ceremony, you will state that you are signing your will. According to the NY EPTL, you must be at least 18 years old and legally competent to sign a contract or will. This means that you are of sound mind and legally capable of understanding that the document that you are signing is your will.

Check out our blog tomorrow to read Part 2 of What are the Necessary Ingredients of a Valid Will.

by

Most estate planning clients want to avoid court interference through guardianship proceedings once they learn what it entails. A guardianship is a court proceeding during which your competency is questioned. It is expensive, time consuming, public, and stressful.

If the court determines that you are incapacitated, it will appoint a guardian to take over your finances. You have no control over who the court appoints and it may not be a family member. It might be a local attorney. Your assets will be eaten away by ongoing guardianship fees and court costs.

You can totally avoid guardianship proceedings, court interference, and losing control with a fully funded revocable living trust.

A trust is an agreement that you create; it’s really a set of instructions, explaining how you want your finances handled should you become incapacitated and when you die.

It’s imperative that you fund all of your assets into the trust and designate your trust as the beneficiary of your life insurance policies, retirement accounts, and annuities.

When you have a trust and have granted disability trustees authority to step into your shoes if you become incapacitated, court interference and the guardianship proceeding is avoided.

All assets that can be funded into the trust must be funded; the trust and your disability trustee only controls assets funded into the trust. Be sure to execute an up-to-date power of attorney in addition to your trust to handle any assets that can’t be funded such as retirement investments and qualified annuities.

RED FLAG: Never try to fund retirement accounts and qualified annuities because doing so will accelerate all the income tax due.

RED FLAG: Your power of attorney must specifically say that your agent has the power to deal with life insurance policies, retirement accounts, and annuities.

If you would like to avoid court interference and guardianship, execute and fund a revocable living trust and a power of attorney with the assistance of a qualified estate planning attorney.

by

If you’ve already handled your own estate planning affairs, you likely understand the importance of planning ahead and an up-to-date, comprehensive estate plan. What do you do if your parents haven’t created or updated their estate plan in years? It’s important to make sure that they have handled their affairs so that they can be in control of their future and your burden of assistance will be less. Take a look at the following information for advice on how to best help. If you have any questions, or if you’d like to help your parents begin your estate plan, contact an estate planning attorney.

  • Explain what you have done to plan. You can make your parents feel more comfortable about planning by sharing your own experience. It can also prepare your parents for some of the decisions that they will need to make during the planning process. It’s a nice, soft way of broaching the issue.
  • Recommend an estate planning attorney or offer to help find a great attorney. Your parents may be unsure about how to start the planning process. A good attorney will carefully walk your parents through the process. Working with an estate planning attorney makes the entire planning process easier and best ensures that your parents will have a quality plan that meets all of their needs.
  • Offer to help as soon as possible. If your parents continue to put off their planning, they won’t be prepared for an emergency such as a medical emergency. Make sure that you begin offering assistance as soon as possible.

You can make a difference by assisting your parents with their estate planning affairs. You and your parents will feel increased peace of mind, knowing all the legal documents are in place just in case.

If you have any additional questions about how you can help your parents with their estate plan, consult with a qualified estate planning attorney.

by

Creating an estate plan doesn’t only have to include making difficult decisions. When creating your plan, you’re able to make choices for the future. This includes having the opportunity to have fun with some of your planning decisions. Take a look at the information below, to see how you can have some fun with your estate plan. If you have any additional questions, or if you’d like to begin creating your estate plan, contact an estate planning attorney.

  • With your estate plan, you’re able to give to back to a favorite charity. This can be a great way to benefit an organization that you’ve always loved. Many people choose to give to an organization that has had an impact on their family or friends. This may include gifting to Susan G. Komen for the Cure or the American Cancer Society. If you choose to gift to charity, carefully consider an organization that is special to you.
  • You may also choose to give to your loved ones in a special and meaningful way. Many people choose to leave assets for their loved ones so that they’re able to achieve their goals. You may decide to leave asset for a grandchild to attend college or for your daughter to fund her career ventures. This can be a great way for you to make an impact on your loved one’s lives while also leaving a special memory along with your gift.

Creating your estate plan doesn’t have to be an upsetting process. While you will be forced to make some difficult decisions, there are also many other things that you can do with your planning. If you have any questions about fun and creative things you can do, consult with a qualified estate planning attorney.