Advantages of an independent fiduciary

New York residents who are preparing their wills should choose an executor carefully. While a person might be tempted to avoid naming an executor, this could leave loved ones with a great deal of conflict. For example, in one case, a woman who did not get along with her sister was told by her mother that she was not naming an executor and that she and her sister could work out the details.

The woman became concerned. She and her sister were supposed to get 40 percent each of the estate, and the woman’s daughter, the only grandchild, was supposed to get 20 percent. However, the woman was concerned that the lack of an executor would lead to a great deal of conflict between her and her sister on her mother’s death. The woman did not particularly care what happened to her share of the estate, but she was concerned about her daughter and hoped to persuade her mother to appoint an executor.

Often, a court will appoint the oldest child as executor if one is not named in a will, and in this case, the sister was the oldest. Sometimes, people will appoint whoever is caring for them at the end of their life, but this is not really a reward because being an executor can be grueling. A person might want to consider appointing an independent executor.

Choosing an attorney as an executor under a will may have a number of advantages. The attorney may be more likely to be disinterested than family members and may be unaffected by conflict. Administering an estate can also be a complex process, and family members often must hire professionals in order to assist them.

Estate planning and the designation of an executor

When a person dies, someone must be appointed by a court to assume fiduciary responsibility for the assets, money and property of the decedent unless a valid will naming an executor exists. New York residents who have been named as an executor have a variety of duties to perform once the probate court has approved their appointment.

Wills play an important part in estate planning by allowing people to direct how assets they acquired and owned during their lifetime are to be distributed after they die. Depending upon the wishes of the testator, more than one person can be designated to serve as executors. A will can also appoint a person as the primary executor and a second person as the alternate who can assume the primary role in the event the executor elects not to serve or is unable to serve in that capacity.

Once appointed by a court in a probate proceeding, an executor has the authority to act on behalf of the estate. This includes assuming financial responsibility for the control and management of the assets being distributed through the will to the heirs of the deceased. As a general rule, executors do not have responsibility for assets that are included in trusts or the proceeds of life insurance policies that are paid to named beneficiaries.

The role of an executor is an important one that could involve complex issues. For example, an estate valued in excess of the applicable exemption, which in 2016 is $5.45 million, might be subject to federal estate tax. Someone taking on the role of executor might benefit from the advice of a probate and estate administration attorney for guidance.

Abusive guardianships of the elderly

When New York residents become incapacitated and unable to make decisions for themselves, the probate court may place them under guardianship. While a guardianship is beneficial for some people, others are handled abusively, leaving families trying to figure out what to do about it.

An example of an abusive guardianship was the one involving Brooke Astor, the philanthropist. Her grandson learned that she was not being given her prescription medication and was being isolated from family and friends. He petitioned the court to remove his father as his grandmother’s guardian, and it was learned that his father had stolen significant amounts of money from her estate .

Unlike the family members of Mrs. Astor, most people do not have the same type of financial resources needed to fight a case through the protracted court process it could turn out being. The Americans Against Abusive Probate Guardianship surveyed families nationally in 2015. Ninety percent of those who responded reported that the judge in their loved one’s case was not acting in a manner that was in their family member’s best interests. Eighty percent believed the judge was influenced, and 70 percent thought retirement homes where their loved ones were placed were not acting in their family member’s best interests.

When an abusive guardianship is suspected, people may petition the probate court to be added as an interested party. They may also petition the court to remove the guardian if they have evidence the guardian is committing financial abuse. People may want to consult with an attorney who has experience with these types of matters for advice regarding the steps they might take in their loved one’s case.

New tax laws might impact New York estates

Those who plan on willing property to their loved ones or executing existing estates may be interested to know that in March 2016, the IRS issued proposed regulations that are designed to match the value of properties received by beneficiaries and other recipients with the value of such properties as computed for estate taxes. The laws may also change the way due dates, beneficiary discovery, joint tenant arrangements and other factors impact property transfers.

The rules could create a clearer definition for when value limitations should be applied to properties. The regulations may also institute penalties for inconsistencies in basis determinations that result in underpayments.

The proposal could impact multiple sections of the Internal Revenue Code, and many of these laws were previously modified in July 2015. Under existing law, the basis of property inherited from a decedent is calculated to be the fair market value at the date of the decedent’s death . The recipient uses this value to calculate depreciation as well as the gain on a future sale. The proposed regulations are intended in part to ensure that such value is what is reported on the decedent’s federal estate tax return, and the executor has to notify both the IRS and the beneficiary of this figure. Penalties could be assessed in the event a discrepancy results in an underpayment.

Income tax laws can have an impact on estate planning just as estate tax laws do. Individuals who want to leave properties to their relatives may also be leaving tax obligations for these beneficiaries, and the way they calculate the value of their inheritances can impact how much heirs have to pay. The new regulations may increase the already significant burden that many executors face, and thus such individuals may want to obtain the guidance of an attorney in this regard.

Appointing an attorney-in-fact

New York residents may want to consider who they will appoint under a power of attorney as part of their estate plan. This is the person who among other duties will deal with their finances if they are unable to do so as a result of becoming incapacitated. In some families, choosing such a person may lead to conflict. One woman was concerned after her 66-year-old father had a stroke and appointed his girlfriend as attorney-in-fact. The girlfriend told the daughter that she was also being left everything in his will.

The daughter and her brother were concerned because they wanted to keep the house their father owned in the family. However, family members do not necessarily have this right over a person named in a will. They can have a medical evaluation for their family member if they are concerned that the relative lacks the capacity to appoint someone under a power of attorney, and they may want to speak to an attorney who has experience with conservatorship matters.

One problem in a situation like this one is that the children might be suspicious of the girlfriend, and the girlfriend may be suspicious of the children. However, it is important for family members to keep in mind that loved ones have the right to make their own choices even if they disapprove.

It is similarly important for a person to create a will and name an executor. However, many people die without making plans for the distribution of their estate. This is called dying intestate , and in such an event the decedent’s assets will be distributed in accordance with state law.