What should I know about letters testamentary?

You might wonder how an executor gains the legal authority in New York to take direct charge of the finances and property of a person who has died. It is actually quite simple. The legal authority to start managing an estate comes when a probate court issues letters testamentary. Whether you are preparing to become an executor yourself or are just a beneficiary, it is important to know what part letters testamentary play in probate matters.

As Bankrate explains, after an individual has passed away, a probate court will determine the validity of the decedent’s last will and testament. Assuming that the decedent had named a person in the will to take on the duties of the executor, the court will authorize that person to act as the executor if the court rules that the will can go into effect. This authorization occurs when the court issues letters testamentary.

Letters testamentary allow a person to perform all the necessary duties of an executor. The executor is allowed to open a bank account in the estate’s name and gather the money of the estate into the account for the purposes of closing out the various matters of the estate. These can include paying off bills and taxes the decedent had still owed before passing away. Additionally, the executor is empowered to take inventory of the assets of the estate, file the final tax return for the estate, and distribute the assets of the estate.

In the event that someone dies without a will, a court will not authorize letters testamentary. Since the decedent did not make a will and did not name an executor for the estate, the decedent’s estate is deemed intestate. It will be up to the court to appoint someone to be the executor. To authorize the executor to carry out the duties of the position, the court will issue letters of administration.

Keep in mind that this article is written to educate New York residents on probate topics. Since issues with probate take many forms, this article should not be read as legal advice.

Is there a problem if executors are slow to communicate?

It is a scenario that some people face. A family member has passed, yet the executor of their deceased loved one’s New York estate has barely reached out with news about the estate and its assets, if the executor has communicated at all. You might think something is up and are exploring legal action against the executor. However, slow communication may not be a sign that you should worry, at least not yet.

As ThinkAdvisor points out, estate administration is not a quick process . It may take months or perhaps even years to complete because of the various legal hurdles that the executor must get over, including sending the estate through probate and dealing with creditors who are claiming some of your loved one’s assets due to old debts. There might also be tax problems that could take years to resolve. All of these duties may hamper an executor from making regular communications to beneficiaries.

The range of responsibilities can feel overwhelming for some executors. In addition to the ordinarily slow process of administrating an estate, an executor may lag in talking to you due to trying to figure out how to handle the duties of the office. Some executors may be occupied seeking out help from outside parties, such as an attorney, to figure out legal and financial matters.

Nevertheless, beneficiaries of an estate will want to know that assets promised to them are in good hands. An executor, even if not ready to dispense the assets, should still let the beneficiaries know that the estate is secure. Shortly thereafter, an executor should convey a description of how the estate will be administrated and copies of the important estate planning papers. Regular communication from the executor to the beneficiaries should follow.

Since it is possible an executor’s lack of communication is not due to malice, it could be a smarter move to reach out to the executor or discuss the matter with fellow beneficiaries to decide on how to approach the executor. However, if an executor continues to remain silent or is too vague or infrequent in talking to you, you might want to see if the estate is having any problems that the executor could be covering up. Consultation with an attorney would also be appropriate.

Probate litigation can take many forms. For that reason, do not consider this article as offering any legal advice, and read it only for educational benefit.

What happens to overseas assets in estates?

Whether your will could pass through probate without your overseas assets diminished by U.S. tax depends on a variety of factors. It also is possible that you could avoid putting some of these assets in your will by establishing a trust, thereby avoiding the probate process in most cases. 

For assets you do not wish to place in trust ownership or move to the United States, you would probably want to consider a number of key points for each. It is often helpful to keep in mind that the court will likely have a different set of rules for nearly every gift you intend to bestow.

The most common concern for wills in terms of United States taxes and foreign assets is often the gift tax. Real estate, securities and other forms of wealth you intend to transfer from outside of the country may be subject to this tax if they come from certain non-treaty nations and exceed a specified dollar value. 

Only a few foreign countries hold gift tax treaties with the United States. As stated on the IRS website, these select nations include some of the USA’s most dedicated  business and trading partners :

  • The United Kingdom
  • Japan
  • Denmark
  • Australia

However, it is not always safe to assume that a court would your assets as foreign. It would be in your best interests to look at each line item in your will individually to determine the exact IRS definition under which it might fall.

Knowing the details of these treaties could be an important first step in developing a strategy for your foreign assets in an estate plan. however, laws change all the time and this should not be considered specific advice. It is only meant to inform and educate.

Student loans after death

As many students pursue their education in New York, they may accumulate debt in the form of student loans. A previous  blog discussed what might happen if someone dies while he or she is still in debt. This week’s blog will focus on student loans after a person’s death. 

The type of loans a student has determines what happens to this debt after death. According to Federal Student Aid , people usually do not need to repay federal student loans if someone dies. People typically need to submit proof that the person who took out the loan died. This can include either a copy of the death certificate or the original document. Sometimes a parent may take out loans for his or her child’s education. If this parent dies before repaying this debt, these federal student loans are also generally discharged.

If someone has private student loans, the situation is usually different.  ABC News says that people may still need to repay a private student loan, even after the student’s death. Some lenders may take the money they are owed from the estate or turn to anyone who might have co-signed this loan. This means that a student’s spouse or parents may sometimes need to pay back student loans even though the student is no longer alive.

Sometimes, though, people may not need to repay private student loans. Some lenders may have a forgiveness policy to cover situations when a student dies before he or she has repaid this debt. If people have private student loans, it is a good idea for them to look into the fine details so they know whether their lender offers a forgiveness policy. Additionally, it is important to remember that even though a student loan might be discharged, this debt may still affect the taxes of the deceased.

What happens to debt when someone dies?

When you live in New York and someone gives you the responsibility of handling his or her affairs after he or she passes, you will need to take certain steps to do so while you manage your loved one’s estate. This might include paying off debts, making distributions to beneficiaries and so on, but what happens when the person who dies leaves considerable debt behind?

According to U.S. News & World Report, one out of every five Americans has  credit card debt he or she believes he or she will never be able to pay off, and that means more and more U.S. residents are dying without covering their debts. If your loved one had enough to cover those debts tied up in other assets, it should not be difficult to pay that debt off, but when someone dies with debt he or she cannot cover, what happens next depends on the type of debt accrued.

If your loved one left behind substantial credit card debt, for example, and he or she does not have other assets to help cover the debt, you should not have to worry about being responsible for it in most cases. There is, however, an exception to this. If you co-signed on the credit card, you may be on the hook for the balance, but otherwise, think twice before letting credit card companies guilt or pressure you into paying.

If your loved one passed away and left behind, say, automotive debt, you can either take over the payments for the vehicle or let the bank take it back. In the case of mortgage debt, you may be able to hang on to your loved one’s property by taking over the payments yourself. Otherwise, the bank will typically foreclose on the property eventually.

This information about what happens when someone dies with debt seeks to inform you, but it is not a replacement for legal advice.

Should an estate executor proceed quickly?

After the death of a New York resident, it is incumbent upon the executor of the estate to oversee the assets of the deceased until the estate goes through probate and the assets are ready to be distributed to the heirs. Some executors may want to pass along the assets as quickly as possible. However, there are important reasons not to rush matters when it comes to overseeing an estate.

As Bankrate points out, as an executor, you have legal responsibilities to carry out. You might overlook important legal steps if you rush the process. At best, you could delay the probate process a little. However, at worst you could be held personally liable if the missteps are severe enough. If anything should happen to the assets of the estate or if there is mismanagement of the estate, it could give the heirs cause to challenge the executor’s fitness in court.

Instead of worrying about finishing the asset distribution quickly, an executor should prepare for a possible lengthy tenure if the probate process should drag out. Fortunately, keeping the records of the estate organized can help prevent unnecessary delays. Additionally, an executor should consider hiring a qualified probate attorney to provide counsel on legal matters and to prevent probate steps from being overlooked.

It is tempting for an executor to want to pay out the assets to heirs as quickly as possible, particularly if there is disharmony among the heirs. Some executors have to deal with arguments among heirs, which can slow down probate. Sometimes an attorney can successfully mediate the matter, while in other instances a judge may need to step in. In any case, the executor should keep the assets secure until the matter is resolved.

Because legal matters concerning probate can vary widely, this article should not be taken as legal advice. It is only intended to educate New York residents on the subject of probate.

A quick look at the probate process

Losing a friend or loved one can be emotional. It is during this hard time that people are forced to make crucial decisions regarding a person’s estate. In some cases, the estate will need to go through the probate process , which helps to settle matters, such as ensuring the will is valid and that the estate assets and property gets to the beneficiaries named in the will. If an estate administrator or executor of the will is named within the document, that person is responsible for seeing the will through the probate process.

The first step is to file the last will and testament along with a copy of the death certificate and an application for probate. These documents should be submitted to the Surrogate’s Court located within the county where the deceased lived. From there the administrator must located all property and assets in the estate and determine the value. Any remaining taxes and debts owed by the deceased are then paid out of the estate’s assets. Throughout the probate process, the administrator must protect the property from vandalism and make sure nothing is taken from the estate. Once everything is paid, the remaining property and assets are then distributed to the rightful heirs.

Not all estates are required to go through probate. Estate’s that value less than $30,000 may avoid the procedures, as well as estates that are put into a revocable living trust. Once property is put into the trust, the trustee may distribute that property out to the beneficiaries without waiting for probate.

What should I consider when choosing an executor?

As you are planning your estate in New York, one big decision you will have to make is who will be your executor. This is a very important choice that can have a far-reaching impact. The executor will ensure that your wishes are carried out after you are no longer around to see to them. Choosing the right executor can make things go more smoothly for your heirs.

According to Kiplinger, there are some important considerations to keep in mind as you choose your executor . These things will help ensure that you choose someone who will handle the estate properly and in the way you wanted.

One of the top things to think about is if the person you choose has a good relationship with your heirs. The person does not have to be friends with them or even know them, but it is important that there are no bad feelings there. If the person and your heirs have issues, it could lead to arguments and trouble during the process.

You should make sure the person you choose is responsible and will be able to carry out your wishes. It is also good to make sure the person is financially stable so there is no risk that he or she may not be able to get bonded or insured, which is often required by the court.  

It is also a good idea to ensure the person will be around after you die. So, choosing someone who is younger and in good health is a good idea. This information is for education and is not legal advice.

What constitutes a breach of fiduciary duty?

If you are the executor of someone’s New York estate or the trustee of his or her trust, that makes you a fiduciary. In other words, you are someone entrusted with the power and authority to handle assets for the benefit of others. Because the decedent or trust settlor trusted you to manage and distribute his or her assets, you owe a duty to the estate or trust to do so competently, appropriately and for the benefit of the designated heirs and/or beneficiaries.

Becoming a fiduciary is serious business and entails many duties on your part. As FindLaw explains, should you fail to fulfill those duties by properly managing and distributing the assets entrusted to your care, the heirs and/or beneficiaries can sue you for breach of fiduciary duty

Breach versus mistake

You need not be perfect as a fiduciary. You can make an occasional mistake and you also can sometimes fail to make the best possible decisions with regard to asset investments, etc. Such things are not breaches of your fiduciary duties and responsibilities. Instead, a breach amounts to a deliberate act on your part that is detrimental to the estate or trust such as one of the following:

  • Failing to disclose pertinent information to the heirs or beneficiaries
  • Acting in your own self-interest rather than those of the heirs or beneficiaries
  • Acting in any manner contrary to their best interests

Proving breach

In order to prevail in their suit against you for breach of your fiduciary duty, the heirs or beneficiaries must prove the following four things:

  1. That the decedent’s will appointed you as executor or the settlor’s trust appointed you as trustee
  2. That the will or trust set forth your fiduciary duties
  3. That you breached one or more of those duties
  4. That the heirs or beneficiaries suffered financial damages because of your breach

Should the heirs or beneficiaries win their lawsuit, you may have to personally pay them the amount of their damages. In addition, you could have to pay them punitive damages if the judge or jury decides that your breach amounted to fraud or malice.

This is general information only and not intended to provide legal advice.

When a beneficiary starts living large

During the course of our professional duties here at Joseph A. Ledwidge, P.C., we see our fair share of family disagreements. Among the most acrimonious are those resulting from the alleged misappropriation of estate assets. We understand that everyone deals with grief in a different way: some mourn in solitude while others attempt to live life to the fullest. Unfortunately, the latter alternative sometimes causes discord when that lavish lifestyle is funded by trusts.

Our main concern, and that of the courts in many cases, is that the intent of a decedent is carried out faithfully. That is, after all, the purpose at the core of estate documents: that you have the ability to carry out your loved one’s will even in face of even the most extreme circumstances.

To this end, there are many ways in which you could want to modify a will or a trust when one of the beneficiaries begins to live beyond the means of the estate. For example, you might want to remove an executor. However, since this is a legal process and the individuals who hold executorial positions are often attorneys themselves, you may not always have a clear path to success in this matter. 

Lawyers tend to know the rules surrounding estates, and therefore are equipped to avoid obvious mistakes. Because of this, we make a point of being more diligent in our investigations than a corrupt executor would be in his or her obfuscations of evidence. We realize we are going up against our peers in many of these cases, so we leave nothing to chance. Please continue to the main site for detailed information.