Finance & Law

Most insurance companies allow a third party to automatically receive notification if a premium is not paid. Stock photo

By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: My father purchased long-term care (LTC) insurance decades ago. Since he had been widowed at a relatively early age, he felt it was important that he have coverage in the event he ever needed skilled nursing care or in-home care.

Recently it has become obvious that my father’s ability to handle his affairs is somewhat impaired. In addition, his health is failing and I believe he needs help with activities of daily living.

Since I am not in a position to assist my father on a daily basis, I decided that the time had come to file a claim for benefits under my father’s LTC policy to cover the cost of his care. When I filed a claim, I was shocked to learn that my father’s policy had lapsed two years ago based upon failure to pay the premium.

THE QUESTION: What are our options with respect to coverage for my father’s LTC insurance?

THE ANSWER: Unfortunately you don’t have any options when it comes to your father’s LTC insurance. When a payment is missed on such policies, companies sometimes give the insured a grace period during which the policy can be reinstated if payment is received. However, if your father failed to pay premiums for two years, I seriously doubt that reinstatement is an option.

Although it is too late to address the non-payment of the LTC insurance premium, you and your father should go through all of the paperwork relating to other insurance he may have, as well as accounts, contracts and recurring obligations, to be sure he has not missed any payments or failed to take whatever action may be needed to avoid penalties.

Most insurance companies allow customers to name a third party who will automatically receive notification if a premium is not paid. If your father had designated you as the person to receive notification of any nonpayment, you could have taken the necessary steps to pay the premium in a timely manner and his LTC policy would not have lapsed. Like insurance carriers, utility companies generally offer customers the option to name a third party to receive important notices regarding nonpayment. Your father should take advantage of these arrangements.

If he has recurring bills that need to be paid and is not able to designate a third party to receive late notices, he may want to consider arranging with his bank to automatically make those payments directly from his checking account. If automatic payments are set up, he will not have to worry about missing a payment because he misplaces the bill, is away when the payment is supposed to be made or simply forgets to send the check.

In addition to working out a system to ensure that your father’s bills are timely paid, you may want to talk to him about an arrangement to ensure that he takes the necessary steps each year to receive his minimum required distributions from any qualified retirement accounts he may have. If your father is unsure of whether he has accounts that require minimum distributions, you may want to ask him if you can speak with his financial adviser and/or accountant. These individuals should be able to assist you.

Assuming such accounts exist, you can ensure that the necessary steps are taken each year by simply making a notation on your own calendar of your father’s obligation to notify his plan administrator. Even if your father does not need the money, it is important that he take the minimum distribution every year since failing to do so can result in significant penalties.

When discussing with your father the lapse of his LTC insurance and suggestions for avoiding similar problems in the future, you may want to suggest to him that he retain an attorney with experience in estate planning to prepare for him a comprehensive power of attorney. The agent named in such a power of attorney will have the authority to handle your father’s affairs and will be in a position to ensure that he does not experience the types of problems discussed above.

Linda M. Toga provides legal services in the areas of estate planning/elder law, probate and estate administration, real estate, small business service and litigation from her East Setauket office.

New York offers two types of guardianship proceedings for adults.

By Nancy Burner, Esq.

Nancy Burner, Esq.

In New York State, when a person turns 18, they are presumed to be legally competent to make decision for themselves. However, if a person is intellectually disabled or developmentally disabled, as defined by Article 17-A of the Surrogate’s Court Procedure Act, a parent or concerned relative can ask the Surrogate’s Court to appoint a guardian to assume the decision-making functions for that person. 

If a young adult has issues with mental illness or other functional limitations, a parent or concerned relative can ask the Supreme Court to appoint a guardian for that person under Article 81 of the Mental Hygiene Law. There are differences in the application and procedure with these two statutory schemes which are described below. 

Article 17-A was originally enacted in 1969 to provide a means for parents of disabled children to continue to make decisions once their children reached adulthood. The belief was that the condition was permanent with no likelihood of improvement. Hence, the same powers that parents held over minors were appropriately continued for the rest of the person’s life.

Article 81 was enacted in 1993 and is directed toward adults who have lost or have diminished capacity. It presumes that all adults have full capacity and requires proof of specific incapacity before a guardian can be appointed to remedy the proven incapacity. Article 81 anticipates closely tailored guardianships, granting the guardian no more power than is necessary under the circumstances, and aims to preserve autonomy to the greatest degree possible.

Article 17-A is almost purely diagnosis driven, while Article 81 requires a more refined determination linking functional incapacity, appreciation of danger and danger itself. Unlike Article 81, Article 17-A provides no gradations and no described or circumscribed powers. Article 17-A is considered a plenary guardianship, meaning that the guardian has full power to make any and all decisions. 

The two statutes differ dramatically in the reporting requirements following the appointment of a guardian. Article 81 guardians have to file a report 90 days after appointment and thereafter on a yearly basis, while Article 17-A guardians have no duty to file any report. 

Procedurally there are significant differences between the two types of guardianships: 

• A hearing must be held for the appointment of an Article 81 guardian, with the subject of the proceeding right to cross-examination and the right to counsel. No hearing is required under Article 17-A where the petition is made by or on consent of both parents or the survivor. 

• When an Article 17-A hearing is held, the presence of the subject of the proceeding may be dispensed with in circumstances where the court finds the individual’s attendance would not be in their best interest; presence of the subject is presumptively required in Article 81.  

• Article 81 requires the appointment of an independent court evaluator to investigate and make recommendations to the court; the appointment of a guardian ad litem to perform a similar function is discretionary in Article 17-A.

• Almost all Article 17-A proceedings are determined by reference to medical certifications by treating physicians; The professionals making the certifications are not subject to cross-examination.

• Article 81 requires proof by clear and convincing evidence, while Article 17-A is silent as to the burden.

Even when young adults meet the medical criteria for an Article 17-A guardian, courts are taking a more wholistic view and looking at that person’s functional capacity and assessing if an Article 17-A guardian is the least restrictive alternative or if an Article 81 guardianship is appropriate to address a certain deficit. For instance, take the young adult with a diagnosis of autism where he or she is considered “high functioning” by the medical experts and they may have other mental health issues that impair decision-making. In this case an Article 17-A guardian may not be the least restrictive alternative, an Article 81 guardianship may be more appropriate.   

Courts are also looking to see if the young person can execute advance directives such as a health care proxy and power of attorney so their parent or concerned relative can assist in making medical or financial decisions for that person without court intervention to preserve their rights and autonomy. 

The lesson to be learned is that while that statute is clear about the medical diagnoses needed for an Article 17-A guardianship, not just anyone with a diagnosis is the proper subject of an Article 17-A proceeding. You may find that the needs of the disabled individual are better met through a limited Article 81 guardianship or that they are able to execute advance directives. The differences in the statutory schemes can be nuanced and if you have a child or relative in this situation, before any court proceedings are commenced, you should consult with counsel experienced with these issues. 

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. 

The distribution of the assets in an account with a TOD designation is independent of the terms of a will. Stock photo

By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: My mother had a savings account which held nearly $50,000. About a year ago while my daughter was visiting my mother, my mother and daughter went to the bank to make a deposit. While there an employee of the bank advised my mother that it was important that she name a beneficiary on her savings account. The bank employee suggested that not having a beneficiary on the account would create problems when my mother died. 

Although my mother has a will that provides that her grandchildren get equal share of her estate, my mother trusted the employee and signed a “transfer on death” designation naming my daughter as the recipient of the account following my mother’s death. 

My mother recently told me about this visit to the bank and was quite upset to learn that the result of her signing the form at the bank was that my daughter would inherit approximately $50,000 more than her siblings and cousins. 

THE QUESTION: What can my mother do to ensure that all of the grandchildren receive equal shares of her estate?

THE ANSWER: If your mother wants her grandchildren to receive equal shares of her estate when she dies, she has two options: she can change the transfer on death (TOD) designation or she can change her will. 

HOW IT WORKS: Before detailing each option, it is important to know that assets passing under your mother’s will are not treated the same as assets passing pursuant to the TOD designation. 

Assets passing under the will are called probate assets. Their distribution is controlled by the terms of the will. The assets in the account with the TOD designation are nonprobate assets and their distribution is independent of the terms of the will. As long as the TOD designation is in place, the assets in the account will not be governed by your mother’s will even if she makes an explicit bequest of those assets in her will. 

With respect to the TOD designation, your mother can either revoke the designation entirely or she can change the designation form. If she revokes the TOD designation, the funds in her account will be deemed probate assets and they will pass under her will. The end result would be that each grandchild would receive an equal share of the account. 

Alternatively, your mother may revise the TOD designation by adding her other grandchildren’s names to the form and stating that the funds are to be divided equally between the named beneficiaries. In this scenario, the funds in the account will still be considered nonprobate assets, but the bank will be required to pass an equal share of the assets to each of your mother’s grandchildren. Since the revocation or modification of the TOD can be done by simply going to the bank and signing a new form, changing or revoking the TOD designation is the easiest and least expensive way to address the problem. 

The second option open to your mother to ensure that her grandchildren receive equal shares of her estate is for her to leave the current TOD designation in place and to revise her will. She would have to add language to the will that provides that the amount of the bequests passing to each grandchild under the will shall be adjusted to take into consideration any nonprobate assets they may receive. 

For example, if your mother’s current will provides that $100,000 of probate assets is to be divided equally between three grandchildren, the provision would dictate that the $50,000 in nonprobate assets passing to your daughter should be added to the probate assets so that the total value of estate assets earmarked for grandchildren could be calculated. That total ($150,000) would then be divided equally between the three grandchildren. Using the figures above, the end result would be that each grandchild would receive the same amount of money from your mother’s estate; $50,000.  

Your mother should seek the assistance of an experienced estate planning attorney if she opts to revise her will. She cannot revise her will by simply writing in the margins or making other notes in the will as to her wishes. Such handwritten attempts at changing a will are not enforceable and the end result would be that your daughter would receive a share of the probate assets plus any funds remaining in the savings account at the time of your mother’s death. 

Linda M. Toga provides legal services in the areas of estate planning/elder law, probate and estate administration, real estate, small business service and litigation from her East Setauket office.

Your spouse receives his/her elective share from your estate at the time of your death. Stock photo

By Nancy Burner, Esq.

Nancy Burner, Esq.

We are frequently asked whether it is a good idea to disinherit your spouse due to the possibility of nursing home care in the future. While updating your estate planning documents is a good idea, simply disinheriting your spouse may not protect your estate in the event she or he needs to go to a nursing facility. 

If your spouse requires care in a nursing facility and wants to rely on Chronic Medicaid to pay for it, the Department of Social Services will conduct a five-year lookback. 

During the examination, the Department of Social Services will inquire whether your spouse received his or her “elective share” from your estate at the time of your death. If your spouse did not receive his/her elective share, the Department of Social Services will issue a dollar for dollar penalty that will delay Chronic Medicaid benefits.

An elective share ensures that surviving spouses in New York receive the first $50,000 or one-third of an estate, whichever is greater. The surviving spouse has a time limit when he or she must demand the elective share. If the elective share is not demanded within the time frame, the surviving spouse forfeits his/her right to receive the share.  

For example, if you pass away with $300,000 in your estate, your spouse would be entitled to $100,000 even though your last will and testament specifically excluded your spouse. If the elective share of $100,000 is not paid from your estate, the Department of Social Services will issue a penalty of about seven months. In other words, Medicaid will not pay for the first seven months of care in the nursing facility.  

There are options available to you now in order to preserve your estate even if your spouse requires care in a nursing facility. One option is to set up a supplemental needs trust through your last will and testament that benefits your spouse but protects the estate. You would appoint a trustee to manage the assets in the trust on behalf of your spouse. 

The supplemental needs trust is a vehicle to supplement and not supplant government benefits. This would allow the money to be used for your spouse’s benefit but not interfere with an application for Medicaid benefits. Another option would be to provide that your spouse receives one-third of your estate and the reminder goes to your children.

Finally, in New York State, we have a program called Community Medicaid, which will pay for a home health aide to come into your home and assist your spouse with activities of daily living. If your spouse received this assistance in the home, there would not be a five-year lookback and he or she would not be required to elect against your estate. This may be a viable option now, so you are not the sole caregiver.    

It is important to review your estate planning documents with an elder law attorney in your area to ensure you and your spouse are protected and have the appropriate documents in place for your specific situation.  

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

A power of attorney is a legal document that gives someone you choose the power to act in your place. Stock photo

By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: My elderly aunt, Mary, has no spouse or children and is getting to the point where her health is failing and she is forgetting to pay her bills. Mary has a will and a health care proxy, but she has not appointed anyone to handle her financial affairs or assets. 

THE QUESTION: What do you suggest?

THE ANSWER: Mary should make an appointment with an experienced estate planning/elder law attorney to discuss the benefits of having a power of attorney prepared. 

HOW IT WORKS: A power of attorney is a legal document whereby a person can delegate to another person authority to carry out specific types of transactions on their behalf.

The person who delegates authority under a power of attorney is the principal. The people to whom authority is delegated are called agents. A principal can name a single agent or co-agents. When a single agent is named, it is important to name a successor agent in case the person who is named as the sole agent is unable to serve. If co-agents are named, the principal must decide whether the agents must act together or may act alone. 

The New York State Legislature created a basic power of attorney form that was most recently revised in 2010. This statutory form allows the principal to delegate authority to carry out banking transactions, sell real and personal property, deal with insurance carriers and address health care billing and payment matters, among other things. 

Although the basic power of attorney may be sufficient for some people, due to her age and her situation, Mary should sign what I refer to as an enhanced power of attorney. An enhanced power of attorney allows people to delegate authority to another person to perform transactions that are not covered in a basic power of attorney and that may be needed in the context of estate and Medicaid planning. 

These transactions include, but are not limited to, creating and/or revoking trusts, changing beneficiaries on accounts, life insurance policies and pension plans, accessing online accounts, entering into care giver agreements, borrowing money, making loans, making arrangements for pet care, waiving attorney/client privilege and signing intent to return home letters for Medicaid purposes. 

As mentioned above, the basic power of attorney is not adequate to address the countless types of transactions that may be needed in the context of estate and/or Medicaid planning. That is why it is important for Mary to speak with an attorney who concentrates in the areas of estate planning and elder law. 

In addition to being able to provide Mary with a power of attorney that meets her needs, the attorney will be able to discuss with Mary the importance of signing the Statutory Gifts Rider that is part of the New York statutory form. By signing the rider, Mary will be able to give her agent gifting authority to make gifts in excess of $500 per year to individuals or charitable organizations. This gifting authority is essential if Mary will be applying for Medicaid and has assets that must be moved out of her name in order to qualify for benefits. 

Without the rider, the power of attorney will not allow Mary’s agent to engage in last minute Medicaid planning that could mean the difference between being eligible for benefits and being forced to spend down her assets before receiving Medicaid. 

Linda M. Toga provides legal services in the areas of estate planning/elder law, probate and estate administration, real estate, small business service and litigation from her East Setauket office.

CDPAP gives Medicaid recipients an alternative way to receive home-care services. Stock photo

By Nancy Burner, Esq.

Nancy Burner, Esq.

The Consumer Directed Personal Assistance Program (CDPAP) is a Medicaid program that allows a Medicaid applicant, or their representative, to choose the individual (or individuals) to provide care at home rather than using an aide from a home health agency. 

Under the Medicaid process, once an applicant is approved for Medicaid, they will undergo at least one assessment to help determine how many hours of care the applicant will receive with a managed long-term care (MLTC) plan. The applicant then signs up with a home-care agency that contracts with the MLTC, and aides are sent to the home to provide the hours of care.

If the applicant is unhappy with the current aide, he or she can request that the agency replace the aide; however, the agency has full discretion on choosing a substitute. The agency only needs to make sure that they are providing the care set up by the predetermined hours.  

There are also limits as to what the aide can do in terms of the care they provide. An aide can assist with most tasks, such as walking, bathing, grooming, light cleaning and cooking, but they cannot perform “skilled tasks,” such as administering medication. 

For example, if an applicant is diabetic and requires daily insulin injections, the aide is not allowed to administer the injection. An aide, however, can give certain cues, such as placing medication in front of the patient, letting them know it is time to take said medication.

Many applicants are satisfied with the care provided by the home health aides, but there are some that may require an aide that can perform skilled tasks, or others already have an established relationship with a specific aide and do not want to switch to a different caregiver.

Under CDPAP, any individual can be hired as the caregiver so long as said individual is not a legally responsible relative, such as the applicant’s spouse or guardian.

The applicant, or their representative, will determine who the aide will be, their work schedule, and what kind of assistance the aide will provide. There is no prerequisite to be certified as a home health aide or registered nurse. Training the aide occurs at the home and the aide gets paid through Medicaid. The aide can perform skilled tasks that are not otherwise allowed under the standard Medicaid program.  

It is important to note that under CDPAP, the aide is considered an independent contractor, not an employee of the agency.  The applicant is therefore fully responsible for finding and setting up the care. The applicant will also not be able to take advantage of some of the benefits an agency provides, such as sending in backup care if the current aide is sick or cannot work for whatever reason.   

To discuss your options, you should contact an elder law attorney who has extensive experience in this field and can navigate the Medicaid system to help provide you with the best care for your specific needs.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office

Out-of-date beneficiary designations are a common and costly mistake. Stock photo

By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: My brother Joe was dying from cancer and wanted to be sure that all of his assets passed to his wife, Mary, upon his death without the need for court intervention. He mentioned this a number of times, so I assumed he had taken the necessary steps to ensure that his wishes were honored. 

The car Joe drove was in Mary’s name and the house in which he lived was jointly owned with Mary. However, Joe had substantial assets in separate bank and brokerage accounts. After Joe died, Mary was told by the bank and brokerage company that Joe never signed any documents indicating that he wanted his accounts to pass to Mary automatically upon his death. 

THE QUESTION: Is there any way Mary can get access to the funds in Joe’s accounts without getting authority to do so from the Surrogate’s Court?

THE ANSWER: Unfortunately for Mary, she will have to petition the Surrogate’s Court for authority to access Joe’s accounts. If Joe died with a will and the will names Mary as executrix, Mary will need to file a petition seeking letters testamentary. The petition, an original death certificate and a fee based upon the value of the accounts must be filed with the Surrogate’s Court in the county where Joe lived at the time of his death. Once letters testamentary are issued to Mary, she will be able to access the funds and, assuming she is the only beneficiary under the will, do whatever she deems appropriate with the funds. 

If Joe died without a will, Mary will have to petition the court seeking letters of administration. The process and the fees for the administration proceeding are similar to those associated with a probate proceeding. Again, once letters are issued to Mary, she will have the authority to access the funds in the account. Mary will be required to distribute the funds in accordance with the NYS intestacy statute that governs the distribution of estates of people who die without a will. If Joe had children, they will be entitled to a share of the money in the accounts to the extent it exceeds $50,000. 

Based on your description of the assets in the separate accounts as “substantial,” I am assuming there is more than $30,000 at issue. If that is not the case, Mary can file with the Surrogate’s Court an affidavit in relation to a small estate to get authority to access the funds in the accounts. The account numbers and the balance in each account must be provided in the affidavit. Mary will be issued a certificate for each account giving her authority to access the account.

 It is unfortunate that Mary will have to seek court intervention in order to access Joe’s accounts, but she should take some comfort in the fact that the probate/administration proceedings are not burdensome and that her situation is not unusual. Clients frequently find that the steps taken by a decedent were not sufficient to ensure that their estates pass as the decedent wished. 

To avoid this situation, I encourage my clients to periodically review all beneficiary designation and transfer on death forms that have been filed and to review how jointly held property is titled. These steps are critical to ensuring that the client’s estate plan truly reflects the client’s wishes. 

Linda M. Toga, Esq. provides legal services in the areas of estate planning and administration, wills and trusts, guardianship real estate, small business services and litigation from her East Setauket office.

A bypass trust was designed to prevent the estate of the surviving spouse from having to pay estate tax. Stock photo

By Nancy Burner, Esq.

Nancy Burner, Esq.

For a traditional married couple, the estate planning has become simpler in many ways. Before the estate tax was increased on both the state and federal level, we were fixated on saving estate taxes. Simple techniques like bypass and marital trusts and insurance trusts called ILITs were the gold standard in estate planning. Today many of those types of plans are irrelevant and maybe even harmful in an estate plan.

Bypass trusts are trusts created in the estate of the first spouse to die. So, for example, if a husband died when the exemption was $1.0, his will left $1.0 million in his bypass trust to protect his exemption (the amount he could pass to a nonspouse tax free) and then the balance would be distributed to his surviving spouse tax free. The idea was that when the second spouse died, she would have her own exemption and the monies in the bypass trust would pass tax free to the next generation.

If the exemption was $1.0 (or more) when the survivor died, then both the bypass trust amount and the exemption amount when the second spouse died would escape estate taxation. This is the most common type of estate plan that was utilized in the last 25 years and many clients still have these documents in place. In instances where the first spouse has died, there still exists a bypass trust for the benefit of the surviving spouse. For those couples with these types of estate plan but with assets under $5.25 million, it’s not too late to change them.

But, what if one spouse has died and the surviving spouse is still alive with assets in a bypass trust. Is there more planning to be done?   

Assume a couple in 2000 with $1.8 million worth of assets. Husband died and $1.0 million was payable to the bypass trust under his will for the benefit of his wife. According to the terms of the trust: (1) she can have all the income, (2) she is entitled to distributions for her health, education and support, and (3) a trustee can distribution all the trust assets to her for any purpose, even if the trust is depleted. The purpose of this trust was clearly to shield the first million of the estate from estate taxes when the surviving spouse later died but gave the trustee the power to make unlimited distributions to the spouse.

Now also assume the wife has, in the intervening years, protected her own $800,000 from the cost of long-term care by placing those assets into an irrevocable trust. In the meantime, the bypass trust has grown to $1.6 million dollars. There are two glaring problems: Capital gains tax and cost of long-term care.

When the surviving spouse dies, the assets in her irrevocable trust will be counted as part of her taxable estate. If she dies this year, she will have a New York state estate tax exemption of $5.25 million (increasing to $5.49 million in 2019) and her federal exemption is $11.18 million. Clearly, she does not have a taxable estate. Her assets will pass tax free to the next generation. However, the assets in the bypass trust will have a capital gains tax for any growth in principal.

Assuming the capital gain of $600,000 and a capital gain rate of 33 percent, there could be a capital gains tax of just under $200,000. If the bypass trust assets were not in the trust, but in the surviving spouse’s estate, there would be no estate tax and no capital gains tax. In this case, assuming no other facts, it would be best to distribute the assets to the surviving spouse and allow the assets to obtain a “step-up in basis at her death.”

The second problem with the bypass trust is that the broad distribution rights under the trust makes those trust assets available to pay for the spouse’s long-term care. She has protected her own assets, but likely the $1.6 million is available to be spent down. In this case, if the trustee were to distribute the trust assets to the surviving spouse, she could add those assets to her irrevocable grantor trust. She would enjoy the income in the trust, her estate (i.e., her heirs) would get a step-up in basis on her death, and the assets could be shielded for the cost of nursing home care or catastrophic illness after five years.

This same scenario applies in the case of insurance trusts that were created during the life of the first spouse to die. The trust was likely intended to shield the surviving spouse’s estate from estate taxes, but the increased exemptions make the insurance trust unnecessary. There is an income tax return due each year that is a burden in both time and money. There is no step-up in basis at the death of the surviving spouse, and the assets are probably not protected from the cost of long-term care.

While the trusts in this example give the trustee wide latitude in distributing trust assets to spouses, not all trusts are the same. If the trustee does not have the power to distribute outright to the spouse, there may be an alternative way to accomplish these objectives. New York state has a very generous decanting statute that may be utilized to “fix” the trust. It may not be too late.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

A pet trust will ensure that a pet is cared for when its owner dies. Stock photo

By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: About a year before he died, my father bought a puppy that he adored. His name was Gizmo. My father’s will provided that $15,000 was to be left to the person who agreed to take care of Gizmo after my father’s death. My father told me that he set aside $15,000 because he assumed Gizmo would live a long time and that it would cost that much to cover his food and vet expenses.

Immediately after my father’s funeral, my brother Joe took it upon himself to bring Gizmo to his house. A week later, Gizmo was hit by a car and died. My brother is now insisting that he is entitled to the $15,000 since he “agreed to take care of Gizmo” after my father’s death. I feel he should be reimbursed for whatever expenses he incurred in connection with Gizmo’s care and burial but that the balance of the $15,000 should be divided between all of my father’s children like the rest of his estate.

THE QUESTIONS: Is my brother entitled to the full $15,000? Does it make a difference that Gizmo’s death could have been prevented if my brother had him on a leash?

THE ANSWER: I cannot say how the Surrogate’s Court would handle this situation because a strict reading of the language of the will suggests one outcome while fairness dictates another. An argument can certainly be made that your brother is entitled to the money because he took Gizmo in and cared for him, even though it was for a very short period of time.

On the other hand, if your brother’s decision to let Gizmo out without a leash led to the dog’s death, an argument can be made that he breached his duty to take care of Gizmo and should not get the money. You can also argue that your father intended the money to be used for Gizmo’s care and not as compensation to a caregiver.

Regardless of which position may prevail in court, the issues raised by what has happened underscores the importance of pet owners being very specific about their wishes when it comes to their pets. Simply setting aside money for a pet’s care is not sufficient. Pet owners should include in their wills a pet trust to be administered in accordance with the pet owner’s wishes. If your father’s will had included a well-drafted pet trust, the question of who is entitled to the $15,000 would be addressed.

I suggest that pet owners arrange in advance for someone to take care of their pet in the event they are unable to do so either because of disability or death. Possible caregivers should be asked if they are willing and able to take the pet in and care for the pet on relatively short notice. Once a caregiver is identified, family members and other potential caregivers should be advised of the arrangement to avoid misunderstandings. Informal arrangements usually work well if they are not long term.

For example, a neighbor may agree to watch a dog while its owner is in the hospital or immediately following the owner’s death. The intent is simply to ensure that the pet is cared for until long-term arrangements can be made. Money is usually not addressed in these types of informal arrangements. 

When it comes to the long-term care of a pet, I suggest that my clients include in their wills a pet trust. How much money the owner wishes to earmark for the pet’s care is clearly one of the things that must be addressed but it is only one of many. The trust should also identify the person who will become the pet’s caregiver and set forth the types of care the pet is to receive.

For example, does the owner want the pet groomed on a monthly basis and, if so, by whom? Does the pet need certain types of food or should certain foods be avoided? Does the pet suffer from any ailments that require medication or close monitoring? If so, the pet’s vet should be identified. Providing this sort of information will help ensure that the pet gets the care that it needs from people with whom it is comfortable.

In addition to addressing the care a pet will receive during its life, a pet trust should provide the caregiver with instructions with respect to the handling of the pet’s remains after it dies. This information is useful to the caregiver who will certainly want to honor the pet owner’s wishes.

A pet trust should also set forth the amount of money the executor of the estate is to distribute to the trustee of the pet trust. The job of the trustee is to then distribute the funds in the trust to the caregiver as needed to be used for pet’s benefit. The owner should state what types of expenses are covered by the trust and whether the caregiver is entitled to compensation in exchange for caring for the pet.

The pet trust should also provide instructions for the trustee with respect to the distribution of the trust assets that remain after the pet has died. Had your father included such instructions in his will, you and your brother would not be at odds now.

Pet owners who want to create a pet trust should discuss their ideas and concerns with an experienced estate planning attorney.

Linda M. Toga, Esq. provides legal services in the areas of estate planning and administration, wills and trusts, guardianship real estate, small business services and litigation from her East Setauket office.

There are planning tools an individual can employ to potentially safeguard wishes after death. Stock photo

By Nancy Burner, Esq.

Nancy Burner, Esq.

Inheritance is the practice of passing on property upon someone’s death. The rules of inheritance differ from state to state.  

In New York, a decedent generally cannot disinherit his spouse. This principle is governed by Estates, Powers and Trusts Law Section 5-1.1-A (Right of Election by Surviving Spouse) and requires that the surviving spouse receive a portion, or share, of the decedent’s estate. The surviving spouse’s share will be equal to the greater of $50,000 or one-third of the decedent’s estate.

The right to elect to take your spousal right of election is governed by time frames. An election under this section must be made within six months from the date letters testamentary are issued but no later than two years after the date of the decedent`s death. A written notice of the election is required to be served upon the executor, or upon the person named as executor in the will if the will has not yet been admitted to probate. The written notice must then be filed and recorded with the Surrogate`s Court.  

Conversely, a decedent can disinherit a child. However, it is important to note that a child falls into a certain class of individuals who have the right to contest your will even if they are specifically disinherited, whether or not they are named as a beneficiary under your will or if they were left with a disproportionate share of your estate. A disinherited child has the right to challenge or contest your will because, had you died without a will, your child would receive a share of your estate through the laws of intestacy.  

However, there are planning tools an individual can employ to potentially safeguard wishes after death. An in terrorem provision in a decedent’s will “threatens” that if a beneficiary challenges the will then the challenging beneficiary will be disinherited instead of inheriting the full gift provided for in the will. An in terrorem clause is intended to discourage beneficiaries from contesting the will after the testator’s death. New York law recognizes in terrorem clauses, however, they are strictly construed.   

Keep in mind that simply having an in terrorem clause in your will may not be enough to dissuade beneficiaries from potentially challenging your will. Theoretically, however, for an in terrorem clause to have any weight at all, a beneficiary under a will must be left a substantial amount to incentivize their compliance with the will. 

An in terrorem clause may have no effect on a beneficiary who was not left anything under a will as they risk losing nothing by challenging the will. While in terrorem clauses may be effective in minimizing a will contest, for some it holds no power.  

As with many things in life, one size does not fit all. A successful estate plan takes all personal and unique factors to an individual into consideration. The documents are only part of the problem and solution. The fact is, there is no substitute for competent legal advice.   

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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