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Linda Toga Esq.

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By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: In his will my father names me as the executor of his estate. I filed a petition in Surrogate’s Court to be appointed executor and have been issued letters testamentary. In addition to his home in New York, my father owned a vacation home in Florida, which I need to sell. 

THE QUESTIONS: Do the letters testamentary issued by the New York Surrogate’s Court give me the authority to sell the property in Florida? I was told I had to get authority from a court in Florida that deals with estates. Is that true?

THE ANSWER:  The quick answers to your questions are “no” and “yes,” respectively. Letters testamentary issued by a Surrogate’s Court in New York give you the authority to handle real property in New York. They do not give you the authority to sell property outside the state. That is because New York courts do not have jurisdiction over property in other states. In order to sell the Florida property, you will have to obtain authority from a court in Florida that handles matters relating to estates.

In order to obtain authority from the Florida court, you need to file a petition with the probate division of the circuit court in the county in Florida where your father’s property is located. 

As part of the petition you will need to provide the Florida court with a copy of the petition filed with the New York Surrogate’s court and a copy of the letter testamentary issued to you by that court. You will also need to pay the court a fee based upon the value of the Florida property. Once that court reviews and approves the petition, you will be issued ancillary letters testamentary and will be appointed the personal representative of your father’s estate. Based on that appointment, you will be able to dispose of your father’s property in Florida.

The ancillary probate process can be quite costly, especially if you retain Florida counsel to handle the matter for you. Because of the extra time, effort and expense of an ancillary proceeding, some people avoid the process entirely by creating a revocable trust to hold their out-of-state property. This is especially true when people own property in more than one state in addition to New York. 

If your father had put the Florida property in a revocable trust and named you as the trustee, you would have been able to dispose of the property without the need for court intervention. An experienced estate planning attorney could have discussed this option with your father and helped him determine how best to proceed. 

Linda M. Toga provides personalized service and peace of mind to her clients in the areas of estate planning, wills and trusts, Medicaid planning, estate administration, marital agreements, small business services, real estate and litigation. Visit her website at www.lmtogalaw.com or call 631-444-5605 to schedule a free consultation.  

By Linda M. Toga, Esq.

Linda Toga Esq.

THE FACTS: Many of my friends have told me that I should transfer my house to my son and retain a life estate.  

THE QUESTIONS: What are the pros and cons of doing that?

THE ANSWER: People often transfer their property to their children and create life estates because they believe it is the best way to increase their chances of being Medicaid eligible or to avoid probate. In most cases, there are better ways to achieve those goals. 

Before the Medicaid look-back period was changed to five years for all nonexempt transfers, life estates were a very popular part of Medicaid planning. However, since the look-back period is now the same whether you transfer a residence and retain a life estate or put the residence in an irrevocable trust, there is no advantage to creating a life estate when it comes to the look-back period. 

The downside of a life estate from a Medicaid planning perspective is the fact that, if the house is sold during your life time, you are entitled to a portion of the proceeds from the sale. The percentage of the proceeds allocated to you would be governed by life expectancy tables and is surprisingly large. 

For example, if you, as the life tenant, are 80 years old when your $300,000 house is sold, you will be entitled to approximately $130,000 of the proceeds. In the context of a Medicaid application, that $130,000 will be deemed an available resource and may result in a denial of benefits. This is true even if you created the life estate more than five years before you apply for Medicaid. 

If, on the other hand, you transferred the house into an irrevocable trust, even if the house was sold, the proceeds would be fully protected in the trust after the five year look-back period. 

With respect to avoiding probate, if you transfer your house to your son during your lifetime and create a life estate, the house will not be subject to probate when you die, the value of the house will not be included in your gross taxable estate (although the value of the transferred share may be subject to federal gift tax) and you will continue to enjoy any real estate tax exemptions that were applicable to the property before you deeded the house to your son. 

However, if the house is in your son’s name, his creditors can attach liens or judgments to the property. If you create a life estate, you will be required to file a gift tax return reporting the gift of the property to the IRS. 

Finally, by creating a life estate you may be subjecting your son to a capital gains tax liability. That is because your son will not get the step up in basis when you gift him the house that he would get if he inherited your house after your death. 

For example, if you paid $150,000 for the house 20 years ago, your son’s basis in the house if you gifted it to him would be $150,000. If he sells the house after you die, he will have to pay capital gains tax on the increased value of the house. 

If, on the other hand, he inherits the house after your death, he will get a step up and his basis in the house will be the date of death value. Unless he holds on to the house for an extended period of time, it is unlikely that your son will have any capital gains tax liability. 

If your goal in creating a life estate is to avoid probate, a better alternative to a life estate is a revocable trust. Although transferring your house into a revocable trust does not provide protection from estate taxes, it does avoid the need for filing a gift tax return, it protects the house from your son’s creditors and it will allow your son to get a step up in basis when he inherits the house after your death. 

There are clearly many issues to consider when deciding whether a life estate, revocable trust or irrevocable trust offers the best solution for you. The cost of each option is also a consideration. Since creating a life estate can have far-reaching consequences, it is important to discuss your goals and your options with an experienced attorney before taking action. 

Linda M. Toga, Esq. provides personalized service and peace of mind to her clients in the areas of estate planning, real estate, marital agreements and litigation. Visit her website at www.lmtogalaw.com or call 631-444-5605 to schedule a free consultation.

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By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS:   I want to be sure that I do not receive end-of life-medical treatment that will do little other than prolong my life. 

THE QUESTIONS: Is the document in which I can state my end-of-life wishes called a living trust or a living will?

THE ANSWER: The document in which you can memorialize your wishes with respect to the medical treatment to be administered or withheld when you are near death is called a living will. 

A living will differs from a living trust, also known as a revocable trust, because a living will has nothing to do with how your assets are handled during your life or distributed upon you death. 

Instead, a living will provides the person you name as your agent in your health care proxy, your next of kin and/or your health care provider with important information about how you would like to proceed if your doctor has determined that your condition is likely to cause death within a relatively short time and you are unable to express your wishes about your medical treatment.  

A properly drafted and executed living will can also serve as clear and convincing evidence of your wishes in the event a court is asked to decide whether or not your health care provider must honor your wish to withhold medical treatment. 

A living will gives you the opportunity to put into writing what types of medical treatments, procedures and medications you do not want if you have suffered from a significant loss of mental capacity and you cannot eat or drink without assistance or you have an irreversible or incurable medical condition with no likelihood of improvement.

For example, in your living will you can state that you want medical treatment withheld if you suffer from dementia or some other form of mental impairment and there is no reasonable likelihood that such treatment will restore your ability to be oriented and interact with your environment. 

You can direct your health care provider to withhold treatment if you lack mental capacity and need a feeding tube. You can also state in a living will that treatment should be withheld if you exhibit significant mental impairment combined with a condition that is likely to cause death in a relatively short time, as determined by your doctor. 

Examples of the types of life-sustaining treatments and procedures you may want withheld include cardiopulmonary resuscitation, dialysis, artificial hydration, artificial nutrition (feeding tubes), mechanical respiration, antibiotics, experimental medications and surgical procedures. Under many circumstances, these sorts of treatments and procedures serve to prolong life but do not necessarily have any impact on a patient’s underlying medical condition. 

While asking that such life-sustaining treatments be withheld, living wills generally direct the health care provider to the administration of pain medication and to take the steps necessary to keep the patient comfortable. 

Since a living will is a document in which a person essentially rejects life-sustaining treatments, sometimes referred to as “heroic measures,” people who have a living will may effectively hasten their own death. As such, a living will is clearly not appropriate for people who want all possible measures to be taken to keep them alive. 

Because of the moral and religious issues associated with a living will, it is likely the most personal and emotionally charged estate planning document you can sign. It is, therefore, extremely important that you give serious thought to your options when deciding if a living will is right for you and discuss your wishes with an attorney who has experience preparing living wills. 

Linda M. Toga, Esq. provides personalized service and peace of mind to her clients in the areas of estate planning, real estate, marital agreements and litigation. Visit her website at www.lmtogalaw.com or call 631-444-5605 to schedule a free consultation.

When a property is owned by joint tenants with survivorship, the interest of a deceased owner automatically gets transferred to the remaining surviving owners. Stock photo
Linda Toga, Esq.

By Linda M. Toga, Esq.

THE FACTS: After my husband died, I remarried a wonderful man named Joe. Joe had been married before and had 3 children with his first wife. Since Joe moved into my house and was helping to pay the carrying costs, I decided to add Joe as an owner on the deed to my house. Shortly after Joe’s name was added to the deed, he died suddenly without a will.

His grown children are now claiming that they have an ownership interest in the house based upon the intestacy statute. They told me that the statute provides that when a married person dies without a will and is survived by a spouse and children, that his assets are divided between the spouse and children.

THE QUESTION: Are they correct?

THE ANSWER: Although the children are correct with respect to the intestacy statute, the statute may not apply to the house. Whether it does, and whether Joe’s children own a share of your house will depend on the language used when you added Joe to the deed.

HOW IT WORKS: Turning first to the intestacy statute, the statute applies to assets that are owned by the decedent alone. In other words, bank accounts and real property on which the decedent is the sole owner will pass pursuant the intestacy statute. On the other hand, assets that the decedent owned jointly with another person, assets that are in trust and assets for which a beneficiary designation form has been signed do not pass pursuant to the intestacy statute. Instead, they pass by operation of law to the joint owner or named beneficiary.

With respect to your house, how Joe was identified in the deed by which you gave him an ownership interest in your house will determine whether his children now own a share of your house. If Joe was named as a joint tenant with rights of survivorship, as a tenant by the entirety or simply identified as your spouse, you are the sole owner of the property. Under these circumstances, the house is not part of Joe’s intestate estate and, therefore, is not subject to the intestacy statute. While you will likely have to share with his children other assets that Joe may have owned individually at the time of his death, his children are not co-owners of your house.

If, however, you added Joe to your deed as a co-tenant, creating a tenancy in common, you may find that you only own 50 percent of your house.

That is because co-tenants can each dispose of their share of property as they please. When a co-tenant dies without a will, his share in the property in which he had an ownership interest will pass under the intestacy statute. Pursuant to the statute, the surviving spouse is entitled to the first $50,000 of the estate and must then split the balance of the estate 50/50 with the decedent’s children.

If Joe had sufficient assets in his name, you may be able to satisfy the children’s share by distributing to them funds equal to their 50 percent share. However, if Joe’s interest in the house is the only asset he owned at the time of his death, and his interest is worth more than $50,000, you are going to have to buy out his children with your own funds if you want sole ownership of the house.

Although your motive for adding Joe to your deed was admirable, I am sure you had no idea that doing so could result in having his children as co-owners of your house. In other words, you did not know what you did not know. While I hope that the language in the deed is favorable to you and that Joe’s children are mistaken as to their ownership interest in the house, in the future, the best way to avoid costly, unintended consequences when signing documents is to consult an experienced attorney before you sign.

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

When a person dies without a will, the law determines who the heirs of the estate are. Stock photo

By Linda M. Toga, Esq.

Linda Toga

THE FACTS: After my mother’s death I was approached by a man I will refer to as Joe who claims that my mother was his biological mother as well. According to Joe, before she and my father married, my mother gave birth to Joe and immediately put him up for adoption. Although Joe admits that my mother rejected his attempts to develop a relationship with her during her lifetime, Joe now claims that since my mother died without a will, he is entitled to a share of my mother’s estate.

THE QUESTION: Is Joe correct? Will my siblings and I have to share our inheritance with him?

THE ANSWER: Fortunately for you, Joe is wrong.

HOW IT WORKS: Generally a child who is adopted out does not have the right to an inheritance from the estate of his birth mother. The order of adoption generally relieves the birth parents of all parental duties and of all responsibilities for the adopted child. At the same time, the order extinguishes all parental rights of the birth parent to the estate of a child who has been adopted, including the right to serve as administrator of that child’s estate and the right to inherit under the intestacy statutes.

Although Joe seems to be relying upon the fact that your mother died without a will and, therefore, did not explicitly disinherit him, his reliance is unwarranted. That is because the New York State intestacy statute and the domestic relations law govern how your mother’s estate should be distributed.

While the child of a decedent is generally entitled to a share of his parent’s estate if the parent dies without a will [Estates, Powers and Trusts Law §4-1.1 (a)(1) and (3)], the rights of an adopted child in the estate of a birth parent are governed by subsection (d) of the statute. It provides that the Domestic Relations Law, specifically Domestic Relations Law §117, controls.

Domestic Relations Law §117 (1)(a) and (b) provide that an order of adoption relieves the birth parent of all parental duties and responsibilities and extinguishes any rights the parent would otherwise have over the adoptive child’s property or estate. At the same time, the order terminates any rights of the adoptive child to an inheritance from the birth parent.

Although there are some exceptions to these laws, the logic behind terminating inheritance rights is to prevent people in Joe’s position from enjoying a windfall by inheriting from both his birth and adoptive parents and to prevent a birth mother from receiving an inheritance from a child that she did not support during her lifetime.

Under the circumstances, the only way Joe could inherit from your mother’s estate would be if she chose to name him as a beneficiary in a will or a trust or on a beneficiary designation form. If Joe decides to pursue a claim against your mother’s estate, you should be able to defeat the claim by providing the court with evidence that Joe was legally adopted as a child.

It would be wise to retain an attorney experienced in estate administration to assist you with this matter.

Linda M. Toga provides personalized service and peace of mind to her clients in the areas of elder law, estate administration and estate planning, real estate, marital agreements and litigation. Visit her website at www.lmtogalaw.com or call 631-444-5605 to schedule a free consultation.

A pet trust is effective immediately upon your death whereas a will can take months to execute.

By Linda Toga

Linda Toga, Esq.

THE FACTS: My mother has a dog, Fido, who means the world to her. When it comes to Fido, money is no object. She is very concerned about what will happen to Fido when she dies. Not only does she worry about who will care for Fido but also about who will pay for Fido’s care.

THE QUESTION: Should these issues be addressed in her will?

THE ANSWER: While the long-term care of Fido can be addressed in her will, your mother needs to make arrangements for Fido’s care for the period immediately following her death because the provisions of her will are not effective until the will is probated. That could take some time.

I always 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. It is important that a caregiver is identified and is ready and willing to take the pet on relatively short notice. These temporary arrangements need not be in writing unless the owner feels that people are going to fight over who will care for the pet.

For example, if you and your siblings agree with your mother that Mary will take care of Fido, there is no need to put the arrangement in writing. However, if all of you want to take care of Fido, your mother should put her wishes in writing to avoid conflicts.

As for the long-term care of Fido after your mother’s passing and the cost of that care, I suggest that your mother include in her will a pet trust. When thinking about the provisions to include in the pet trust, your mother should not only consider who will care for Fido for the rest of his life but also whether the appointed caregiver has the resources to cover the costs associated with pet ownership.

Even if money is not an issue for the caregiver, your mother should confirm in advance that the caregiver’s living arrangements are suitable for Fido. Some apartment buildings and residential communities do not permit residents to own pets. If the caregiver of choice lives in such a community, or lives in a setting that is not large enough for Fido, your mother should consider naming someone else to adopt Fido after her death.

Once she has settled on a caregiver, your mother should think about the types of care she wants Fido to receive after she is gone. For example, does she want Fido groomed once a month or to have his teeth cleaned three times a year? Does she want Fido to be fed certain types of food? Does Fido suffer from any ailments that require medication or close monitoring? If so, these things should be addressed in the pet trust. If your mother has been using the same groomer and vet for years, she may want the caregiver to continue using the same providers. This is particularly important if Fido is receiving any specialized care or treatment. If this information is not included in the pet trust itself, your mother definitely should provide this information to the caregiver in a letter.

While the reason for including a pet trust in her will is to ensure that Fido will be cared for after she dies, it can also serve as a vehicle for providing the caregiver with instructions with respect to the handling of Fido’s remains after he dies. This information is important and useful to the caregiver who will certainly want to honor your mother’s wishes.

In addition to setting forth in the pet trust the name of the caregiver and the type of care she wants Fido to receive, both during his lifetime and upon death, your mother will need to allocate a certain amount of money to the trustee of the pet trust.

The job of the trustee is to distribute the funds in the trust to the caregiver as needed to be used for Fido’s benefit. The money will be used to pay for Fido’s food and care, but your mother can also allocate some of the money in the trust directly to the caregiver in recognition of the time, effort and responsibility he/she assumed by caring for Fido. If she wants, your mother can name the caregiver as trustee of the pet trust. She need not name two different people for these roles.

A final decision that your mother will have to make in connection with the pet trust is what happens to any of the funds left in the trust after Fido dies. Many people who have a pet trust direct that any money left in the trust after the death of their pet goes to the caregiver. Another popular arrangement is for the money to be donated to an organization that cares for abandoned and/or abused animals. Of course, your mother can also have the funds left in the pet trust divided between you and your siblings. Regardless of how she wants the funds distributed, it is important to include her wishes in the pet trust.

In light of the number of issues, your mother should discuss if she wants to create a pet trust, and the fact that it will be part of her will, with an experienced estate planning attorney. That is the best way to ensure that Fido will be cared for in accordance with her wishes.

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

By Linda Toga, Esq.

THE FACTS: After my mother’s death, my father met a woman, Mary, who was his partner for many years. They lived in my father’s house, which has a value in excess of $3 million. In his will my father left the house to Mary. He also named Mary as the beneficiary of his life insurance policy, which has a death benefit in excess of $2 million. He left his residuary estate to me and my sister. However, the will states that any estate taxes that may be owed are to come out of his residuary estate. My concern is that paying the estate taxes will likely deplete the residuary estate, leaving my sister and me with nothing.

THE QUESTION: Is there some way we can compel Mary to pay the estate tax from the funds she is receiving? It does not seem fair that we may be paying the taxes on the assets which she will be enjoying.

THE ANSWER: Since your father clearly intended for you and your sister to be beneficiaries of his estate, it appears that he may not have understood which of his assets would be considered in calculating his estate’s tax liability.

If, for example, your father and Mary were married at the time of his death, the value of the assets passing to Mary would be excluded from the value of the estate used to calculate the estate tax liability. That is because there is an unlimited marital deduction that applies when determining whether or not federal or New York state estate tax is due.

It is possible that your father believed the exclusion would apply based upon the fact that he and Mary were living together as husband and wife. Unfortunately for you and your sister, the taxing authorities do not see it that way.

Another possibility is that your father assumed that the death benefit from his life insurance policy would not be included in his gross estate for estate tax purposes. That is a common misconception that often leads to an unexpected tax liability.

Estate taxes are calculated based upon the value of all the assets owned or controlled by an individual at the time of death. Since your father could have changed the beneficiary listed on his life insurance policy up until the time of his death, he had “control” over the $2 million death benefit. For that reason, the value of the death benefit is included in his estate for purposes of calculating the estate tax owed.

It is noteworthy that some people actually buy life insurance so that the death benefit can be used to cover the estate taxes that may be assessed against their estates. By doing so, the decedent provides his beneficiaries with liquid assets that can be used to pay any estate taxes that are assessed against the estate. This, in turn, eliminates the possibility that the beneficiaries may need to sell estate assets just to pay the estate tax.

Even if your father was aware of how the estate tax would be calculated, he may not have realized that his will dictated that all of the taxes be paid from his residuary estate. If that fact had been explained to your father, he may have chosen to apportion the estate tax liability between all of the beneficiaries of his estate.

By apportioning the taxes that were due, Mary would be responsible for the taxes attributed to the value of the house, for example. That would have certainly decreased the amount of taxes being paid from the residuary estate earmarked for you and your sister.

In light of the fact that your father’s will does not provide for the apportionment of the estate, the full tax liability will be paid from the residuary estate unless Mary is willing to pay some or all of the estate tax assessed against your father’s estate. If she is not willing, there is nothing the executor of the estate can do but pay the taxes in accordance with the provisions of the will.

The amount of the estate tax due from your father’s estate will depend on when your father died since the exclusion amount on both the federal and New York state estate tax has been increasing annually for a number of years.

Since April, 2017, the exclusion amount for both federal and New York state estate tax exceeds $5.2 million. Even without apportionment, there is a chance that no estate tax will be due unless the value of your father’s estate exceeds the current exclusion amounts. If it does not, the full amount of the residuary estate will pass to you and your sister without any tax liability.

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

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