Tags Posts tagged with "Linda Toga Esq."

Linda Toga Esq.

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Linda Toga, Esq.

THE FACTS: I have been estranged from my family for many years. I want to be sure that family members are not able to inherit from my estate

THE QUESTION: Is that possible?

THE ANSWER: While you cannot disinherit your spouse, you can certainly take steps to prevent your siblings, children, cousins and other blood relatives from getting a share of your estate. However, keep in mind that even if they are not successful in inheriting from your estate, certain relatives can try to recover against your estate if you do not plan properly. Defeating claims against your estate could be time consuming and costly.

HOW IT WORKS:

You did not mention whether you were married and, if so, whether you were estranged from your spouse as well as from other family members. If you do have a spouse, she will be entitled to a share of your estate upon your death regardless of what you may do with your assets.

Spouses have a statutory right of election that entitles the surviving spouse to one-third of most of their deceased spouses’ assets, even if those assets are jointly held or are in a trust. Getting a divorce or getting your spouse to waive her spousal rights are the only options you have for defeating any claim she may make against your estate.

As for other family members, you can ensure that they do not get a share of your estate if you transfer all of our assets into a trust. Unlike a will that is subject to court oversight upon your death, a trust is generally free of such oversight. In most cases, people who are not named as beneficiaries in the trust are not even required to be given notice of the grantor’s death. That means that trust assets can be distributed without notice to your family.

If you do not want to transfer assets into a trust, you can execute a will that explicitly states that you do not want the family members identified in the will to share in your estate.

While some people believe leaving a nominal amount of money to the people they do not want to inherit will convince them not to contest their will, that strategy rarely works. If someone would be entitled to $50,000 if a will was denied probate, it is unlikely that they will accept $10 to simply walk away.

It is important to note that only certain family members have the right to contest a will. If you have children, for example, they could contest your will because, if you died without a will, they would be in line to inherit.

In that case, your siblings could not contest your will because your children have priority. Your siblings could only contest your will if you die without a spouse, parents or children. When deciding how to proceed with your estate plan, it will be helpful to understand the circumstances under which certain family members can try to recover against your estate.

If you are serious about protecting your estate from your family, you should consult with an experienced estate planning attorney. Working with an attorney who regularly deals with the issue of estranged family members is the best way to ensure that your estate plan will meet your needs.

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. Visit her website at www.lmtogalaw.com or call 631-444-5605 to schedule a free consultation.

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By Linda Toga Esq.

Linda Toga, Esq.

THE FACTS: Last year my aunt Sue died without a will. She was widowed and owned a house that had been in our family for generations. The understanding was that when she died, the next generation, including me and my siblings, would inherit the house. Recently, my aunt’s daughter, Mary, signed a deed transferring the house to herself and her only sibling, Jane. 

THE QUESTION: Did Mary have the legal authority to transfer the property? 

THE ANSWER: Unfortunately for you, as Sue’s daughter and a distributee of Sue’s estate, Mary was well within her rights to transfer the property. If Sue had a will in which she left you and your siblings a share of the house, Mary would not have been able to transfer the property to herself and Jane. She would have first been required to obtain letters testamentary from the Surrogate’s Court (assuming she was named as executrix in the will) and she would then have to abide by the terms of the will by transferring the house to the beneficiaries named in the will. 

However, since Sue died without a will, by law title to the house automatically vested in her children when she died. In other words, as Sue’s only children, Mary and Jane immediately became the legal owners of the house when Sue died. The law that addresses vesting does not apply to you or your siblings because you are not in Sue’s direct bloodline. If Sue did not have any children, the outcome may have been different.  

If Sue wanted you and your siblings to have a share of the family home, she should have had an estate planning attorney prepare a will for her in which her wishes with respect to the property were memorialized. The executor of the estate would then be obligated to carry out Sue’s wishes and transfer the property to you, your sibling and any other beneficiaries set forth in the will. Absent a will, you have no claim to the house. 

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.

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.

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 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.

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By Linda M. Toga, Esq. 

Linda Toga, Esq.

THE FACTS: My father executed a will many years ago in which he disinherited my older brother, Joe, and named me as executor of his estate. Joe had been estranged from the family for years. My father recently passed away. I have looked through all of my father’s papers and cannot find the will. I vaguely remember my father telling me that he put his will in his safe deposit box so that it would not get lost, but the bank manager will not allow me to access the box. 

THE QUESTIONS: How can I gain access to my father’s safe deposit box? If my father’s will is in the box, how should I proceed? 

THE ANSWER: Many people mistakenly believe that their safe deposit box is the best place to keep their will. While the will may be safe locked in the safe deposit box in the bank, it will not necessarily be accessible when needed. 

When the holder of a safe deposit box dies, the box is supposed to be sealed. This means the box is not to be opened unless the person seeking access to the contents of the box provides the bank with either a court order directing the bank to open the box or evidence that the person has been granted authority from the court to handle the decedent’s estate. 

If you cannot find your father’s will and believe it is in his safe deposit box, you must obtain an order from the Surrogate’s Court directing the bank to open the box. To do that, your attorney will need to file an application with the court in the county where your father lived in which he or she provides your father’s name and address, his date of death, your relationship to your father and the location of the bank where the safe deposit box is located. 

A small fee is required by the court for filing the application and providing to you a certified copy of the order when it is issued. 

Once the court issues the order, you should arrange with the bank for a bank officer to open your father’s safe deposit box in your presence. The officer is required to take an inventory of the contents of the box and, if your father’s will is there, to send the will to the Surrogate’s Court that issued the order. All other items that are in the box must be returned to the box. You will not be able to remove the other items until your attorney files a petition for letters testamentary and the court issues those letters to you.

 If it ends up that your father’s will is not in his safe deposit box, and you cannot locate it elsewhere, rather than petitioning for letters testamentary, your attorney will need to petition for letters of administration. Once you have obtained either letters testamentary or letters of administration, you will have full authority to access your father’s safe deposit box and to remove the contents.

 As an aside, if you cannot provide the original will to the court as part of the probate process and are issued letters of administration, you will be required to distribute to your estranged brother a share of your father’s estate pursuant to the NYS intestacy statute, regardless of what you believe your father may have wanted.

Although you will eventually gain access to the contents of your father’s safe deposit box, the administration of your father’s estate will clearly be delayed and additional estate expenses will be incurred in order to determine if, in fact, he put his will in his safe deposit box. To avoid the delay and expense I recommend that clients keep their wills and other important papers at home in a water/fire resistant safe or storage box. 

Linda M. Toga provides personalized service and peace of mind to her clients in the areas of estate planning, wills and trusts, Medicaid planning, marital agreements, estate administration, small business services, real estate 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: My mother recently passed away. She and my father were divorced and my mother was in a long-term relationship with Tom. My mother prepared her will before she met Tom. After living with Tom for many years, my mother made changes to her will by writing in the margins of the pages of the will. The changes were advantageous to Tom. She also prepared a written statement that provides that Tom was to receive all of the funds in her bank account at the time of her death. The written statement was signed and notarized.

THE QUESTIONS: When my mother’s will is admitted to probate, what effect, if any, will the notes in the margins and the written statement have on the administration of my mother’s estate? In light of the fact that he is not mentioned in the original will, is Tom entitled to a share of my mother’s probate estate?

THE ANSWER: Without seeing the will and the written statement, I cannot conclusively state that Tom is not entitled to a share of your mother’s probate estate. However, from the information you provided, it appears that the handwritten changes to the will and the notarized statement will not be enforceable. That is because your mother apparently did not comply with the requirements set forth in the New York statutes pertaining to the execution of amendments to a will. 

Certain formalities must be observed when a will or an amendment to a will, known as a codicil, is executed by a testatrix (a woman signing a will.) Different states have different laws that govern the execution of a will. New York Estates, Powers and Trusts Law (EPTL) 3-2.1 provides, among other things:

1. that a will must be signed by the testatrix at the end of the document,

2. that no effect shall be given to any matter that follows the signature of the testatrix other than an attestation clause signed by witnesses,

3. that no effect shall be given to any matter preceding the testatrix’s signature that was added subsequent to the execution of the will, 

4. that the testatrix shall sign the will in the presence of at least two attesting witnesses who have been advised that the document they are signing is the testatrix’s will, and

5. that the witnesses must sign an attestation clause stating that the testatrix advised them that they were witnessing the execution of her will and that they did so in her presence and the presence of the other witness. The attestation clause is considered part of the will. 

In addition to the attestation clause, most attorneys who supervise the execution of wills have the attesting witnesses sign an affidavit stating that they witnessed the execution of the will by the testatrix, that she was of sound mind and acting voluntarily and that they witnessed the signing of the will at the request of the testatrix. This affidavit is not considered to be part of the will but is generally stapled to the back of the will.  

Based upon EPTL 3-2.1, the handwritten notes in the margin are clearly not enforceable since they were added to the will long after your mother executed the will in the presence of witnesses. As such, they will not carry any weight, and the executor will not be obligated to take them into consideration when administering the estate. 

As for the statement that your mother signed in the presence of a notary, unless it was also signed in the presence of two witnesses who affixed their signatures at the end of the attestation clause following your mother’s signature, the written statement does not comply with the requirements of the statute. Consequently, to the extent the written statement conflicts with the provisions of the original will, it will not be enforceable. 

Unless the executor and the beneficiaries under your mother’s will are inclined to give effect to the handwritten changes and your mother’s written statement, Tom will not be receiving a share of your mother’s probate estate. This may be a good outcome for the beneficiaries but, assuming your mother was of sound mind when she made the changes and truly wanted Tom to be a beneficiary of her estate, it means that your mother’s wishes are not being honored. That result is unfortunate and could have been avoided if your mother retained an experienced estate planning attorney to prepare a new will or a codicil for her. 

Under the supervision of an attorney it is more than likely that the proper formalities would have been followed when a new will or codicil was signed, ensuring that your mother’s wishes would be honored. 

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

Properly drafted prenuptial agreements ensure that assets ... remain separate.

By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: I am widowed, have two grown children and will soon be getting married to Joe. Joe also has children from his first marriage. We are both financially independent and have agreed that our assets will remain separate. When I die, I want my children to receive the bulk of my assets.

THE QUESTION: Should I ask Joe to sign a prenuptial agreement? 

THE ANSWER: The quick answer to your question is Yes. Properly drafted prenuptial agreements ensure that assets that are held by one spouse at the time of the marriage remain separate and that marital assets are only those assets that the spouses intentionally commingle. 

In other words, if, at the time of the marriage, you have a brokerage account worth $200,000, that account will not be subject to equitable distribution in the event the marriage terminates in divorce unless you add Joe’s name to the account.

However, if you choose to use some of that money to purchase a house with Joe, the assets you invested in the house will no longer be deemed your separate property and will be subject to equitable distribution in the event of a divorce. You and Joe need to discuss how you want your separate assets to be treated in the event of a divorce and have a prenuptial agreement prepared that reflects those wishes.  

In addition to addressing how your separate property will be treated, your prenuptial agreement should address how your retirement accounts and pension plans are to be handled. Some such accounts and plans require the account holder or the plan participant to obtain the consent of his/her spouse if that spouse is not going to be the beneficiary on the account/plan. 

If you have such an account or pension plan and you want to name your children as the beneficiaries, you will want Joe to waive any rights he may have to the assets held in the account or managed by the plan. 

While most people understand the importance of prenuptial agreements in connection with divorce, such agreements are equally, if not more important, when one of the spouses dies. That is because a well-written prenuptial agreement addresses the rights of a surviving spouse to share in the estate of his/her deceased spouse. 

In New York, spouses have priority over other family members to administer the estate of a person who dies without a will. That means that if you do not have a will at the time of your death, the Surrogate’s Court will give Joe, and not your children, priority to become the administrator of your estate. 

In addition to having the right to handle the estate of an intestate spouse, under the intestacy statute that governs the estates of people who die without a will, the surviving spouse is entitled to the first $50,000 of the testamentary estate and 50 percent of the balance of the estate. In your case, Joe would be entitled to more than half of your estate, leaving your children with less than they would be entitled to if you had not remarried. 

Even if you have a will at the time of your death, Joe, as the surviving spouse, can exercise his right of election. That means that he can claim one-third of almost all of your assets regardless of whether you owned the assets jointly with another person or designated other people as beneficiaries via a beneficiary
designation form. 

In other words, Joe would be entitled to one-third of an account you owned jointly with your children and one-third of your pension or retirement plan. To ensure that your estate is handled by the person of your choosing and that your assets pass to your intended beneficiaries regardless of whether you have a will, it is important to have Joe sign a prenuptial agreement waiving his spousal rights. The waiver should address both the administration of your estate and the right of election. Since prenuptial agreements are generally reciprocal, you should be prepared to waive the same rights in the prenuptial agreement as Joe. 

If you decide a prenuptial agreement is the best way to proceed, you should retain an experienced attorney well in advance of your marriage to prepare the agreement. To ensure that the prenuptial agreement you sign is enforceable, Joe should have separate counsel so that he cannot argue that he did not understand the rights he was waiving or the consequences of signing the agreement. 

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.  

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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.