Legally Speaking

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By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: 

My uncle John named my cousin Mike as executor in his will. Mike lives out of state and decided it would be too burdensome for him to serve as executor. Since I was named as successor executor, I had my attorney file a petition asking that the court issue to me letters testamentary. Mike signed a form renouncing his appointment and consenting to my appointment. Now that I am about to close the estate and receive commissions for serving as executor, Mike is insisting that he is entitled to the commissions since he was my uncle’s first choice for executor.

THE QUESTION:

Is Mike correct?  

THE ANSWER: 

Mike is absolutely wrong. Commissions are designed to compensate an executor for the time and effort he spends marshalling the decedent’s assets, paying the decedent’s debts and distributing the probate assets in accordance with the terms of the decedent’s will. Commissions paid to an executor of an estate are statutory. That means that there is a law (Surrogate’s Court Procedure Act, Section 2307) that sets forth the manner in which the commissions are calculated. That calculation takes into account the value of the estate assets and how those assets are addressed in the will. 

For example, if the decedent owned a house and in his will made a specific bequest of the house to his daughter, the value of the house is not included in the commission calculation. If, however, the decedent did not make a specific bequest of the house and simply stated in his will that his entire estate was to be distributed to his children in equal shares, the value of the house would be included in the commission calculations.

The commissions paid to an executor represent a percentage of the value of the estate so, the larger the estate, the greater the commissions. Commissions are awarded on a sliding scale. Generally an executor earns 5% of the first $100,000 of the value of the estate, 4% on the next $200,000 of the value of the estate and so on. 

The percentage on the value of the estate decreases as the value of the estate increases. Calculating commissions is a bit involved since the executor has to take into consideration the value of assets he receives as well as the value of assets paid out by the estate. Those figures may not be the same if, for example, the decedent’s investments lose significant value during the administration of the estate. Commissions paid to an executor are considered income and are subject to income tax. 

Although Surrogate’s Court Procedure Act, Section 2307 gives the executor the right to take commissions, it is not a requirement and it is not uncommon for close family members of the decedent who are also beneficiaries under the will to forego commissions. Doing so results in all of the beneficiaries who are entitled to a specific share of the estate to get a little more. 

That being said, in situations where there are beneficiaries that are likely to be uncooperative, I often recommend that the executor advise the beneficiaries that his decision about taking commissions is dependent on their conduct. Knowing they may get a bit more from the estate if they help rather than hinder the executor is usually enough to get cooperation.

Because of the complexities involved in probating an estate and calculating executor commissions, it is prudent for the person named as executor in a will to retain an experienced attorney to assist with the process. 

Linda M. Toga, Esq provides legal services in the areas of estate planning and administration, real estate, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected] 

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By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS:

My aunt Mary died recently. She was widowed and had no children. My father, her only sibling, died a few years ago. In her will Mary named me as the executrix of her estate and the sole beneficiary. The attorney who drafted the will expected to be retained to handle Mary’s estate but I have worked with a different attorney and want to work with him in connection with the probate of Mary’s estate. The drafting attorney has the original will and has refused to give it to me.

THE QUESTIONS:

Must I retain the drafting attorney to handle the probate of my aunt’s will? If not, must he turn the will over to me or my attorney?

THE ANSWER:

The short answer to your first question is an emphatic “NO”! Although many attorneys assume and likely hope that the families of their estate planning clients will retain them to handle the estates of those clients when they die, there is absolutely no legal basis for the drafting attorney to insist that he/she be retained by the named executor to assist with the probate of the estate. If your aunt wanted the drafting attorney to handle her estate, she certainly could have named him as executor. Since she named you, you are free to retain any attorney you want to assist you with the probate process.

As for whether the drafting attorney must provide you or your attorney with the original will, it would clearly be better if the drafting attorney simply agreed to turn the will over to you or your attorney. However, if that does happen, all is not lost since New York law provides a mechanism for compelling a person who is holding an original will of a decedent to file that will with the surrogate’s court.

If polite requests for the will are ignored, your attorney can commence a proceeding in the surrogate’s court to compel the drafting attorney to produce the will. If the court determines that the drafting attorney did not have good cause to withhold the will, the court may not only order the attorney to file the original will with the court but, can also order the drafting attorney to reimburse you for the attorney’s fees you paid in connection with the proceeding.

Obviously, unless there is a good reason why the drafting attorney will not provide you or your attorney with the will, it is in his/her best interest to simply turn it over without the need for court intervention.

Linda M. Toga, Esq provides legal services in the areas of estate planning and administration, real estate, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected]

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By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS:

I have a friend who says I’m crazy to have a will rather than a revocable trust because probating a will is so time consuming and expensive.

THE QUESTION:

Is she right?

THE ANSWER:

In certain situations, probating a will may be more expensive and time consuming than having your assets pass pursuant to a trust. However, unless there is a will contest or your executor elects to take commissions, getting a will admitted to probate is generally a relatively quick and inexpensive process.

While I do not recommend a will to a client who is estranged from family members or who anticipates a will contest, I do recommend a will for clients whose heirs are easy to locate and on good terms, and whose executor is a family member or friend who is unlikely to take commissions. That is because under those circumstances, the probate process is straight forward and the legal fees associated with the process are generally quite modest.

The probate process is started when the person named as the executor under the will files a short petition with the surrogate’s court seeking letters testamentary. The petition provides information about the decedent, his heirs and his assets. Individuals in line to inherit and people named in the will must get notice of filing and/or sign a consent form.

The consent forms are filed with the court along with the petition, the original will and death certificate and a fee that ranges from $45 to $1,250. Even during the pandemic we are now experiencing, the surrogate’s court has been processing probate petitions and issuing letters testamentary within a few weeks.

Once letters are issues, the executor has the authority to sell property, close accounts and otherwise marshal the decedent’s assets to ultimately distribute those assets in accordance with the terms of the will. Provided the executor choses to forego commissions, the process of obtaining letters testamentary often costs less than $3,000, including the filing fee.

Although it may cost less to distribute your assets pursuant to a trust, creating a trust often costs more than will and there are frequently expenses involved in funding the trust that are not incurred when you have a will prepared.

In addition, having a trust does not guarantee that your entire estate will pass to your beneficiaries without court intervention. It is not uncommon for people who opt to have a trust created to forget to put some of their assets into the trust.  If they do not retitle an account or a vehicle, for example, the trust will not govern how those asset are distributed. In that case, someone will have to petition the court for the authority to dispose of those assets.

Getting back to your question, you are not crazy for having a will rather than a trust. Although your friend’s circumstances may dictate that a trust is the better option for her, as I mentioned above, I generally recommend that my clients have me prepare wills as part of their estate plans. That being said, if after hearing the pros and cons of having a trust a client choses to have me prepare a trust, I am happy to do so. The important thing is that the client makes an informed decision.

Linda M. Toga, Esq provides legal services in the areas of estate planning and administration, real estate, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected]

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By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: My brother John died unexpectedly. John never married and has no children. He had a Will in which he named me as executrix and left everything to me and my sister, Julie. The only assets John had was a bank account with a balance of $22,500.

THE QUESTION: What do I need to do to close that account so the money can be divided between me and Julie?

THE ANSWER: In most cases when someone dies with assets and a will, the person named in the will as executrix must file a petition with the surrogate court in the county where the decedent lived seeking letters testamentary. Once letters testamentary are obtained and the executrix has obtained a taxpayer identification number from the IRS, the executrix can go to the bank to close the account.

It is noteworthy the bank will not write checks to beneficiaries of the estate but, will only write a check for the balance in the account payable to the estate. That check must be deposited in an estate account from which the distributions to the beneficiaries can be made. 

In your case, since the value of John’s assets is less than $30,000, you need not obtain letters testamentary. Instead you can file an affidavit with the surrogate‘s court as part of a small estate administration. The filing fee is $1 and the form is less involved than the one used to file for letters testamentary. You will have to provide the name and address of the bank, the account number and the account balance and information on who is entitled to the funds.

Once the affidavit is accepted, the court will send you a certificate that gives you the authority to close your brother’s bank account. You will receive a separate certificate that gives you the authority to open an estate account into which you need to deposit the check issued by the bank.

To insure that the affidavit is prepared and filed correctly, I recommend that you retain an attorney with surrogate’s court experience to represent you. That way you can be sure the process will go as smoothly possible.

Linda M. Toga, Esq provides legal services in the areas of estate planning and administration, real estate, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected]

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By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: My husband, Fred, died recently. We are both on the deed to our house.

THE QUESTION: Do I need to change the deed?

THE ANSWER: Whether you need to change the deed depends on how you and Fred took title to the property when you first purchased it. You and Fred were co-owners of your property but, the ownership interest of co-owners of real property can be expressed on a deed in different ways.

Two or more co-owners can each own a specific percent of the property For example, two owners can each have a 50% interest in the piece of property. Each owner can dispose of his/her 50% interest as he/she pleases. Owners with this sort of arrangement are referred to as tenants in common.

Two or more people can also own property jointly with the right of survivorship. Such co-owners are referred to as joint tenants and the deed to the property will include the words “joint tenants with the right of survivorship” or “jt. tenants WROS.” Each joint tenant has an interest in the entire property and generally cannot dispose of their interest in the property without the consent of the other joint tenants.

Finally, when a married couple takes title to real property, they can do so jointly as tenants in the entirety. This designation is similar to jt. tenants WROS but, is only an option for married couples.

If you and Fred took title to your home as 50/50 tenants in common, a new deed should be prepared by which the executor or administrator of Fred’s estate transfers his 50% interest in the property to the person he named as the beneficiary in his will or the person entitled to his share under the intestacy statute. The new deed must be signed by the executor/administrator and filed/recorded in the office of the county clerk in the county in which the property is located.

If you and Fred held the property as joint tenants WROS or as tenants in the entirety, there is no need to change the deed. You became the sole owner of the property upon Fred’s death by operation of law. In other words, Fred’s ownership interest in the property was extinguished when he died and you automatically became the owner.

If you sell the property, you will need to provide proof that Fred died. Without such proof, the deed bearing only your signature will not be accepted for recording. If your house is not sold until after you die, the person selling your house will have to provide both Fred’s death certificate and letters testamentary or letters of administration from the surrogate’s court to establish that he/she has the authority to sell the property.

If you are still uncertain as to whether a new deed is needed, you should contact an attorney with experience in real estate who can review your deed and advise you as to how to proceed.   

Linda M. Toga, Esq provides legal services in the areas of real estate, estate planning and administration, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected] She will respond to messages and emails as quickly as possible.

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By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: I am starting to work on my estate plan and am having trouble deciding who I should name as guardian of my three children in the event I die when they are still minors.

THE QUESTION: Can you provide some guidance on what factors I should consider when making a decision about an appropriate appointment?

THE ANSWER: I can certainly provide guidance about choosing a guardian but I want to first commend you on planning ahead. So many people put off estate planning and the end results are often less than optimal.

After many years helping clients develop their estate plans, I have come to the conclusion that the decision as to who will serve as guardians of their children is the most difficult decisions my clients face. This is particularly true when the client does not have family in the area. That being said, there are certainly situations where friends may be more suitable guardians than family members.

When choosing a guardian, you want to name someone who is willing and able to raise your children in an environment similar to the one they are familiar with and one in which they can thrive. Whoever you chose as guardian should have values that are similar to yours and be willing to love and nurture your children.

Not only should you look at the relationship between the person you are considering as guardian and your children but also the relationship between that person’s children and your own. Are the children similar in age? Do the children get along? Do they have common interests? If the proposed guardian does not have children, is that because she doesn’t want children? These are the sorts of questions you should be asking yourself.

Since you will likely want your children to continue to have a relationship with your family regardless of who is appointed as guardian, the relationship between the guardian and family members may be a factor.

Where the proposed guardian lives and her living arrangements also come into play. Does the guardian live locally so that your children can stay in the same school district or will they have to relocate out of state? Does the guardian have room to take in three children or will the guardian need to build an addition or move in order to welcome your children into her home? If the guardian’s living arrangement is not suitable, does she have the funds to remedy the situation?

While money should not be the overriding factor in deciding on a guardian, if the person you want to name does not have the means to take in and care for your children, you can address this issue in your will. By setting aside assets in a testamentary trust which can be distributed to the guardian to cover certain costs, you can decrease the chance that the guardian will suffer economic hardship as a result of caring for your children. Funds that remain in the trust when your youngest child is no longer a minor can be distributed to your children.

While the discussion above is far from exhaustive, it sets forth many of the things you should think about when deciding on who to name as guardian of your children. However, do not assume that the decision is yours alone. Ask the person you would like to name as guardian if she is willing and able to accept the responsibility of raising your children. Upon your death, you don’t want the person you named as guardian to be surprised.

Linda M. Toga, Esq provides legal services in the areas of estate planning and administration, real estate, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected]

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By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: Ever since I purchased my property, my neighbor had allowed me to drive over his property to get to my garage since the driveway that is on my property is very narrow and difficult to navigate. I am concerned that when my neighbor dies or sells his property, I will no longer be able to use the driveway that passes over his property. He told me he is willing to sell me the strip of his property that I am currently using.

THE QUESTION: Is this the best way to proceed?

THE ANSWER: Unless your neighbor owns a very large parcel of land that is subject to subdivision, I would be surprised if he would be allowed to simply sell you a piece of his property. Even if his property could be legally subdivided, it is unlikely that he could sell you a parcel that is smaller than the standard building lots in your area.

Rather than seeking a subdivision, I suggest that your neighbor grant you an easement over his property that runs with the land. In other words, he could grant you the right to use a specific part of his property for a specific purpose and indicate that the obligations and benefits created by the easement shall be enjoyed by subsequent owners of both your property and his own.

If your neighbor is amenable to creating an easement, the first thing that would have to be done is to have a surveyor map out the area that you will be allowed to use and prepare the legal description of that area. He should then retain an attorney to prepare an easement agreement that sets forth the details of your continued use of the area and the rights and obligations of whoever may own each of the subject properties now and in the future.

The agreement must contain sufficient information to identify the properties involved and the area comprising the easement. The agreement must then be recorded against both your property and your neighbor’s property so that future owners of both properties are on notice of the existence of the easement and their rights and obligations.

Once properly recorded, you will have the right to use the designated area of your neighbor’s property as a driveway for as long as you own your property and future owners will enjoy the same benefits you now enjoy.

Linda M. Toga, Esq provides legal services in the areas of real estate, estate planning and administration, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected] She will respond to messages and emails as quickly as possible.

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By Linda Toga, Esq.

Linda Toga, Esq.

With the COVID-19 pandemic on everyone’s mind, many people who have not engaged in estate planning have contacted me about how best to proceed with the development of an estate plan. 

It seems that the fear of the virus has made people understand the need for estate planning. However, even if you have a will or a trust, a power of attorney and/or a healthcare proxy, now is a good time to review your documents to confirm that they still express your wishes and meet your needs. Advanced planning is not something you think about once and forget. Successful planning requires that you periodically review and possibly revise your documents to reflect changes in your life circumstances. 

Some things to think about are:

Your beneficiaries: Have any of the beneficiaries named in your will or trust passed away? If so, you may want to name some new beneficiaries to share in your estate. Even if a beneficiary is still living, you should ask yourself if that person is still someone to whom you wish to leave a bequest. Relationships change over time. Are there new people in your life who are important to you? Are there beneficiaries named in your documents with whom you now have little or no contact, perhaps as the result of a divorce or relocation? Did you name a charity that no longer exists as a beneficiary? Are any of the beneficiaries now disabled? If you answered “yes” to any of these questions, you should consider making changes to your will or trust. 

The bequests: If you financial situation has changed since you created your estate plan and you can now make more generous bequests, you may want to revisit the size of bequests made to certain individuals. The converse is also true. If your estate is likely to be significantly smaller, perhaps you want to limit the bequests you are making either by removing some beneficiaries or decreasing the amount or percent of your estate going to each beneficiary. 

Your fiduciaries: The word fiduciaries refers to the people you have named as executor, trustee, agent and/or guardian in your estate planning documents. If any of the people you named as a fiduciary have passed, you should name a successor. If you named a sibling as an executor because your children were minor and now they are responsible adults, perhaps you want to name one of more of your children as the executor(s) of your estate.

Many clients revise their estate plans and name their children as agents on their powers of attorney or healthcare proxies when their children are older, more responsible and in a better position to make important decisions. This may be something you want to consider. If you named guardians to care for your children in the event you die when the children are still minors, it is very important to revisit this appointment. Perhaps your children have attained the age of majority and no longer need a guardian in which case the provision naming a guardian can be deleted. 

If a guardian may still be needed, you should consider the relationship the named guardian has with your children. Perhaps the person you named no longer has a good relationship with your children, or they have moved out of state and could only serve if your children are relocated. Has the guardian’s financial situation or living arrangements changed to the point that taking in and caring for your children will be overly burdensome? Since the guardian you name may be raising your children, all of these issues deserve serious thought. 

Although there are many issues to consider when reviewing your estate plan, the points mentioned above can provide a good starting point. Retaining an experienced estate planning attorney to review your documents with you and to discuss any changes you may want made will ensure that your estate plan will once again reflect your wishes. 

Linda M. Toga, Esq provides legal services in the areas of estate planning and administration, real estate, small business services and litigation. Call 631-444-5605 or email Ms. Toga at [email protected] to schedule a consultation. 

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By Linda Toga, Esq.

Linda Toga, Esq.

THE FACTS: My father died in September, 2018. This April I received a check from the United States Treasury payable to my father in the amount of $1,200. The check reflects the Economic Impact Payment or stimulus check authorized for many citizens as part of the Coronavirus Aid Relief and Economic Security or CARES Act. My family could really use the money since I lost my job when the business I worked for closed in March but, I’m not sure if I should I cash the check.

THE QUESTION: Are deceased individuals or their families entitled to Economic Impact Payments?

THE ANSWER: There has been a great deal of confusion concerning stimulus checks that were sent to deceased individuals. I have received quite a few calls from clients asking whether they can cash checks sent to individuals who died recently, as well as individuals that died well before your father. 

Adding to the confusion is the fact that some of the checks in question include the notation “DECD”, short for deceased, on the payee line. This certainly suggests that the Treasury knowingly sent checks to deceased individuals and has lead a number of people to conclude that the checks can be cashed. Other callers have suggested that since their loved one either died from the coronavirus or suffered financially from the virus before passing that their estate should be entitled to the stimulus funds. Unfortunately for the families of the deceased check recipients, the government does not see it that way. 

On May 6, more than a month after checks were first mailed out, the IRS tried to clarify the situation by stating on its website that funds that were sent to deceased individuals should be returned. They provided instructions for how that should be done. 

However, rather than bringing clarity to the issue, the posting on the website added to the confusion. That’s because the posting states that if the payee died “before receipt of the payment,” the payment should be returned. If all payments were made by checks that were mailed to the recipients and delivery times throughout the country were the same, the IRS post may settle the question. 

However, since the time it takes for mail to be delivered to different places varies, and since some people received checks through the mail while others had the funds deposited directly into their bank accounts, a rule that relies on receipt of the payment rather than the date the payment was authorized inevitably favors those people with slow mail service. 

For example, if Mr. Smith’s check is mailed on April 11 and received on April 14 and Mr. Cooper’s account is credited on April 11, and both men die on April 12, the IRS post suggests that Mr. Smith’s estate can keep the money but, Mr. Cooper’s estate is expected to return the funds. It seems unlikely that the Congress intended the CARES Act to discriminate against people with direct deposit but, absent further clarification from the IRS, they will suffer that unintended consequence. 

Although it is clear that the Treasury expects checks payable to deceased individuals to be returned, some people point out that it may be premature to return funds to the IRS at this time. That is because Congress is debating additional relief packages that may provide that the families of deceased recipients of stimulus checks are entitled to retain the funds. 

Even if the family of an individual who died years ago and was not impacted by the coronavirus may not be entitled to a keep the stimulus check, provisions may be made to help the families of those who died from or suffered financially from the pandemic. There is precedence for such relief since the government did not require that funds payable to deceased individuals through the Economic Stimulus Act of 2008 be returned. Then, as now, the goal of the stimulus checks was to stimulate spending and specifically to boost consumer spending.

At this time, it may be prudent to take a wait and see approach, especially with respect to checks that were sent to individuals who died recently. That is especially true since it is unclear how the government will get back the stimulus money that was given to deceased individuals. Collection efforts by the treasury cannot be started until death records are compared with the list of payees and the list of estates that already returned checks. That will take time. 

In addition, Congress may yet decide that the funds need not be returned. Considering the confusion surrounding the initial issuance of the stimulus checks, the prospect of getting a returned check reissued in the event Congress authorizes payments to deceased individuals is poor. That being said, once the question of eligibility is conclusively resolved, stimulus checks that were sent to deceased individuals who are found to be ineligible to receive the funds will have to be returned. 

As far as the check sent to your father is concerned, I would be surprised if Congress decided that your father or his estate is eligible for stimulus funds relating to the pandemic. However, I recommend that you monitor the situation closely so that you can make an informed decision as to whether you need to return the check. 

Linda M. Toga, Esq provides legal services in the areas of estate planning and administration, real estate, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected] She will respond to messages and emails as quickly as possible. 

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Linda Toga, Esq.

THE FACTS: My father recently died at the age of 98. I am 78 and not well. My oldest brother is the executor of my father’s estate. In his will, my father directs his executor to distribute this estate in equal shares to me and my siblings. My brother strongly dislikes my wife and has made it clear that if I pass away before my father’s estate is settled, that he has no intention of distributing my share of the estate to my wife.

THE QUESTION: Can my brother legally withhold my share of my father’s estate from my wife?

THE ANSWER: As executor, your brother is legally bound to honor your father’s wishes whether he likes it or not. Regardless of whether you are alive at the time of distribution or not, your brother cannot change the terms of the will. 

If you had died before your father, how your share of his estate was to be distributed would have depended on the language in your father’s will. For example, if your father’s will said his estate was to be divided equally amongst his children, per stirpes, and you predeceased your father, your share of his estate would pass to your children, not your wife. If your father’s will stated that his estate was to be divided equally between his then living children, your share would be distributed, pro rata, to your siblings who were alive when your father died. However, since you were clearly alive when your father died, you have a vested interest in your share of his estate. 

If you are still alive when your father’s estate is settled, you are obviously entitled to receive your share of his estate outright. You can then do with your inheritance whatever you wish. If you pass before your father’s estate is settled, your share of his estate will pass to your estate. 

Once an executor or administrator is appointed by the court to handle your estate, that person will have the authority to distribute your inheritance in accordance with the provisions of your will. If you do not have a will, the intestacy statute will dictate how your estate will be distributed. 

If your wish is to have your estate, including the inheritance from your father, pass entirely to your wife, you should retain an experienced estate planning attorney to prepare a will that reflect your wishes. This is particularly important if you have children since, without a will, the intestacy statute would require that your children receive a share of your estate. 

Linda M. Toga, Esq provides legal services in the areas of estate planning and administration, real estate, small business services and litigation. She is available for email and phone consultations. Call 631-444-5605 or email Ms. Toga at [email protected] She will respond to messages and emails as quickly as possible.