Testate and Intestate Proceedings in Surrogate's Court
What is the Decedemt's Estate? The Surrogate Court Proceedings What if Unable to Locate the Will Recognition of Wills from Other States Filing a Claim in an Estate Taxes Tables
What is the Decedent's Estate?
Depending upon the context, "estate" may mean: (a) the interest which a person has in property; or (b) the aggregate of property which a person owns. EPTL §1-2.6. "Property is anything that may be the subject of ownership, and is real or personal property." EPTL §1-2.15. ("Real property" is commonly known as "real estate," which confuses the terminology even more!) Think of what one owns: perhaps a house, car, furniture, stocks, money in a bank account, cash in the pocket. Together, that is one's estate.
At death, one's estate is automatically decreased by certain property. That includes real property owned as "tenants by the entirety" (status for married couples) or as "joint tenants with right of survivorship." By operation of laws, that real property becomes the property only of the surviving spouse or the other joint tenant(s). Joint bank accounts become the sole property of the survivor(s). U.S. Savings Bonds POD (payable on death) are the property of the beneficiary. The proceeds of an insurance policy, retirement accounts, like a 401k and IRA, and other accounts with a named beneficiary other than the estate, are transferred to the beneficiary by the institution that holds them. The regulations of the taxing authorities (Internal Revenue Service and New York State Department of Taxation & Finance) may continue to consider those assets as property of the decedent's estate for computing any estate tax, but in terms of whether there is any Estate to be divided upon heirs, those assets are not includible.
See also Publication 603: Estate Tax Waivers, a publication of the NYS Department of Taxation and Finance, which includes an explanation of what an Estate is.
Also excluded from a decedent's estate is property which falls under the Exemption for the Benefit of the Family, EPTL § 5-3.1, which states that:
(a) If a person dies, leaving a surviving spouse or children under the age of twenty-one years, the following items of property are not assets of the estate but vest in, and shall be set off to such surviving spouse, unless disqualified, under 5-1.2, from taking an elective or distributive share of the decedent's estate. In case there is no surviving spouse or such spouse, if surviving, is disqualified, such items of property vest in, and shall be set off to the decedent's children under the age of twenty-one years: (1) All housekeeping utensils, musical instruments, sewing machine, jewelry unless disposed of in the will, clothing of the decedent, household furniture and appliances, electronic and photographic devices, and fuel for personal use, not exceeding in aggregate value twenty thousand dollars. This subparagraph shall not include items used exclusively for business purposes. (2) The family bible or other religious books, family pictures, books, computer tapes, discs and software, DVDs, CDs, audio tapes, record albums, and other electronic storage devices, including but not limited to videotapes, used by such family, not exceeding in value two thousand five hundred dollars. (3) Domestic and farm animals with their necessary food for sixty days, farm machinery, one tractor and one lawn tractor, not exceeding in aggregate value twenty thousand dollars. (4) The surviving spouse or decedent's children may acquire items referred to in subparagraphs (1), (2) and (3) of this paragraph, in excess of the values set forth in such subparagraphs by payment to the estate of the amount by which the value of the items acquired exceeds the amounts set forth in such subparagraphs. If any item so acquired by the spouse or children of the decedent was a specific legacy in decedent's will, the payment to the estate for such item shall vest in the specific legatee. (5) One motor vehicle not exceeding in value twenty-five thousand dollars. In the alternative, if the decedent shall have been the owner of one or more motor vehicles each of which exceed twenty-five thousand dollars in value, the surviving spouse or decedent's children may acquire one such motor vehicle from the estate, regardless of the fact that the decedent may also have been the owner of another motor vehicle of lesser value than twenty-five thousand dollars, by payment to the estate of the amount by which the value of the motor vehicle exceeds twenty-five thousand dollars; in lieu of receiving such motor vehicle, the surviving spouse or children may elect to receive in cash an amount equal to the value of the motor vehicle, not to exceed twenty-five thousand dollars. If any motor vehicle so acquired by the spouse or children of the decedent was a specific legacy in decedent's will, the payment to the estate of the amount by which the value of the motor vehicle exceeds twenty-five thousand dollars shall vest in the specific legatee. (6) Money including but not limited to cash, checking, savings and money market accounts, certificates of deposit or equivalents thereof, and marketable securities, not exceeding in value twenty-five thousand dollars, reduced by the excess value, if any, of acquired items referred to in subparagraphs (1), (2), (3) and (5) of this paragraph. However, where assets are insufficient to pay the reasonable funeral expenses of the decedent, the personal representative must first apply such money to defray any deficiency in such expenses. (7) Any set off to a child under the age of twenty-one years not exceeding ten thousand dollars shall be covered by the provisions of section twenty-two hundred twenty of the surrogate's court procedure act as if the child were a beneficiary of the estate. Any excess amounts shall be governed by the guardianship statute, if applicable. (8) The court shall have the authority to issue such documentation as necessary to effectuate the transfer of any items under this section. (b) No allowance shall be made in money or other property if the items of property described in subparagraph (1), (2), (3) or (5) of paragraph (a) are not in existence when the decedent dies. (c) The items of property, set off as provided in paragraph (a), shall, at least to the extent thereof, be deemed reasonably required for the support of the surviving spouse or children under the age of twenty-one years of the decedent during the settlement of the estate. (d) As used in this section, the term "value" shall refer to the fair market value of each item, reduced by all outstanding security interests or other encumbrances affecting the decedent's ownership of said item.
This exemption preserves the family setting, allowing the family to continue to function, with the cash being useful for the payment of rent or the mortgage, for example. The NYS Department of Motor Vehicles has a form and instructions in order to transfer the motor vehicle. See mv843 on the DMV website for instructions. The Affidavit to Obtain Payment of Deposit On Death of Depositor Without Court Administration may be acceptable for other transfers that fall within the exemption.
The Surrogate Court Proceeding
Decedent was a resident of New York State
There is a Surrogate's Court established in every county. Should a deceased have died with an Estate, the court to turn to is the Surrogate's Court in the county in which the deceased was domiciled (which is usually also where the deceased primarily resided). A decedent either dies with a Will ("testate") or without a Will ("intestate"). When there is a Will involved, the legal process that takes place is called probate. Probate simply refers to the act of proving the validity of the Will. Before the Will has any legal effect, it must be admitted to probate in the Surrogate’s Court. In other words, the court must make a determination that the Will is valid. A valid Will is one that was properly executed and accurately reflects the wishes of the testator/decedent.
Most proceedings do not require more than a basic knowledge of the law, because as set forth below, the official forms tell one what information to fill in and who to serve. When needed, the Estates, Powers, and Trusts Law ("EPTL") governs the substantive law relating to wills. The Surrogate's Court Procedure Act ("SCPA") governs the procedural aspects relating to estate administration. Along with the statutory law found in the State of New York, common law (also known as case law) serves to interpret and explain the intent of the legislature in the formation of the statutory law. Such interpretations and explanations receive the full force and effect of law and, as a result, must be understood and followed. Additionally, similar to all other parts of law, the area of wills, trusts, and estates does not exist in a vacuum and is affected by various other State and Federal statutory laws from time to time.
If someone died with an estate whose gross value is $50,000.00 or less, and does not include any real property, a "small estate" proceeding may be filed (Surrogate's Court Procedure Act §1301) even if the deceased is a non-domiciliary. Go to the New York State court site for the link to a Do-It-Yourself Program and further information. The court filing fee is still only $1.00 for small estates.
Testate, dying with a Will, is herein addressed first. Note that while such scenes are common in movies, there is no requirement under New York Law to gather the family together to "Read the Will".
For help with terminology, consult the "Glossary" located on the Life Planning page.
The probate process is commenced by the filing of the original Will, a certified copy of the death certificate, the filing fee, a family tree, and a probate petition with the court. If the staples have been removed from the Will at any point, a Staples Affidavit may be required. Usually, the petition is filed by the Executor or Executors named in the Will. Whoever the petitioner is, all the blanks in the petition form nevertheless have to be filled in. The information to be provided includes the date of death, beneficiaries named in the Will, names of statutory heirs in case the Will is invalid, and an estimate of the value of the estate. The statutory heirs are those who would have inherited by law if the testator had died without a Will. See EPTL 4-1.1, infra. All interested people, beneficiaries and statutory heirs, must be notified of the probate proceeding. The filing fee depends on the size of the estate. If the filer does not have an Affidavit of Attesting Witnesses that was executed with the Will, the witnesses to the Will must appear to give testimony that the Will is authentic or now sign a sworn statement to that effect.
To have a better understanding of what is being stated here, start looking at the official Probate forms, provided by the New York State Unified Court System. Read the Petition for Probate and the Probate Proceeding Checklist. An affidavit may be required in addition to the Family Tree if there is only one distributee or if there are no immediate relatives alive. If someone has died testate and a resident of another state, but has real estate here, the filer would use the Petition for Ancillary Probate and the Ancillary Probate Proceeding Checklist in addition to probating the Will in the resident state.
New Inventory Forms as of 3/1/2016 22 NYCRR §270.20: Inventory of Assets Sample Probate Petition and Affidavit of Heirship Part 207: Uniform Rules for the Surrogate's Court (NYS Unified Court System): check requirements for Affidavit in addition to Family Tree. Uniform Rule for Surrogate's Court §207.16 (NYS Unified Court System) Surrogate's Court Fees: Surrogate's Court Procedure Act §2402
Although there is no deadline to file or probate a Will in New York, it should be done as soon as possible. If you are in possession of a Will that should be probated due to the existence of assets and creditors, it may be wise to just file the Will and a certified death certificate with the Surrogate's Court Clerk. Then it is up to any other family member or creditor to start probate, if he/she/it wants to. There is no law that requires the nominated Executor to accept the position and commence probate.
No matter who petitions for probate, if there is significant delay in the filing of the petition, important deadlines, such as tax filing deadlines, may be missed.
The petitioner may hire an attorney. The attorney fees are an expense of the Estate, subject to court review and approval.
Once the Will is placed with the Surrogate’s Court, the court will issue citations (which the filer has prepared; see the Petition for Probate, supra) to those named who have standing to challenge the Will, which is usually all beneficiaries and statutory heirs. The citation sets a date for a hearing, generally within 10 days. If anyone believes that the Will is not valid, that person may start a Will contest by appearing in court on that date and filing objections to the probate.
A premarital contract trumps the Will. Other contracts do as well, such as a business agreement. It is more difficult to establish “improper execution” of a Will when an attorney has supervised. If the original Will was given to the decedent by the attorney, and it is not found, the presumption is that the Will was revoked. “Undue influence” is dependent on specifics to the individual decedent, and there is no magic test. Undue influence is harder to establish the closer the relationship between the beneficiary and the decedent, and nearly impossible to establish from a spouse, as a spouse is allowed to beg and use his/her influence to obtain a benefit.
Absent a waiver (such as in a prenuptial agreement) or his/her choosing not to contest the Will, a surviving spouse cannot be disinherited or left left less than a statutory share in the Will. Spouses have an automatic right, called a "right of election,” to a percentage of the deceased’s estate in New York. Legislation enacted as of September 1, 1992 gives surviving spouses two years from the date of death to file this election with the Surrogate’s Court. The share is $50,000 or one-third of your estate after payment of debts and expenses, whichever is greater. EPTL §5-1.1-A. This "right of election" is less than the amount a spouse would get when there is no Will. The statutory amount in that situation is $50,000.00 plus one-half of the residuary estate, if there are also issue; and the whole estate, if there are no issue. EPTL §4-1.1.
See EPTL §5-1.4 for law on automatic disinheritance of a former spouse when divorce (or judicial separation) occurred after the Will was executed. A divorce only revokes those provisions in decedent’s Will made to the former spouse as well as any appointments to the former spouse contained therein, unless the Will contains a provision expressly stating otherwise. The rest of the decedent’s Will remains intact.
In the event that the decedent married after the creation of his/her Will, the Will is not deemed revoked. Instead, the surviving spouse will take his/her share of the decedent’s estate as if the decedent died intestate unless a provision was made for the surviving spouse in a written antenuptial agreement. EPTL §5-1.3.
Whenever a testator has a child born after the execution of his/her Will, and is not provided for or mentioned in the same or any other settlement by the testator, that child will be entitled to receive what the other children of the testator receives. EPTL §5-3.2 (a)(1). Thus, if the testator had children prior to the execution of his/her Will and did not provide for them in the same, then the child born after the execution of the Will will not receive anything from the Estate. However, if the testator provided only for those children alive at the time of the execution of his/her Will, then a child born after the execution of the same will be entitled to his intestate share of his/her parent’s estate. EPTL § 5-3.2 (a)(1). On the other hand, if the testator executed his/her Will prior to the birth of any child and did not mention or provide for the same in his/her Will, any child born after the execution of the Will will take his/her intestate share of the testator’s Estate. EPTL §5-3.2 (a)(2).
After jurisdiction is complete and all issues have been addressed, the court will issue a decree granting probate and issue Letters Testamentary to the Executor or Executors named in the Will. Letters Testamentary is a document which gives the Executor the authority to administer the estate. The appointment is retroactive to the date of death. The Executor will be responsible for identifying and inventorying the decedent’s property, having the property appraised, checking for insurance coverage, changing locks (if the decedent lived alone), paying debts and taxes and distributing the property as the Will directs.
An estate without a Will is “administered,” not probated. As stated above for probate proceedings, to have a better understanding of what is being stated here, start looking at the official Administration forms, provided by the New York State Unified Court System. Read the Petition for Letters of Administration and the Administration Proceeding Checklist. There are also miscellaneous forms that may be required in either a probate or administration proceeding, such as the Family Tree Form and the Petition to Search a Safe Deposit Box. If someone has died intestate and a resident of another state, but has real estate here, the filer would use the Petition for Ancillary Administration and the Ancillary Administration Proceeding Checklist. It is the Administrator's duty to administer the estate pursuant to law.
When there is no Will, the law determines who inherits. This is set forth in EPTL §4-1.1, which states:
The property of a decedent not disposed of by will shall be distributed as provided in this section. In computing said distribution, debts, administration expenses and reasonable funeral expenses shall be deducted but all estate taxes shall be disregarded, except that nothing contained herein relieves a distributee from contributing to all such taxes the amounts apportioned against him or her under 2-1.8. Distribution shall then be as follows: (a) If a decedent is survived by: (1) A spouse and issue, fifty thousand dollars and one-half of the residue to the spouse, and the balance thereof to the issue by representation. (2) A spouse and no issue, the whole to the spouse. (3) Issue and no spouse, the whole to the issue, by representation. (4) One or both parents, and no spouse and no issue, the whole to the surviving parent or parents. (5) Issue of parents, and no spouse, issue or parent, the whole to the issue of the parents, by representation. (6) One or more grandparents or the issue of grandparents (as hereinafter defined), and no spouse, issue, parent or issue of parents, one-half to the surviving paternal grandparent or grandparents, or if neither of them survives the decedent, to their issue, by representation, and the other one-half to the surviving maternal grandparent or grandparents, or if neither of them survives the decedent, to their issue, by representation; provided that if the decedent was not survived by a grandparent or grandparents on one side or by the issue of such grandparents, the whole to the surviving grandparent or grandparents on the other side, or if neither of them survives the decedent, to their issue, by representation, in the same manner as the one-half. For the purposes of this subparagraph, issue of grandparents shall not include issue more remote the grandchildren of such grandparents. (7) Great-grandchildren of grandparents, and no spouse, issue, parent, issue of parents, grandparent, children of grandparents or grandchildren of grandparents, one-half to the great-grandchildren of the paternal grandparents, per capita, and the other one-half to the great-grandchildren of the maternal grandparents, per capita; provided that if the decedent was not survived by great-grandchildren of grandparents on one side, the whole to the great-grandchildren of grandparents on the other side, in the same manner as the one-half. (b) For all purposes of this section, decedent's relatives of the half blood shall be treated as if they were relatives of the whole blood. (c) Distributees of the decedent, conceived before his or her death but born alive thereafter, take as if they were born in his or her lifetime. (d) The right of an adopted child to take a distributive share and the right of succession to the estate of an adopted child continue as provided in the domestic relations law. (e) A distributive share passing to a surviving spouse under this section is in lieu of any right of dower to which such spouse may be entitled.
A parent will be disqualified to take the intestate share of a child if the parent failed to provide for or abandoned the child while the child was under the age of twenty-one. This prohibition against inheritance can be changed if there is proof that the parent and child resumed and subsequently continued their relationship prior to the child’s death. EPTL §4-1.4.
A nonmarital child is considered to be the natural child of his/her mother and, therefore, entitled to take from the mother’s estate. Further, a nonmarital child is consideredto be the natural child of the father and therefore entitled to inherit from his estate if any of the following apply:
1. A court of competent jurisdiction has entered an Order of Filiation (paternity) against the father, or the parents have executed an acknowledgment of paternity. 2. The father has signed an instrument acknowledging paternity provided it is signed and acknowledged before a notary and in the presence of one or more witnesses and it is filed withinsixty days of its making with the putative father registry, and the Department of Social Services sent written notice of the same to the mother. 3. Paternity has been established by clear and convincing evidence and the father has openly and notoriously held the child out to be his own. 4. A blood genetic marker test has been administered and determines that, with all other evidence, paternity has been established by clear and convincing evidence.EPTL §§4-1.1 & 4-1.2.
If the administrator has died after having been granted Letters of Administration, the proposed new administrator files a Petition for Letters of Administration (d.b.n.).
Whether a probate or administration proceeding, it is best to wait at least seven months before closing the proceeding, because that is the cutoff point for creditors to make claims against the estate. This is the shortest time it can take, but just as any lawsuit, it can takes years if there is a disagreement among interested parties.
Estimated Timeline: MONTH 1-3. Read the will, if there is one. Determine who will be the personal representative – it will either be the executor mentioned in the will, or the person who everyone is comfortable with. Get death certificates. Get all the necessary waivers and consents. File a petition with Surrogate’s Court to start the probate process. In many circumstances, getting appointed can take considerably longer or not happen at all. MONTH 3-6. After obtaining Letters Testamentary or Administration from the Court, the personal representative begins acting. They take a preliminary inventory of the estate and make a preliminary list of creditors. Open and inventory the safe deposit box. Notify all possible creditors. Determine which creditors are legitimate. If necessary, consult with an accountant regarding taxes. The accountant will prepare Federal Estate Tax return, Form 706. Final income taxes also need to be filed - 1040 and 1041. MONTH 6. Inventory of the assets needs to be filed. Get property appraised, if needed. At this point, the extent of the estate should be known. MONTH 7-8. Decide which property should be sold and which beneficiary gets which asset. MONTH 8. Close out creditor claims. Provide preliminary accounting to beneficiaries. Finish negotiating with creditors. Pay creditor and tax bills. MONTH 9. This is the deadline for filing a renunciation, if needed (consult an attorney well in advance). File petition on final accounting with the Surrogate’s Court. Prepare Beneficiary Agreement. MONTH 11 and on. Distribute assets to beneficiaries. File Petition to be discharged as personal representative. Close the estate. This timeframe is approximate. The estate will take longer if substantial or complicated property is involved, or if there is an ongoing business. It will take even longer if there is a disagreement.
Upon receipt of Letters, the Executor/Administrator must secure an Employer Identification Number from the Internal Revenue Service ("EIN"). This number is assigned by the Internal Revenue Service (“IRS”) upon completion of IRS Form SS-4 (which can be done online at www.irs.gov). All accounts opened for the Estate (such as a checking account to deposit funds and pay expenses) will require the use of this EIN. Dividends and interest on accounts after the date of death are payable to the Estate (unless specifically left to someone in the Will), and as such, are income of the Estate. The same is true for rental property and other income-producing property. An EIN is also required to transfer certain assets, such as real estate, from the Executor/Administrator (on behalf of the Estate) to the heir or purchaser.
The Executor/Administrator is a "fiduciary" to the Estate and has a duty of loyalty and a duty of impartiality to the Estate. He/she is required to use the skill of a "prudent investor" when considering the investment and placement of estate assets. Whether or not the estate assets should be invested in anything other than insured and liquid funds, such as an FDIC insured savings account, must be decided by the Executor/Administrator. He/she will consider factors such as the expected length of the probate/administration process, the nature of the inherited assets and the need for cash to pay bills and taxes.
The Executor/Administrator may delegate the inventory of assets, and there are businesses that specialize in doing such. In estates with items of significant value, it is better that the executor/administrator not determine the value of items unless he/she has expertise or value is easily determined by reference materials. Usually, an executor's/administrator's determination has no weight with the Internal Revenue Service.
The Executor/Administrator is entitled to reimbursement for reasonable out-of-pocket expenses and, unless the Will states otherwise, a commission which is calculated according to SCPA §2307 and is based on the value of the assets of the Estate, not including specific legacies or devises. The Executor/Administrator may choose to waive some or all of the commission. The commission is usually taken at the end of the administration process, but may be taken sooner upon application and approval of the Court or upon the consent of all beneficiaries. The commission is taxable income and is reported on the line for "other" income on Federal Income Tax Form 1040.
If the decedent left minor children who have no surviving parent, a guardian of the "person" must be appointed for the minor children by the Surrogate’s Court as soon as possible. The nomination of the guardian included in the testator's Will is given great weight. In addition, if the testator left funds directly to the minor children, a guardian of the property of the minor children will be needed. The court will complete a background check on the nominated guardian before making an appointment. Further, it may be necessary to request an expedited or temporary appointment of a guardian for the reason that minors cannot receive medical treatment or enroll in school without the consent of a parent or guardian.
In the event that the Will does not give the minor child his or her "intestate" share then the Court will appoint a guardian ad litem to examine the Will and supporting document on behalf of the minor child. The guardian ad litem reviews the documents to be sure that they appear to be in order and that no objection to the Will should be made on behalf of the minor child. The guardian ad litem will be appointed even if the natural parent of the child is surviving.
If the Will provides for a guardian of a minor, the guardian must file a document with the court accepting the appointment: Sample Guardian Acceptance Form. The guardian is also required to file an Oath: Sample Guardian Oath Form. The guardian may be required to post bond to cover any losses from possible mismanagement of a minor's inheritance. Sample Order Appointing Testamentary Guardian
If a beneficiary of the Estate is a disabled person receiving, or qualified to receive government benefits, a proceeding to Reform the Last Will may be initiated in Surrogate's Court to have the beneficiary's share put into a Supplemental Needs Trust so that the inheritance does not interfere with the receipt of those benefits.
Most Estates may be closed informally, that is, without having to file an accounting petition with the court. This is known as an "informal accounting." If all of the beneficiaries of the estate are adults and have the legal capacity to sign a Receipt and Release, then the Executor/Administrator should prepare a summary of the transactions of the Estate, make copies of statements, account information and related financial information available to the beneficiaries who wish to review the estate's transactions and prepare and distribute to the beneficiaries a proposed distribution schedule with Receipts and Releases. Upon receipt of the signed Receipts and Releases, the Executor/Administrator files them with the Court and distributes the final distribution check. In addition, the Executor/Administrator files with the Court a Fiduciary Affidavit which advises the Court that all matters of the Estate are concluded.
If one or more of the beneficiaries does not want to sign the Receipt and Release or if the beneficiary is not able to sign the Receipt and Release due to incapacity, the Executor/Administrator must petition the Surrogate's Court to secure a discharge of the Executor's/Administrator's responsibilities to the Estate. A formal accounting will, in this case, be required using the official accounting forms. This is known as a judicial accounting. The Petition is filed with the Court and the Court sets a date for the appearance of the Petitioner (Executor/Administrator) and any beneficiary who wants to object to the accounting. A beneficiary who objects has to state why he or she believes the Executor/Administrator failed to act properly. Any beneficiary who does not voluntarily agree with the Petition (by signing a Waiver and Consent) must be served with process by the delivery, usually in person or by mail of the Petition and Citation. The Citation states the date of the Court appearance. If an objection is filed then the matter turns into a litigated accounting proceeding.
If the Executor/Administrator does not account, his/her fiduciary duty cannot be discharged. Additionally, if the Executor/Administrator fails to disclose an asset, the statute of limitations does not run against the beneficiaries' rights to that asset.
Additional forms: Order Designating Person to Receive Process SCPA 311 Order Appointing Guardian Ad Litem Report of Guardian Ad Litem when brief and able to report on back of Order Appointing Guardian Ad Litem
Decedent was Not a Resident of New York State
When the decedent was not a resident of New York State (a non-domiciliary), but owned property here, an ancillary proceeding must be brought in New York State. An ancillary proceeding supplements the one in the state where the decedent did reside. This arises mostly when the decedent owned real estate in New York. As with the forms for estates of resident decedents, the ancillary probate proceeding forms and the ancillary administration proceeding forms are provided online by the New York State Unified Court System.
If there is no proceeding in another state, but the decedent owned real property in New York State, a probate or administration proceeding may be brought upon establishing jurisdiction. Form: Affidavit Regarding Jurisdiction.
The New York State Department of Taxation & Finance requires that the Executor or Administrator file tax forms, as applicable, some of which are listed here: (always check the NYS Department of Taxation & Finance for the latest forms and instructions) AU 67: Instructions to Request a Waiver of Citation and Consent ET 20: Stipulation Reserving Domicile ET 30: Application for Release(s) of Estate Tax Lien ET 130: Tenative Payment of Estate Tax ET 130i: Instructions for ET 130 ET 141: New York State Estate Tax Domicile Affidavit
What if Unable to Locate the Will
If the original Will cannot be located, it will be necessary to contact the Surrogate's Court to determine if the Will was filed with the court. Often, to ensure that his/her Will will be probated, the testator files his/her Will with the Surrogate's Court in his/her county of residence. The Surrogate's Court clerk accepts Wills for filing prior to death, upon payment of a filing fee. These are sealed records until death.
If the Will was not filed, then it will be necessary to communicate with the professionals who most recently worked with the testator to inquire as to the location of the original. If the original was in the possession of the lawyer who drafted the Will and the lawyer cannot locate the original, it may be possible to probate a copy provided the Surrogate's Court is satisfied with the applicable and required affidavits explaining the loss of the original.
In order to probate a lost Will, one must prove to the court, through clear and convincing evidence, that the Will was, in fact, lost and not revoked by physical act. The proponent must further prove throughclear and convincing evidence that it was properly executed pursuant to statutory requirements, and that the contents of the lost Will can be proved through testimony of at least two credible witnesses or a copy or draft of the same. SCPA §1407.
Recognition of Wills from Other States
EPTL § 3-5.1 Formal validity, intrinsic validity, effect, interpretation, revocation or alteration of testamentary dispositions of, and exercise of testamentary powers of appointment over property by wills having relation to another jurisdiction: (a) As used in this section: (1) "Real property" means land or any estate in land, including leaseholds, fixtures and mortgages or other liens thereon. (2) "Personal property" means any property other than real property, including tangible and intangible things. (3) "Formal validity" relates to the formalities prescribed by the law of a jurisdiction for the execution and attestation of a will. (4) "Intrinsic validity" relates to the rules of substantive law by which a jurisdiction determines the legality of a testamentary disposition, including the general capacity of the testator. (5) "Effect" relates to the legal consequences attributed under the law of a jurisdiction to a valid testamentary disposition. (6) "Interpretation" relates to the procedure of applying the law of a jurisdiction to determine the meaning of language employed by the testator where his intention is not otherwise ascertainable. (7) "Local law" means the law which the courts of a jurisdiction apply in adjudicating legal questions that have no relation to another jurisdiction. (b) Subject to the other provisions of this section: (1) The formal validity, intrinsic validity, effect, interpretation, revocation or alteration of a testamentary disposition of real property, and the manner in which such property descends when not disposed of by will, are determined by the law of the jurisdiction in which the land is situated. (2) The intrinsic validity, effect, revocation or alteration of a testamentary disposition of personal property, and the manner in which such property devolves when not disposed of by will, are determined by the law of the jurisdiction in which the decedent was domiciled at death. (c) A will disposing of personal property, wherever situated, or real property situated in this state, made within or without this state by a domiciliary or non-domiciliary thereof, is formally valid and admissible to probate in this state, if it is in writing and signed by the testator, and otherwise executed and attested in accordance with the local law of: (1) This state; (2) The jurisdiction in which the will was executed, at the time of execution; or (3) The jurisdiction in which the testator was domiciled, either at the time of execution or of death. (d) A testamentary disposition of personal property intrinsically valid under the law of the jurisdiction in which the testator was domiciled at the time the will was executed shall not be affected by a subsequent change in the domicile of the testator to a jurisdiction by the law of which the disposition is intrinsically invalid. (e) Interpretation of a testamentary disposition of personal property shall be made in accordance with the local law of the jurisdiction in which the testator was domiciled at the time the will was executed. (f) Whether a testamentary disposition of personal property is effectively revoked or altered by the provisions of a subsequent testamentary instrument or by a physical act to or upon the will by which the testamentary disposition was made is determined by the law of the jurisdiction in which the testator was domiciled at the time thesubsequent instrument was executed or the physical act performed. (g) Subject to paragraphs (d), (e) and (f), the intrinsic validity, effect, revocation or alteration of a testamentary disposition by which a power of appointment over personal property is exercised, and the question of whether such power has been exercised at all, are determined by: (1) In the case of a presently exercisable general power of appointment, the law of the jurisdiction in which the donee of such power was domiciled at the time of death. (2) In the case of a general power of appointment exercisable by will alone or a special power of appointment: (A) If such power was created by will, the law of the jurisdiction in which the donor of the power was domiciled at the time of death. (B) If such power was created by inter vivos disposition, the law of the jurisdiction which the donor of the power intended to govern such disposition. (C) If the donor is himself the donee of a general power of appointment exercisable by will alone, the law of the jurisdiction in which the donor of the power was domiciled at the time of death. (3) The formal validity of a will by which any power of appointment over personal property is exercised is determined in accordance with paragraph (c) on the basis that the testator referred to therein is the donee of such power. (h) Whenever a testator, not domiciled in this state at the time of death, provides in his will that he elects to have the disposition of his property situated in this state governed by the laws of this state, the intrinsic validity, including the testator's general capacity, effect, interpretation, revocation or alteration of any such disposition is determined by the local law of this state. The formal validity of the will, in such case, is determined in accordance with paragraph (c). (i) Notwithstanding the definition of "real property" in subparagraph (a) (1), whether an estate in, leasehold of, fixture, mortgage or other lien on land is real property governed by subparagraph (b) (1) or personal property governed by subparagraph (b) (2) is determined by the local law of the jurisdiction in which the land is situated.
Filing a Claim in an Estate
The fiduciary of a decedent's probate estate is obligated to pay any enforceable debts of a decedent outstanding at the time of death. A creditor, however, must follow prescribed steps in successfully enforcing a claim against a decedent's estate. Generally, it is impossible for creditors to satisfy claims from a decedent's non-probate property, such as jointly-owned assets, life insurance proceeds, qualified retirement plans or individual retirement accounts, unless the debt is secured by one of those items.
A creditor must present the claim within seven months from the date that the Surrogate’s Court issues Letters, whether Letters Testamentary, Letters of Administration, Temporary Letters of Administration or Preliminary Letters. If the claim is not presented within the seven month period, the fiduciary will not be liable for any good faith distributions made before the claim was presented. In other words, if the fiduciary distributes all of the estate assets after the seven month period has elapsed but before the claim is presented, the fiduciary cannot be held liable. On the other hand, the fiduciary is liable to a creditor that has presented a valid claim within the period and may be personally liable if he or she distributed the estate assets before the seven month period has run. The same is true even if the claim is presented late, but assets remain undistributed in the estate. SCPA §1802.
A claim must be in writing, state the amount sought, and contain a recitation of facts upon which the claim is based. The fiduciary may require the creditor to present proof by affidavit that (i) the amount sought is justly due, (ii) any prior payments have been credited, (iii) the creditor is not in possession of any undisclosed collateral, and (iv) any indebtedness or other offset of the creditor to the decedent has been accounted for. The claim must be presented by delivering a copy to the fiduciary in person or by certified mail return receipt requested at the place of residence stated in the fiduciary's designation (or if a notice has been published pursuant to SCPA §1801, at the place specified therein or upon the clerk of the court pursuant to the designation required under §708 whenever the fiduciary cannot be found or served within the state after due diligence). Failure to comply with these requirements may result in your claim being unenforceable in court, with exception for a claim based upon a decree or order of the court or a valid judgment rendered by a court of competent jurisdiction.. SCPA §1803. A Verified Claim Form
When the fiduciary of an estate cannot be served for whatever reason the clerk of the surrogate's court is designated to receive service on his/her behalf. As such, a fiduciary cannot avoid a creditor's claim.
Getting the Internal Revenue Service to file a Proof of Claim in a probate proceeding.
The State of New York, in its capacity as a sovereign, has a prerogative right to priority over other general creditors regarding the administration of an estate or property of a debtor. In re Estate of Sheridan, 149 Misc.2d 519, 521 (Sur Ct, Yates County 1991) (citing NY Constitution article I, sect 1); see also, In re Estate of Canfield, 126 Misc.2d 900, 901 (Sur Ct, Onondaga County, 1984) (state hospital has priority for claim over county social services department); In re Gallucci, 87 AD2d 818 (2d Dept 1982) (Office of Mental Health has priority of claim over other creditors). “[A] state entity enjoys a priority over the claims of private creditors unless such creditors can demonstrate a superior lien or statutory right to defeat the state’s preference.” Matter of Benedictine Hosp. v. Glessing, 47 AD3d 1184, 19987 (3d Dept 2008) (citations omitted).
Taxes
The Executor or Administrator is responsible for filing and paying from estate accounts applicable federal and state taxes on a timely basis. After death, there are three potential taxpayers: (1) the estate, which may have to pay federal and state income tax (IRS Form 1041, NYS IT-205), and estate tax (IRS Form 706, NYS ET-706); (2) the testator, who is subject to income tax for the portion of the year before his or her date of death (a IRS Form 1040 for the calendar year of death, which may be joint with a surviving spouse unless the surviving spouse has remarried by the end of the year); and (3) the beneficiaries, who may have to pay income tax upon the receipt of a distribution from the estate (on their IRS Form 1040 and state forms). To the extent that the taxation of the estate impacts the beneficiaries, the Executor or Administrato is expected to take into consideration this impact in making tax elections for the estate during administration. For example, deductions for commissions and attorneys' fees may be taken on either the estate tax return (Form 706) or the estate income tax return (Form 1041). When there are one or more tax forms that are required to be filed for the Estate, the Executor must decide which return will achieve the best result for the estate and the beneficiaries.
The estate tax is a tax on the right to transfer property at one's death. It consists of an accounting of everything the decedent owned or had certain interests in at the date of death. If the estate is subject to federal and/or state estate taxes, a return must be filed and the taxes paid within nine months of the date of death. If it is filed late or incorrectly, there may be penalties assessed. The unwary Executor or Administrator may be personally liable for such penalties.
If the decedent is a U.S. citizen or resident, an estate tax return (IRS Form 706 and NYS Form ET-706) must be filed if the gross estate of the decedent, increased by the decedent's adjusted taxable gifts and specific gift tax exemption, is valued at more than the filing threshold for the year of the decedent's death. The Basic Exemption Amount ("BEA") for estates in New York State in which the decedent died on or after April 1, 2017 and before or on December 31, 2018 is $5,250,000.00. Beginning January 1, 2019, the BEA is equal to the federal exemption amount. The federal exemption amount is $11,180,000 in 2018. Assets are valued at date of death, but if tax would be saved, the Executor/Administrator may elect an alternate valuation date which is the date of disposition of the asset or the value of the asset six months after date of death, which ever is sooner.
An estate tax return also must be filed if the estate elects to transfer any deceased spousal unused exclusion (DSUE) amount to a surviving spouse, regardless of the size of the gross estate or amount of adjusted taxable gifts. The election to transfer a DSUE amount to a surviving spouse is known as the portability election.
Additionally, when Form 706 or Form 706-NA is required to be filed, federal tax law also requires the filing of information on the valuation of assets transferred to heirs, so that there is a consistent value between what the estate reports and what the heir reports when selling the asset. See: IRS Publication 551 and Form 8971.
In preparation for filing an estate tax return, the Executor or Administrator should request copies of all gift tax returns filed by the testator from the IRS, unless the Executor/Administrator is working with the professionals originally engaged by the testator and the professionals have copies of all prior returns. At the federal level, the law operates to add all taxable gifts made after 1976 to the value of the estate before computing estate taxes. Gifts are normally valued at their fair market value at the time the gift was completed, unless the donor retained a life estate or control over the property. In addition, the Executor/Administrator must try to determine if the testator made gifts to "skip persons" during his/her lifetime to determine if the testator made use of the Generation Skipping Tax Exclusion. The federal GST tax applies when the testator has made transfers exceeding the federal extension amount to any person who is more than one generation below the person making the gift.
The Executor/Administrator must determine and claim all available deductions and credits. Then the amount of any estate tax due be computed. The estate is allowed to take deductions for expenses and debts actually paid by the estate against the value of the estate assets. The most significant deduction is the marital deduction which is equal to the value of the assets that pass to the spouse either outright or in trust. If the assets are in trust for the spouse, the deduction will be available only if the trust satisfied the tax rules regarding "qualified terminable interest property" also known as a QTIP trust. Under this trust, the assets are considered part of the surviving spouse's estate and are therefore not subject to the estate tax on the decedent spouse's estate. The marital deduction typically eliminates estate taxes on the estate of the first spouse to die.
In addition, an unlimited deduction is allowed for the value of the property transferred to a charitable organization that qualifies for tax exempt status under Internal Revenue Code (“IRC”) Section 501(c)(3). Note, however, the Will must require the bequest to the charity(ies), because the Executor/Administrator is not permitted to make the charitable gift on a discretionary basis. It is often the case that the beneficiary of retirement funds is a charity. The Executor/Administrator will need to know who received these assets and in what amount even though the retirement funds are not paid to the probate estate.The Generation-Skipping Transfer (GST) tax may have to be computed and added to the federal estate tax due. The New York State generation skipping transfer tax was repealed effective April 1, 2014.
New York State tax law places a lien on the decedent's real property to secure the payment of any estate tax due. This estate tax lien is effective as of the decedent's date of death. To transfer real property from a decedent's estate, one must request and then receive a release of lien from the New York State Tax Department. The release of lien is an authorization to transfer the real property, located in New York State, free and clear of the estate tax lien. The lien applies only to real property located in New York State. No fee applies to a release of lien.
For an estate income tax return, if advantageous for income tax purposes, the estate may elect to use a fiscal year that is different than a calendar year. The fiscal year must end no later than the end of the month prior to the month in which the death occurred (no greater than a 12 month period). If the estate earns in excess of $600 during a fiscal year of administration or if it has any taxable income, it will be necessary to file an income tax return. The Executor/Administrator reports the income of the estate on Form 1041, "U.S. Income Tax Return for Estates and Trusts". New York State requires the filing of form IT-205.
In determining what income is taxable to the estate and what is taxable to the beneficiaries, the general rule is that if there are no distributions to the beneficiaries during the fiscal year, the estate will pay the tax on the income. If distribution to the beneficiaries is made, in most cases, the beneficiaries will "pick up" the income on their personal returns from the information reported on the K-1 generated by the estate's income tax return. Except in the final tax year of the estate, the estate will report and pay capital gains and losses. Because the estate is likely to be required to pay tax at a rate that is higher than the tax rates of the beneficiaries, it is generally wise to distribute assets to beneficiaries to permit the use of a lower tax rate for the paymentof taxes. Due to the other administration constraints applicable to an Executor, this preferable tax position may not be possible. The Executor must consider all factors relevant to the administration of the estate and not just the tax implications. If the estate has deductible expenses, those deductions are used to offset the income reported on the estate's return or on the K-1 distributed to the beneficiaries. Unless the deductions are "matched" with the income, it is possible that some deductions will be "wasted" because there is no offsetting income. Deductions that are reported on the Estate tax return cannot be reported again on the Estate's income tax return. Deductions for the final income tax return filed for the estate will "pass out" to the beneficiaries. Expenses of administration, such as Executor fees, attorney fees, accountant fees and appraiser fees generally will be the most significant type of deductions. Even if these deductions are more than the taxable in case of the estate, these deductions may be useful to beneficiaries who itemize their deductions.
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