Articles Posted in Wills & Trusts

Most of the press concerning Jeffrey Epstein concerns the despicable crimes of which he is accused.  Of interest to this author  is the Will and other estate documents signed by Epstein merely two days before his death by suicide.  There are legitimate reasons why a person in prison or in the hospital may have an experienced attorney prepare documents such as a Will, power of attorney and health care proxy evidencing their last wishes with the anticipation of impending death.  If a person is in prison for a long time and even has children, his legal affairs need to be in order should he suffer death as a result of another inmate or from other causes.  However, Epstein seems to have fashioned a scheme to shield his assets and possibly defraud creditors of his estate, most notably his victims.

Apparently Epstein’s estate plan included a “pourover” Will that dictated that his assets would be left to a trust.  His executors then filed the Will in the U.S. Virgin Islands, rather than in New York State.  The possible explanations for this strategy will be discussed in this post.  We  may advise our estate clientele  to have such an estate structure, although not for such nefarious purposes.  As we have explained in prior posts, a trust can be a valuable tool in estate planning for certain persons.  In the event of a potential Will contest, trust provisions typically are more difficult to be challenged.  Further, in the case of famous people who may not want specifics of their assets and beneficiaries made public in a Surrogate’s Court filing , trusts afford the opportunity to keep such matters private because they are not filed with the Court.

Venue, the location of the probate Court filing, is an interesting issue in this case as well.  Typically, a Will should be filed in the state where the deceased maintained his primary residence.  However, Epstein had multiple residences around the world and seems to have selected the U.S. Virgin Islands as the location to probate his Will because he owned at least one island in the territory.  It is possible that the Court will decline venue and move the probate proceeding to New York, where Epstein seems to have spent the majority of his time.  In any case, ancillary probate proceedings will be required to determine the disposition of properties in each location.

Our readers may be aware of the recent death of fashion icon Gloria Vanderbilt.  Having died at the ripe old age of 95, Ms. Vanderbilt’s life had many interesting dimensions.  From a legal perspective, Vanderbilt experienced a Court proceeding as a young child that is instructive to our clientele.  The Vanderbilt family is one of the historically ultra wealthy families in the United States.  Gloria’s father died when she was an infant, leaving her substantial share of his Estate in trust to be managed by her mother as trustee.  Instead of using the trust as intended, for the care and support of Gloria, the trust was used for her mother’s lavish excursions to Europe and the like.  Fortunately, Gloria’s Aunt observed her mother’s behavior and brought a successful Court action, known as “the trial of the century”, to remove her mother as trustee and obtain custody of Gloria.

The Vanderbilt matter demonstrates that the Surrogate’s Court will certainly intervene when trustee abuse occurs and when the trustee is not managing the trust assets for the benefit of the beneficiary.  There are additional reasons why a petition to remove or replace a trustee will be entertained by the Surrogate’s Court.  For instance, a trustee was named in a document drafted thirty-five years ago when the intended trustee was fifty years old.  Now the trustee expected to serve is eighty-five years old and is not enjoying good health.  An expert draftsman will anticipate this potential issue when drafting a will or trust and will suggest that the named trustee may not be practical.  Also, a will or trust can be subsequently amended by codicil or trust amendment should the client note changes in the named trustee that make such person unfit to serve.  Codicils and trust amendments are less time consuming than engaging in Court intervention at a future time.  Another potential safeguard is to name a corporate trustee (such as a bank) to serve, in order to avoid trustee abuse as well as the possible aging or death of the proposed trustee.

As in the case of Whitney Houston’s executor , there are certain roles that are appropriate for a trustee.  A trustee should be financially savvy and is required to invest assets prudently.  Income and principal of the trust is to be distributed for the purposes named in the trust.  Such purposes may be to maintain the lifestyle to which the beneficiary is accustomed, pay for education, fund enriching travel, cover healthcare costs, and the like.  Your attorney will ask you to consider a responsible and honest person to serve as your trustee.  It is also preferable to consider a trustee who has a good relationship with the beneficiary, as there will be significant interaction between them in the future.

Our readers may be aware of the business activities recently announced by the Executor of the Estate of deceased pop icon Whitney Houston.  After having rejected prior business opportunities, the Executor has decided to enter an arrangement with a music and marketing company to have a touring hologram of Ms. Houston’s image, a possible Broadway musical, branding deals, and issue an album of unreleased music tracks.  This activity gives rise to the question; “[h]ow will I know” if promoting business activity is legally proper for an executor in New York?  We suggest that you “don’t trust your feelings” and that you consult an experienced attorney who “know[s] about these things”.

By way of background, if a person dies with a Will, the Surrogate’s Court appoints the executor named in the Will.  The deceased, in “racing with destiny” has “laid the plans” and named her chosen executor in the Will.  The executor’s role is to collect and preserve assets, determine and pay just debts and distribute funds remaining after these activities to the beneficiaries named in the Will.  When drafting a Will , your attorney will include a “powers clause” for the executor.  It could be an extensive list of activities that the executor may conduct, such as making investments, selling property, borrowing money, employing professionals such as accountants and attorneys , making tax elections and the like.  In the alternative, the powers clause may instead be general in nature, such as the full power and authority in all matters as if the deceased is still living.  Of course, the executor is forbidden from self-dealing and transferring assets for the benefit of anyone besides estate beneficiaries.

The activities of Whitney Houston’s executor could be evaluated in multiple ways.  As reported in the news story, she is pursuing new business opportunities rather than winding down the estate, distributing the assets to the beneficiaries and closing the estate.  On the other hand, it may be considered wrong in the Houston estate matter if an executor declines business opportunities that could be lucrative for the beneficiaries and enlarge estate assets.  Certainly, the Houston Estate matter provides an executor unique opportunities to generate additional estate income.  However, most people are not famous.  It is unlikely that the typical executor can legitimately promote additional business activities for reasons besides increasing his own commission.  The executor does personally benefit by increasing potential executor commissions that can be collected, as such commissions are calculated based upon the value of the estate.  We would recommend that the executor confer with the beneficiaries to determine if they would rather have the estate maximize its future assets or if they would prefer to have the estate distribute and close without delay.  Although such a discussion is not legally required, it could prevent the beneficiaries from making a claim against the executor for delay in closing the estate if they all agree that such business activity be conducted.

Music lovers, reeling from the recent news of Aretha Franklin’s death, have now found out that the “Queen of Soul” died intestate, without a will.  This blog has previously addressed the matter of another musician, Prince, having passed away without a will and the legal repercussions.  We  will address the legal issues that have arisen once the “Queen of Soul” passed away without a will.

In Michigan, where Ms. Franklin had her primary residence, the assets of an unmarried person are left in equal shares to her children.  New York would have a similar disposition.  Devil’s advocates might say that if the legal result of having no will is the same as having a will, that the children will inherit the assets, what is the benefit of having a will?  First, if one has a will, the fiduciary of the estate (Executor) can be selected by the decedent, rather than the default person being selected according to statute.  For instance, musicians such as Prince and Aretha Franklin leave vast music catalogs deserving of post-death management by an expert who has knowledge of how to handle such specialized assets.  Second, a person making a will may have a preference for how the assets will be distributed, instead of the statutory default of all children sharing equally.  If Ms. Franklin had devoted greater consideration to this issue, she may have found it appropriate for the “red roses” in the garden in “Spanish Harlem” to be transferred to the child who would most appreciate and care for this asset.  Further, family infighting over her “pink Cadillac” could have been avoided, so that the ride “on the freeway of love” could take place without delay.

Apparently, Ms. Franklin valued privacy and nondisclosure of her assets during her lifetime.  The best way for her to have avoided the additional public disclosure that takes places when one dies without a will would be to have made a revocable trust.  That way, assets titled in the name of the trust would be transferred automatically after death as directed in the trust, with no public disclosure and without Court intervention and the delays that it may entail.

News outlets have recently reported on the Will contest brought by the children of the late country singer Glen Campbell.  This post will address the concepts of diminished capacity and undue influence and whether these concepts can potentially invalidate a Will in New York.

In general, a person can make a Will and disinherit his entire family or those deemed of close relation.  The exception to this rule is that one cannot disinherit a spouse, as spouses qualify for at least a minimal portion of the estate under the concept of elective share.  Potentially a person may be estranged from his family and decide to leave his estate to a friend or someone else who is close to him.  New York Surrogates Courts generally favor the making of a Will and will not invalidate a Will merely because a particular person was disinherited.

However, a Will can be contested on the basis of the diminished capacity of the person making the Will.  Diminished capacity is when the person making the Will is afflicted with a physical or mental ailment which may cloud his judgment or render him unable to know his own wishes.  Let’s say that the testator (the person who made the Will) was suffering from Alzheimer’s disease, like Glen Campbell.  Such an affliction does not automatically invalidate the Will.  New York Courts have held that if the testator had a “moment of lucidity” when the Will was signed, then it will be valid.  So long as the testator understood the general assets of his estate and the “natural objects of his bounty” (the identity of his family members or friends), the Will should be upheld.  Prudent legal practitioners  typically meet alone with the testator before the Will is drafted and before it is signed to ask questions and attempt to evaluate the mental capacity of the testator.  The recollections of the meetings should be memorialized in a memorandum to the client’s file in the event of a Will contest.

We have written extensively about the pitfalls in not having a will. As such, many clients heed that warning and request that their attorney draft a will and other associated estate documents on their behalf.  While these clients have taken responsible action and had their estate documents drafted, additional tasks are required.  We suggest that estate documents be reviewed and potentially redrafted on a periodic basis for the reasons highlighted in this post.

Most people experience changes in their life and in the lives of those around them that require revision of estate documents.  Such internal changes are as follows.  Perhaps the executor appointed in the will does not currently get along with the testator (person making the will) or is unable to perform his duties due to illness or death.  Maybe the formerly adorable child is now an irresponsible young adult, whose inheritance should be left in a trust.  Perhaps an estrangement of relationship has occurred, so that the testator wishes to disinherit a relative.  These events are under the knowledge and control of the testator.

Relationships and events may result in the need to revise estate documents.  Some of these events are divorce of the testator or adult child, a grandchild’s birth, receipt of inheritance, retirement, and chronic disability.  Your attorney will assist you in adjusting your estate documents whether or not such events are joyous.

As our political landscape is more uncertain than ever after this week’s election results, our readers  cannot be certain that estate tax repeal is on the horizon.  Also, most people do not own substantial assets so that estate taxes may apply to their estates.  However, most of our clients  could benefit from the drafting of a Will and other estate documents by a skilled attorney.  This post will address the benefits of engaging a qualified attorney to draft your estate documents.

Without a Will, one’s property will be left according to the laws of intestacy.  Intestacy distribution through an administration proceeding may serve most people well enough.  For instance, if one’s closest surviving relative is a daughter with whom there is a good relationship, the parent would have no problem with the daughter inheriting her entire estate.  However, if there is also a son with whom the parent has an estranged relationship, intestacy would result in both children sharing in the estate equally.  Since this is not a result favored by the parent, the drafting of a Will is essential so that the parent’s wishes that only the daughter inherit will be honored.  Also, should the parent wish for both children to inherit, but in unequal portions, a Will would be needed to address this desire.  Likewise, a Will can allocate responsibility for the payment of estate taxes between beneficiaries and may direct that only certain assets be liquidated in order to pay estate taxes.

When working with an attorney  to draft estate documents, the opportunity to select an executor to manage the estate is also available.  Otherwise, with intestacy, the person who inherits the estate also is appointed to serve as administrator to manage the estate.  This may not be a favorable result if this person is not as prudent in managing money as another person that may be selected by the decedent.