The word ‘Probate’ means to taking a deceased person’s Last Will and Testament to the courthouse, called “Surrogate’s Court,” along with the Death Certificate and all other required papers and documentation, and hand in those papers to a Probate Clerk. The Probate Clerk looks over all the papers, and if everything is filled out correctly, sends the Will and paperwork to the judge (known as the “Surrogate”) who will then sign another papers called a “Decree Granting Probate and Letters Testamentary.” The Decree part means that the Surrogate has read the Will and determined that it’s genuine and legal, and the “Letters Testamentary” part means the Surrogate has officially appointed you as Executor of the Will. And that’s it! Probate is now complete, but your work isn’t over yet.
After you’ve picked up your Letters Testamentary (or Letters of Administration) from the courthouse, now you can read the Will and do what it says. Such as paying bills and giving jewelry or other personal property to other people; closing all the bank accounts and investment accounts and putting all the money into one bank account in the name of the estate; selling the house or co-op or condo and putting the proceeds of sale into the same bank account. Or maybe transferring the house to a beneficiary in the Will. So you keep very accurate records, to the penny, of everything you do, and then start to write checks to the people named in the decedent’s Last Will and Testament.
One of the most important words in the world of Probate is the term “Distributees.” These are people who are the closest living relatives to the person who died. Distributees are people who would have the right, under New York law, to inherit a part of the deceased person’s property if the deceased person had no Last Will and Testament at the time of death. This is important, because even if any of those Distrbutees do on inherit anything under the deceased person’s Last Will and Testament, the law says they still must be given the opportunity to look at the Will and make a challenge to the Will. That’s just the way the law works and there’s nothing you can do about it.
This is one of the reasons why, sometimes, the Probate process can take a long time: because sometimes you do not even know the names of all of the Distributees, and even if you know the names, you may not know their current address. But you have to track them down anyway. That’s the law and there’s no way around it.
For the most part, the Probate process in New York is quick and easy. In some cases, yes, the Probate process can be very costly and time consuming. But that is in a very small percentage of cases. Eighty percent of the time it shouldn’t take more than six weeks from the time you have all the papers filed, until the time the Surrogate judge signs the Decree appointing someone as Executor or Administrator of a decedent’s estate. Another ten percent of the time, it’s going to take more effort and paperwork to get the job done, and it might take a few months to complete Probate. And then five percent of the time the process can’t be completed without a lawyer, and could take up to a year. And as for the remaining five percent, well sometimes there are situations where the process could take years. But that’s very, very unusual. You may think it has to do with the amount of money someone had when they died. But that would be wrong. The Probate process is the same whether someone died with $100,000 or $1,000,000 or $10,000,000. The forms are the same and the procedures are the same. Most of the time, a lawyer can tell pretty quickly whether Probate is going to be quick and easy, or take longer. Or much longer. Please ask.
When someone dies without a Last Will and Testament, that is known as ‘dying intestate’, or sometimes ‘intestacy’. In that case, the process to settle a deceased person’s estate is called Administration instead of Probate. The forms are a little different, but more or less the steps are mostly the same. In the Probate process, the final outcome is that someone is appointed as Executor and receives from the court Letters Testamentary. In the Administration process, the end result is someone is appointed as Administrator, and issued Letters of Administration. There are sometimes a few more steps involved in the Administration process, but mostly it’s not a problem.
A Power of Attorney is a legal document where one person, called the Principal (probably you), gives legal rights to another person, called the Agent, to act on the Principal’s behalf on almost all financial matters. Financial decisions, not medical. So the Principal’s Agent could sign a lease renewal on behalf of the Principal, or sign insurance documents (change of beneficiary forms, for example), or sign checks and pay bills on behalf of the Principal . . . many, and most, types of financial matters. Some actions the Agent is not allowed to take under a Power of Attorney, such as voting, or getting into a divorce; those types of very personal matters. Otherwise, a Power of Attorney is one of the most important and powerful documents available under New York law.
A typical Power of Attorney is often referred to as a “General Durable Power of Attorney.” This document gives another person, called the “agent,” to act on behalf of the “principal,” which is you, in almost matters of financial affairs. It is effective as soon as everyone signs, and does not expire (that’s why it’s called “durable”). Sometimes people don’t want their Power of Attorney to take effect right away, but only when they become medically incapacitated and unable to make their own decisions. Thus, the Power of Attorney only “springs” into effect when this incapacity occurs. The way to do that is to add language into the Power of Attorney which requires a letter from one or two doctors certifying that the principal is unable to make their own financial decisions.
That’s a good question. Many people think of a Living Will as part of a typical Estate Planning package. Let’s make sure we understand what a “living will” is first. A Living Will is essentially an open letter to your family, friends, doctors and nurses regarding your end of life wishes. That sounds like a good idea, and almost all of the time there’s nothing wrong with having a living will. The problem is that in a very small number of cases, the living will can cause problems. Why? The reason is that in New York, the Living Will is not a legal document: it doesn’t have any legal effect. A person’s end of life decisions are supposed to be included in the Health Care Proxy: that’s the legal document in New York. The Living Will is not a legal document. So the problem comes in, potentially, where someone interprets what you wrote in the living will differently from how your agent in the Health Care Proxy decides to make medical decisions on your behalf. Someone might read the Living Will and claim that what you said in the Living Will conflicts with what your agent decides. And that could cause problems.
Let’s make sure we’re on the same page, meaning referring to the same type of taxes. 1. Taxes on the person’s inheritance; 2. The Decedent’s final income taxes (or prior year unpaid taxes), or 3. Estate and Gift taxes.
First, there are no taxes on money you inherit. There are a few exceptions, especially when it comes to IRA’s, and a few other items. But generally speaking, any money which someone inherits is not taxable income
Second, as Executor, you’re responsible for making sure the decedent’s final income tax returns are filed. As Executor, you sign the tax returns. So make sure they’re done correctly, and pay any taxes due from the decedent’s estate.