PRACTICE AREA INFORMATION
When a loved one passes while domiciled in a state other than Connecticut or New York, but owns New York or Connecticut assets (such as real estate), you must probate the record owner name change through the Connecticut Probate Court or the New York Surrogates Court. This is known as “Ancillary Probate”. The process is somewhat abbreviated, but still requires tax information, petition, financial reports, and exemplified copies of the probate documents from the state of domicile. State authorities often seek additional tax revenue, so careful planning and prudent Ancillary Probate administration are highly advisable.
Asset protection broadly encompasses various means available to effectively protect your assets from creditors. First, there are statutory protections, such as those for qualified plans (IRA, 401k, for example). The next line of defense is insurance, followed by Asset Protection Trusts (“APT”). In some cases, limited liability companies are often used in conjunction with an APT achieve enhanced asset protection. Finally, offshore trusts and international corporate structures are often utilized to shield substantial assets from creditors. Each individual case is unique, so a careful review of your situation is required in order to properly design your asset protection plan.
A revocable living trust is often used to avoid the expense and delay of formal probate administration. Living trusts are specially tailored to each individual family's needs and requirements. For example, special needs trusts, supervised trusts for minors, and spendthrift trusts are often incorporated within a living trust. Many living trusts have asset protection aspects. With a living trust, the successor trustee simply steps into the departed trustee's shoes, avoiding probate. The successor trustee then carefully follows the instructions in the trust as to asset distribution and trust management. Living trusts are an excellent choice for many families. A careful review of the estate is necessary to determine if a living trust is the right choice for you.
Business succession issues and post-mortem transfers of certain assets often present special problems involving transfer, documentation, and valuation. For example, closely-held businesses with minority shareholders, professional businesses, and real estate often present difficult issues which we can help you resolve strategically while providing proper management and required documentation.
Charitable remainder trusts are best used in cases where one expects a large capital gain transaction in the near future, such as a sale of real estate. The proceeds of the sale are contributed to a charitable remainder trust which typically makes periodic payments to the trust settlor for a term of years, with the remainder going to a designated charity. The current present value of the charitable remainder interest is computed and then deducted from the grantor's income in the year of the contribution, reducing income tax on the capital gain transaction. Charitable remainder trusts are also useful as a simple way to endow a designated charity after a term of years, but the use to offset capital gain transactions is more common.
Estate planning is a documented process which assures that your post mortem wishes are honored as to assets and guardianship, while also strategically minimizing estate tax and maximizing efficiency of management and distribution. For example, you may choose to avoid probate using a living trust, or you may use a simple will, HIPAA and Power of Attorney. Special Needs Trusts and Spendthrift Trusts are sometimes indicated as well. International individuals and families have special planning issues, particularly regarding non-citizen spouses and multi-jurisdictional real estate and assets. Absent an estate plan, distribution of your assets and guardianship will be determined by state statute, which may not be your intention whatsoever and could result in negative tax or state benefit effects. From estate tax to special bequests and private foundations, there are many factors to consider in an estate plan. For this reason, every estate plan we draft is customized to individual client needs and considerations. This is done only after a complete review of your family situation, your intentions, and other important issues.
Estate administration or probate administration (aka "probate") is a court supervised settlement of all claims against a decedent and the distribution of the decedent's estate to either the beneficiaries named in a will or the decedent's "heirs-at-law" if there is no will. Probate begins with a petition filed with the probate court. If the petition is accepted, the probate court judge will appoint a fiduciary, known as the executor (if there is a will) or administrator (if there is no will). The fiduciary then proceeds with an inventory of assets, return of claims, estate tax return, and a financial report on expenses and distributions. Probate can be lengthy and difficult, particularly if there is a challenge to the will or a creditor conflict. Sound planning and documentation will avert most problems and often result in the elimination of probate administration altogether. Not everyone is prepared for the unexpected or the unforeseen. It is important to note that probate only applies if the decedent had assets solely in their name at time of death. Joint accounts and survivorship interests, for example, do not require probate administration.
The “HIPAA” gives your designee authority to access medical records and insurance information or applications. This is quite helpful to your loved ones and/or representatives if you are in a hospital or health care facility, since they may have to address your insurance and admission issues with a health care provider. In fact, health care providers often ask if you have HIPAA at the time of your admission. The admission process will be much easier if you have a HIPAA.
A Health Care Proxy gives your agent (a near relative, spouse or significant other) the authority to terminate life support if there is brain death or other circumstance from which there is no recovery possible. Life support includes a lung machine, heart pump, or feeding tube.
Irrevocable trusts are supposed to be irrevocable. However, irrevocable trusts can now be amended and/or modified under Connecticut and New York law. Modification of an irrevocable trust requires a carefully drafted petition filed with the probate court. A guardian ad litem is appointed for any beneficiaries who are minors, followed by a modification hearing set by the probate court. There are limitations on modifications, but in general, beneficial interests cannot be changed, eliminated, or added without various consents, such as from a potential disinherited beneficiary. Each individual case is different. A careful review of the facts with an attorney can determine if a trust modification is feasible and worthwhile. Individual needs and requirements can change unpredictably. Contact us if you need to modify an irrevocable trust.
A Power of Attorney allows a third party to sign and execute financial transactions for you. There are two principal types of Powers of Attorney: Durable Power of Attorney and “Springing” Power of Attorney. A Durable Power of Attorney is usually effective immediately and remains operative until revoked or you pass. A “Springing” Power of Attorney is activated only upon your incapacity (doctor certified) or some other designated event. Powers of Attorney are extremely powerful and should only be executed with the advice of an attorney.
The Probate Court changes record owner title of all Connecticut assets in your name at the time of death. This process is called “probate administration” and generally takes approximately six to twelve months to complete. The process begins with filing a detailed petition and proceeds through an inventory of assets, estate tax returns, creditor’s report and a final account of all financial activity and distributions. If the deceased has a will, the Probate Court or Surrogates Court and the executor will follow the terms of the will. If the deceased has no will, then the assets will be distributed by an administrator under Probate Court or Surrogates Court supervision to your spouse, children, siblings, or other relatives. Unless you have a living trust or other "non-probate" dispensation of assets, you will need to be appointed executor or administrator and proceed through Probate Court or Surrogates Court to distribute the decedent's assets. It is highly advisable to contact an attorney to assist with: drafting and filing all required submissions, meeting with heirs, preparing tax returns, periodic reports, court hearing appearances, negotiating disputes, and handling assets (such as stocks, bonds, cash, retirement accounts, real estate, and business interests).
A Special Needs Trust sets funds aside for a special needs individual in a way which protects access to state aid. "SNT" funds are used to supplement state funds for specified purposes in order to improve and enhance the well-being of the SNT trust beneficiary. There are two principal types of SNT’s: “third party SNT”; and “self-settled SNT”. A third-party SNT is established with funds provided by someone other than the SNT beneficiary and any unused funds are returned or paid out to persons designated by that third party upon the death of the SNT beneficiary. A self-settled SNT is set up with funds provided by the special needs beneficiary and the unused portion reverts to the state upon death. SNT’s have many specific requirements and special provisions must be carefully drafted to assure compliance with state statute in order to effectively protect the SNT beneficiary’s access to state assistance. In addition, only certain expenses qualify for payment from the SNT, so the trustee must be very careful in making disbursements only for qualified expenses.
A will contest arises when admission of a will in probate court is challenged by a disinherited heir. A will contest seeks to block the appointment of a named executor and prevent distribution under the terms of the will. A successful will contest is usually based on either: (i) undue influence; or (ii) lack of capacity. A properly executed will is endowed with a presumption of validity, so the aggrieved party must present specific and compelling evidence of undue influence or lack of capacity in the execution of the will in order to prevail. Certain patterns often emerge, such as the isolation of the will testator from family members, making it important to watch for warning signs before someone passes. Get involved if you see possible trouble, such as isolation and control, like taking a cell phone or communication ability away from the testator. It is difficult to overturn a will. Close involvement with the testator can prevent misunderstandings later. Special precautions can be taken in cases involving a potential challenge, but a well drafted and properly executed will is the best start. In cases of clearly proven undue influence, the aggrieved party should fight the will vigorously from the very start and continue with force until resolution is achieved. All will contests are fact-specific. Contact us to discuss your situation in detail so that we may appraise you of your rights and potential recovery chances.
A will is a written disposition of your assets and other directives (such as guardianship, personal property, real estate designations and more) which must be executed per specific rules under state statute. A will is highly advisable for most individuals, even if they are avoiding probate using a Living Trust. For one thing, it will greatly facilitate a smooth probate process. Moreover, a will can often eliminate many difficult issues which may arise without a will, so your executor(s) can avoid unnecessary hassle, hearings, and expense. For example, a will disposes of any assets not held in trust or survivorship, while also waiving probate bond and appointing your choice of executor. Properly drafted, your will can eliminate the need for an appointment hearing, which means your executor or administrator will begin with an efficient and cost-effective probate process. Special bequests and instructions can also be included, plus Special Needs Trusts and Spendthrift Trusts can be established to protect your heirs from creditors, spouses or losing state benefits, which is extremely important in some cases.
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