Adoption and Inheritance in New York, Part 1. A Brief History of the Issue

As a young girl, I was fascinated by the stories of Anne of Green Gables (1908), Pollyana (1913), and the comic strip Little Orphan Annie (1924).  These stories of adoption spoke to me of acceptance and of intergenerational care.  What I did not realize at the time was that these stories also reflected a new trend in the history of adoption and of family construction, a shift from an emphasis on strict bloodlines for the purpose of inheritance to the acceptance of adoption to create or expand a family.  

As in other jurisdictions, adoption in New York is, strictly speaking, a creature of the law.  The law in New York concerning inheritance rights of adopted children would also change as a result of changes in society, creating a uniquely legal concept of the family through the expansion of inheritance rights to include the adopted child.  Literature and the law would walk hand in hand to bring about change.

The story of Anne Shirley in Anne of Green Gables represents a transitional phase in the history of adoption.  Marilla and Matthew Cuthbert, sister and brother, had decided to adopt a boy to help them out on the farm because they were getting too old to take care of the chores themselves.  Orphanages in the 19th century regularly adopted out children as a form of cheap farm labor.  Through a series of mishaps, the Cuthberts received precocious Anne instead.  With her flaming red hair and freckles, Anne’s cheery disposition soon warmed the heart of Matthew and even crusty Marilla, exemplifying the more desired kind of adoption based on sentiment rather than work.  This desired kind of adoption would progressively find its way into the spirit and language of the law.

Anne’s flaming red hair is also the dominant characteristic of Little Orphan Annie.  Based upon Indiana poet Charles Whitcomb Riley’s poem Little Orphant Annie (1885) written in the Hoosier dialect,  Riley’s Annie is adopted out to be a household servant. 

Little Orphant Annie’s come to our house to stay,
An’ wash the cups an’ saucers up, an’ brush the crumbs away,
An’ shoo the chickens off the porch, an’ dust the hearth, an’ sweep,
An’ make the fire, an’ bake the bread, an’ earn her board-an’-keep;

But Annie also had an unusual gift:  she could spin goblin stories for the children after the evening meal, morality tales where the children are exhorted to obey their parents.  The poem focused on the beneficial moral effects of the adopted child, in contrast with real orphans who often were associated with ignorance, disorderly conduct, and poverty.

Annie would not have ridden out on an orphan train, a particularly painful part of the history of adoption in New York from 1854-1929.  The orphan train was the brainchild of New York Protestant reformer Charles Loring Brace, author of The Best Method of Disposing of Our Pauper and Vagrant Children (1859).  Alarmed at the growing number of homeless and disorderly children in New York, particularly Irish Catholic immigrant children who had arrived during the Irish Potato Famine, Brace feared that crime would increase in the city as a result.  His Children’s Aid Society placed out only boys to rural regions of America, in what was in large part a contractual arrangement.   

Riley’s Annie became the prototype for Harold Gray’s syndicated cartoon Little Orphan Annie (1924), which appeared at the height of the Progressive Movement in the United States.  The Progressives Movement in New York would make significant inroads in adoption reform in the United States. 

Massachusetts had passed the first adoption law in 1851.  Section 6 dealt with the issue of inheritance.

“A child so adopted, as aforesaid, shall be deemed, for the purposes of inheritance and succession by such child, custody of the person and right of obedience by such parent or parents by adoption, and all other legal consequences and incidents of the natural relation of parents and children, the same to all intents and purposes as if such child had been born in lawful wedlock of such parents or parent by adoption, saving only that such child shall not be deemed capable of taking property expressly limited to the heirs of the body or bodies of such petitioner or petitioners.”

If the adopting couple was childless, then the adopted child could inherit freely from the adoptive parents.  However, if the couple already had natural children, the law prohibited the adopted child from inheriting from the adoptive parents.  Under the law, adopted children were not considered to be the equals of natural children with respect to inheritance rights. 

New York began amending its adoption laws beginning in 1873.  One feature of New York’s early adoption law with respect to inheritance was a provision that allowed adopted-out children to inherit from their natural parents (In re Landers’ Estate, 100 Misc. 635, 166 N.Y.S. 1036 (Sur. Ct., Oneida Co. 1917)).  In 1963, New York amended its adoption statute Domestic Relations Law (DRL) § 117 with respect to inheritance.   For the purpose of inheritance, the amended law ended the adopted-out child’s right to inherit from the biological parents, but at the same time gave the adopted child the right to inherit from the adoptive parents.

The law was amended in 1966, giving the biological parent the right to provide a bequest to an adopted-out child by last will and testament.  For the first time, the law also addressed the issue of a child who was adopted by a step-parent, an acknowledgement that new family relationships were also being forged by remarriage.

In 1986, as a result of a Court of Appeals decision in In re Best, 66 N.Y.2d 151 (1985), the law was amended to state that the adopted-out child was deemed a “stranger” with respect to the biological parents.  The adopted-out child may not inherit from the natural parents through a class gift in a will or a trust, or through intestacy.  However, the adopted-out child can still inherit from the biological parents if the adopted-out child is specifically named in the biological parent’s will or trust.  In the case of a class gift, the adopted-out child must be specifically named as belonging to that class.

However, the new law created particular issues with respect to step-families and with respect to inheritances from grandparents.  The law was quickly changed in 1987 to provide for inheritance rights if  (1) the child’s adoptive parent is (a) married to the child’s birth parent, (b) the child’s birth grandparent or (c) a descendant of such grandparent; and (2) the testator or creator is the child’s grandparent or a descendant of such grandparent (DRL § 117(2)(b)).  This remains the law in New York with respect to inheritance rights of adoptees.

This brief history into the inheritance rights of adopted children in New York is yet another reason as to why you should have an attorney draft your Will instead of relying on boilerplate forms that are not tailored to your unique situation. After all, no person’s estate and family situation is like any other, and your uniqueness should be reflected in the way that your Will is prepared: a Will that is specifically drafted for you. Your Will is, after all, one of the most important documents of your life and you should have the benefit of expert legal assistance in drafting it.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

In the next segment of this series, I will look at some specific and fascinating New York cases involving adopted-out children and inheritance rights.  I invite you to join my list of subscribers to this blog by clicking on “Sign me up!”  under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.  Thank you.

What Constitutes a Valid Will in New York? Part 4: No Undue Influence

For a Will to be valid in New York, there must be an absence of undue influence.  Undue influence is an issue that arises in the context of a Will contest.  The person challenging the admission of the Will to probate may assert that the person making the Will (testator) did not have free will at the time that the Will was drafted. 

Undue influence implies that the testator was being advised to make certain property dispositions to the advisor who exercised power over the testator.  That power over could have been through psychological domination, or through a special relationship of trust such as one that would exist between long-time friends or siblings.  An allegation of undue influence may only arise in a Will contest when the advisor is receiving a direct benefit as a result of specific acts.  If the advisor is receiving an indirect benefit, then the proper charge is one of fraud.

What is the definition of undue influence with respect to the drafting of a Will?  The New York Court of Appeals defined the term in a case decided in 1877 called Children’s Aid Society v. Loveridge 70 N.Y. 387 (1877).   The definition has been used to determine the presence or absence of undue influence since that time:

“It must be shown that the influence exercised amounted to a moral coercion, which restrained independent action and destroyed free agency, or which, by importunity which could not be resisted, constrained the testator to do that which was against his free will and desire, but which he was unable to refuse or too weak to resist. It must not be the promptings of affection; the desire of gratifying the wishes of another; the ties of attachment arising from consanguinity, or the memory of kind acts and friendly offices, but a coercion produced by importunity, or by a silent resistless power which the strong will often exercises over the weak and infirm, and which could not be resisted, so that the motive was tantamount to force or fear lawful influences which arise from the claims of kindred and family or other intimate personal relations are proper subjects for consideration in the disposition of estates, and if allowed to influence a testator in his last will, cannot be regarded as illegitimate or as furnishing cause for legal condemnation” (Children’s Aid Soc. v. Loveridge, 70 N.Y. 387, 394-395).

There are certain confidential relationships where, absent an explanation, the inference of undue influence arises when the advisor is a named beneficiary in a Will.  The first such relationship to receive scrutiny is when the attorney drafting the Will is a named beneficiary in the Will.  “Such wills, when made to the exclusion of the natural objects of the testator’s bounty, are viewed with great suspicion by the law, and some proof should be required beside the factum of the will before the will can be sustained.”  (Marx v. McGlynn, 88 N.Y. 357, 371.).  In Matter of Putnam  257 N.Y. 140 (1931), the New York Court of Appeals held that there is a rebuttable inference of undue influence when an attorney is a named beneficiary in a Will that he or she drafted.  This is known as the Putnam rule

Lower courts in New York have since applied the Putnam rule to other confidential relationships, such as doctor and patient (Matter of Satterlee 119 N.Y.S.2d 309 (1953)); nurses and patients (Hazel v. Sacco, 52 A.D.2d 1042 [4th Dept 1976]); clergy and parishioner (Matter of Eckert 93 Misc 2d 677 (1978)); and accountant and client (Matter of Collins, 124 AD2d 48 (1987)).

To prove undue influence, the person objecting to the admission of the Will to probate must prove three elements: (1) motive, (2) opportunity and (3) actual acts of undue influence.  The standard of proof is by a preponderance of the evidence, meaning that it is more likely than not that the evidence presented is true.  Circumstantial evidence may be used, but this evidence must lead to a necessary conclusion of undue evidence.  The modest standard of proof, by a preponderance of the evidence, is used because the State has an interest in ensuring that estates are distributed in an orderly manner and according to the decedent’s wishes.  The person contesting the Will bears the burden of proof throughout the proceedings.

The issue of who bears the burden of proof is a Wills contest case is very important.  We have to distinguish between a claim of undue influence in a contracts dispute and a claim of undue influence in a Will contest. In a contract dispute, when the vulnerable party in a special relationship makes a claim of undue influence, the burden of proof shifts to the more powerful party to disprove the allegation. If the vulnerable party prevails, then the contract is voidable, meaning that the vulnerable party can elect to enforce the contract but the contract cannot be enforced against him or her. But in a Will contest where the issue of undue influence has been raised, the burden of proof never shifts from the person contesting the admission of the Will to probate.

How do these three elements play out in cases involving undue influence?  In a recent case decided in January 2010, Matter of Feller 2010 NY Slip Op 50001(U) [26 Misc 3d 1205(A)], the issue of undue influence arose in the context of funeral plans and the choice of a funeral home.  The attorney who had drafted the Will was also the executor of the estate and the proponent of the Will before the Surrogate Court.  But because the attorney was not a named beneficiary in the Will, the Putnam rule did not apply.   

The objectants to the admission of the Will to probate claimed that the attorney had used his influence to have the decedent change her funeral home.  The attorney had the opportunity to exert undue influence regarding the choice of a funeral home, and he did have a potential motive:  he represented a competitor funeral home.  But the record clearly showed that the decedent had selected a funeral home not represented by the attorney, eliminating any motive.  Moreover, the attorney had on several occasions advised his client that she should choose someone other than himself as executor.

Because the objectants failed to prove all three required elements to make a showing of undue influence, the court found an absence of undue influence.  The court also found that the testator had testamentary capacity and that the formalities for the Will execution ceremony had been properly followed.   The Will was, therefore, admitted to probate.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

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What is the Difference between an Heir and a Beneficiary?

In everyday life, you will often hear people speak about their hope for an inheritance from a family member or relative.  However, this commonplace use of the term “inheritance” often masks a misunderstanding of the law and can lead to unintended consequences when misplaced assumptions are not addressed.  Today we are going to examine exactly what the term “inheritance” means from a legal standpoint, and how having a Will takes uncertainty out of the equation.

What defines an “heir”?  Strictly speaking, one is not an “heir” of a living person.  That is because the exact identity of an “heir” is determined at the time of the decedent’s death.  The determination is made by the laws of the jurisdiction, and not by the decedent.  An “heir,” then, is a legal creation and its terms are defined by a State.  One becomes an heir by virtue of satisfying the definition in a statute.  In New York, that statute is EPTL § 4-1.1. That is because New York  has an interest in the smooth transfer of property from one generation to the next.  As such, an “heir” is the statutory recipient of property from a decedent who dies without a Will (intestate).  The State is also the final “heir” in most statutory schemes.  If there are no statutory heir, then the property will go to the State (escheat).  In New York, a person who inherits property under intestate succession is called a distributee.

New York also has a “laughing heir” statute (EPTL §4-1.1(6)).  A “laughing heir” is someone entitled to inherit by law who is so remotely connected to the deceased that he or she would not feel any sorrow at hearing of the death.  To prevent this occurrence, New York cuts off heirs at the grandchildren of the deceased:  “For the purposes of this subparagraph, issue of grandparents shall not include issue more remote than grandchildren of such grandparents.”  No one more remote, such as a great-grandchild, may inherit.  After that, the property of the deceased escheats to the State.

When a person dies without a Will, New York uses as its default an intestate distribution system called per capita (“each head”) at each generation.  In this system, each person is weighed equally.  By virtue of their presence on the family tree, no one can be disinherited.  The first thing we have to do is determine the number of surviving distributees. To illustrate: Beth is a single person who dies without a Will.  She had two sons named Luke and Dick, and a daughter named Nancy.  Luke had two children, Bill and Jane, and Nancy had one child named Jim, and Dick had two children named Sandy and Sam.

At the time of Beth’s death, Luke had already predeceased her.  Had Luke been alive, he, Nancy and Dick would have each received 1/3 of the estate.  Because Luke has already died, Nancy and Dick each receive their 1/3 share, and Luke’s children divided what would have been their father’s share equally between them.  So Nancy receives 1/3, Dick receives 1/3 , and Bill and Jane each receive 1/6.   

Depending upon your family situation, the New York default system of distribution may not suit your needs.  In that case, you may want to draft a Will stipulating that you want your estate distributed per stirpes (“by each branch”) to give you more control over the outcome.  In New York, a person who receives under a Will is called a beneficiary.  Let’s say that you want your great-grandchild to receive something from your estate.  Drafting a Will eliminates the “laughing heir” statute and allows you to leave something to your great-grandchildren.  A Will also allows you to distribute your estate to a class of beneficiaries, such as “to all my children” or “to all of my grandchildren” to cover any issue born or adopted after the execution the Will (pretermitted child).  The class closes at the time of the death of the testator.

Finally, instead of having your estate possibly escheat to the State, you can name a person unrelated to you or a charity as a beneficiary of your residuary estate.  Your property can then be used in a way that is consistent with your life and beliefs.  You should seek the advice on an attorney in drafting a Will so that your wishes are reflected in the resulting document.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

I invite you to join my list of subscribers to this blog by clicking on “Sign me up!”  under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.  Thank you.

Single Parents and Wills: The Appointment of a Guardian for Your Child

One of the most important decisions that a single parent can make regarding the care of a minor child is the appointment of a testamentary guardian in the event of the parent’s death. The appointment of a testamentary guardian is done in a Will. In essence, a guardianship clause in a Will determines who will get custody of the child upon the parent’s passing.

If you are divorced, then it is very important that you have a Will. While the remaining parent will likely become the guardian of your child, unless that parent has been declared unfit, the Will of the last parent to die will determine the guardianship of any minor child. To illustrate: if a divorced mother with a Will predeceases her divorced husband who later dies without a Will, the mother’s designation of a testamentary guardian will prevail.

How should you choose a testamentary guardian for your minor child? There are several factors to be considered, such as:

  • the health of the guardian;
  • the person’s values;
  • whether the proposed guardian has children already and, if so, whether their ideas on parenting are in agreement with yours;
  • if religious upbringing is important to you, whether the proposed guardian shares your beliefs;
  • whether the proposed guardian shares your educational values;
  • whether the person is willing to comply with all of the court procedures on a yearly basis;

You should consider appointing an alternate guardian who will also meet the same criteria as the designated guardian in case the designated guardian cannot take on the duties in the event of your death. Note that, depending upon the age of the minor child at the time of the parent’s death, any designated guardian or alternate may have to serve for quite a long time. Therefore, a designated guardian should reflect carefully upon the duties involved before making the commitment.

Regardless of the presence of an ex-spouse, a single parent will want to assure the unencumbered transfer and management of non-probate assets for any minor child through a Will. If your minor child is named as a beneficiary of your life insurance policy or retirement plan, then that property will pass outside of probate directly to your child. In your Will, you may want to consider either appointing a separate guardian for your child’s property or establishing a testamentary trust.

If there are multiple children, provision may be made in the testamentary trust to pool the assets in order to afford the trustee discretion in caring for differing needs of the children. This is especially important if there is a special needs child. Without a Will, each child will receive equal shares without any regard to the different care needs of each child.

In the case of a testamentary trust, the parent (grantor) will want to designate a trustee to manage the proceeds of the trust until the child reaches majority. The designated trustee must agree to meet annually with the probate court and show that the trust assets are being dispersed responsibly.

A single person should consult with an attorney to draft a Will that will provide for the proper care of minor children in the event of the parent’s death. The attorney will assess each individual situation and provide guidance as to how best to protect the minor children and their assets.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

I invite you to join my list of subscribers to this blog by clicking on “Sign me up!”  under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.  Thank you.

I am Single: Do I Need a Will?

If you are currently single, you are not alone.  Over 40% of all adults 18 years and older are single.  And if you live in Manhattan, you live in the borough with the most singles in New York City (61.4%).  Chances are that you are working, have a 401(k), some assets, and maybe a pet or two.  Chances also are that you don’t have a Will.

Why is this an important issue?  Because the percentage of single people in this country is rising faster than the percentage of married persons. According to a 2008 U.S. Census Bureau report, singles in this country break down statistically into the following groups:

95.9 million:  Number of unmarried Americans 18 and older in 2008. This group comprised 43 percent of all U.S. residents 18 and older.

53%:  Percentage of unmarried Americans 18 and older who were women.

61%:  Percentage of unmarried Americans 18 and older who had never been married. Another 24 percent were divorced, and 15 percent were widowed.

15.8 million: Number of unmarried Americans 65 and older. These older Americans comprised 16 percent of all unmarried and single people 18 and older.

87:  Number of unmarried men 18 and older for every 100 unmarried women in the United States.

52.9 million:  Number of households maintained by unmarried men or women. These households comprised 45 percent of households nationwide.

32.2 million:  Number of people who lived alone. They comprised 28 percent of all households, up from 17 percent in 1970.

Source for statements in this section: America’s Families and Living Arrangements: 2008

In an article titled “Single New Yorkers, Ahead of the Pack,” the New York Times tacked the issue of what “single” means today (it is an especially relevant term as we all fill out our Census forms).  In New York City according to the American Community Survey conducted between 2005 and 2007, the Times reported the following numbers of singles by borough:

  • Staten Island is 41.0 percent single with 26.5 percent never married.
  • Queens is 46.3 percent single with 30.9 percent never married.
  • Brooklyn is 52.4 percent single with 37.0 percent never married.
  • The Bronx is 57.6 percent single with 41.6 percent never married.
  • Manhattan is 61.4 percent single with 45.9 percent never married.

Many single people do not have a Will. That may be because they believe that their worldly possessions will go to their families; that one should draft a Will only if there is a spouse or a child involved; or that they do not have enough assets to make a difference. And while these assumptions may be true in many cases, many singles have not considered the consequences of dying without a Will (intestate) on their families. Writing a Will may be one of the kindest acts that one can do for one’s family.

So why is it so important for a single person to have a Will?   In New York, the statute that governs the distribution of the estate of a person who dies without a Will is EPTL § 4-1.1.   For example, if you are single with no children and you die without a Will, New York State will award your property to your parents.  If your parents are deceased, then your property will be divided among your siblings and their heirs.  If you have no siblings, your property will go to the State of New York.

But is that always the best result?  Let’s imagine some scenarios for Client X, a single person living in New York, with two siblings and both parents living.  Let’s say that one of Client X’s parents becomes seriously ill requiring nursing home care.  The ailing parent meets the Medicaid income eligibility standards for nursing home care.  The non-ailing parent goes to live with Client X’s eldest sibling.  Client X dies without a Will, leaving behind substantial savings that get awarded to Client X’s parents.  As a result, Client X’s ailing parent may now be required to contribute towards the nursing home costs.  Instead, Client X could have left his savings to his siblings in his Will,  with a greater share to the sibling taking care of the non-ailing parent.

Client Y is single and an only child whose parents have predeceased her.  Client Y owns her home.  If she dies intestate, the home will escheat to the State of New York.  But Client Y is a loyal alum of Education University (EU) and attends every alumni function.   Instead of her home going to the State after her death, she can gift her home to EU as a charitable bequest in her Will, and designate that any proceeds from the sale of her home after her death be used for student scholarships.

As these two scenarios illustrate, a single person should draft a Will with the assistance of an attorney to take into account the best interests of loved ones left behind.  Your attorney will assess your individual needs and draft a document that will suit your interests and the interests of those who remain after your passing.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

I invite you to join my list of subscribers to this blog by clicking on “Sign me up!”  under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.  Thank you.

Prenuptial Agreements and Property: Getting Clear about Title

In January 2010, the New York Times published an article in the real estate section about the growing number of unmarried couples purchasing real estate together (“Come Buy With Me and Be My Love“).   While the attraction may be low mortgage rates or the ability to buy a more desirable property that the current housing market has placed within an unmarried couple’s reach,  the couple in consultation with their attorneys should give care and thought to such issues as to how the property will be titled, how the property will be treated in each party’s Will, how payments and tax issues will be apportioned, and whether a new deed will be drafted and recorded in the event that the couple marries.

For an unmarried couple wishing to purchase real estate together, a prenuptial agreement can resolve these issues before the purchase is made.  Domestic Relations Law (DRL) 236[B](3) recognizes provisions in prenups “for the ownership, division or distribution of separate and marital property.”  As we shall see, the way in which a property is titled has some serious repercussions.

To simplify this discussion, I have divided ownership types by whether or not they have a right of survivorship, meaning that the surviving tenant will become the owner of the entire property without Probate.  The surviving tenant’s claim on the property will be first in line over any other claims on the property. 

There are two ways to title property to ensure the right of survivorship.  The first is available only to married couples:  tenancy by the entirety.   For married couples in New York, this is the default title.  It affords certain rights not available to unmarried couples.  Tenancy by the entirety presupposes that in marriage the two become one.  The law views the couple as a single unit.  Each spouse owns an undivided 100% of the property.   Neither spouse can sell or diminish the 100% share that each owns without the consent of the other.  Should a creditor obtain a lien on one spouse’s interest in the property, the lien will only survive if the debtor spouse is the surviving spouse.  Otherwise, the lien is extinguished with the death of the debtor spouse.  Moreover, the property cannot be reached in a bankruptcy proceeding. 

Joint tenancy with right of survivorship provides some of the same protections for an unmarried couple.  Each person owns an undivided 100% interest.  However, one party may transfer or put a lien on his/her interest without the knowledge or consent of the other joint tenant, thereby severing the joint tenancy and making the property a tenancy in common.  Moreover, the interest of each joint tenant can be attached by creditors or in bankruptcy.  When attachment takes place, the property can be sold to recover against the debt, and the proceeds of the sale will be divided between the unencumbered party and the bankruptcy trustee.

When a joint tenant transfers his/her interest to a third party, the joint tenancy with right of survivorship is severed and the parties become tenants in common with no right of survivorship.  Why is this important?  First, it can be done without the knowledge or consent of the other party.  Secondly, it can undo the estate planning that the other party has done, particularly if there is every expectation by the non-suspecting party that the property will pass outside Probate to the surviving party.

Tenants in common have no right of survivorship.  When one tenant in common dies, their property rights pass according to their wishes in their Will, or by the applicable rules of intestacy if they die without a Will.  Each tenant in common enjoys full possession of the property and may not be excluded without compensation.  Tenants in common need not have equal shares, and more than two persons may own the property together.  A tenancy in common affords no protection from creditors or the bankruptcy court.  One joint tenant can transfer his/her ownership rights to a third party without the consent of the other, effectively giving the other co-tenant a new “roommate.”  That third party will now be in possession with the remaining original co-tenant.  The only remedy that the remaining original remaining co-tenant has is to demand a sale of the property and a division of the proceeds.

With a prenuptial agreement, the couple can clearly designate how the property will be titled.  In addition, they can agree to apportion payments based on a percentage of each other’s earnings, reviewable on a yearly basis.  Since each party will be filing taxes separately until the marriage, the prenuptial agreement can spell out the pro rata percentage that can be used for deductions on the IRS’s Schedule A.

Finally, the prenuptial agreement can spell out if and how the unmarried couple will re-title the property as a tenancy by the entirety in the event of a marriage.  Will the property become marital property, or will it remain separate property?  Being up-front about one’s intentions can spare both parties much anxiety and grief, and also bring clarity to each party’s estate planning.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

I invite you to join my list of subscribers to this blog by clicking on “Sign me up!”  under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.  Thank you.

Prenuptial Agreements and Wills: Loving Acts for a Stable Marriage

As I emphasized in a prior posting, the prenuptial agreement has gotten some bad press because it has been portrayed in celebrity divorces as a way to shield assets from one’s spouse in the event of a divorce.  As a result, many couples shy away from prenups because they see them as signs that the couple is already planning for a divorce even before they are married.  But a prenuptial agreement can be just the opposite:  a foundational element for long-term marriage stability.  In this post, we will look at how incorporating into a prenup an agreement to draft Wills makes sense to protect the couple’s estate, family, and wishes.  Having such a provision in a prenup can bring great peace of mind.

Domestic Relations Law (DRL) 236[B](3) is the statute that controls prenuptial agreements in New York.  The statute states that a prenuptial agreement may include (1) a contract to make a testamentary provision of any kind, or a waiver of any right to elect against the provisions of a will.  We will examine in detail what this provision means to you.

A prenup may include a provision to make a Will (this is called a contractual Will) or, in some cases, not to revoke a Will.   In New York, a contractual Will must contain an express statement in the Will that its provisions are intended to constitute a contract between the parties.  Contractual Wills may be revoked by an agreement of the parties.

Having a Will is not only a good idea, it is a loving act.  According to a 2007 article in Forbes, a survey done by Harris Interactive found that 55% of the general population had no Will.  If you die without a Will (i.e., intestate) in New York, New York State has a default plan for your estate, but you may not like the plan.  New York’s Estates, Powers and Trusts Law (EPTL) § 4-1.1 governs the distribution of estates from persons who die without a valid Will.  This chart summarizes the law:

 

As you begin to have a frank conversation about how you want your estate distributed in the event of your death or the death of your spouse after marriage, it is a good idea to begin by having each of you fill out a family tree, like this one provided by New York State.  You will want to update this family tree yearly, and you will want to bring it with you for your attorney during your yearly visit to review your Will and estate planning.   And if you have not done so already, you will want to have a frank discussion about any known congenital diseases that are present on your family tree.  By being honest and open about your family tree issues with each other, you will build invaluable bonds of trust that will support your marriage when the difficult times come.

Each of you may also want your Will to reflect a gift to a favorite charity or non-profit organization, like a college or university.  That charitable gift will have to be expressed in your Will.  Likewise, there may be heirlooms or other family memorabilia that you would like kept in your family of origin.  Your Will is the place where you will want those exclusions made known. 

The prenup is the place where you can agree to include in your Will an added provision specific to your future spouse after the marriage takes place.   For instance, you might include a bequest to your spouses’s alma mater creating a scholarship fund in his or her name.  When the gift is one of tangible property, during your yearly review with your attorney you will want to make sure that the promised item still exists as part of your estate.  If the item has been lost or destroyed, the gift is said to adeem.  But this situation can be easily rectified by modifying the prenup as we discussed in a prior post. 

The statute also says that either party can waive any right to elect against any provision of a Will.  Here the statute is referring to the elective share statute (EPTL § 5-1.1-A).  The elective share statute protects against disinheritance by either spouse by giving the surviving spouse a minimum share of the decedent’s estate.  In New York, the elective share amounts to the greater of 50K or 1/3 of the net estate after the payment of debts, but before the payment of estate taxes.  In a prenup, either party can waive their right to the elective share.  One reason to exercise this waiver might be to protect children from a prior marriage.  Whether to waive an elective share in a prenup is a decision that must be made carefully and with full disclosure of the salient facts, including full financial disclosures. 

One advantage of drafting a prenup is that it encourages financial disclosures before marriage.  It will also encourage discussions about the emotional aspects of money (saving and spending habits, attitudes concerning debt, and issues surrounding dependency, control and self-image).   Each party should fill out a personal statement of net worth, such as this example by the Small Business Administration.  Getting into the habit of talking about financial issues before and during the marriage will go a long way in building trust in the relationship.

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