Gifts Mnemonics Wills Mnemonics

GIFTS MNEMONICS

GIFTS

1) Give AID… A – ACCEPTANCE (usually implied) I – Donative INTENT D – Effective DELIVERY

2) …and you’ll deliver an ACE: A – ACTUAL C – CONSTRUCTIVE E – ESCROW

WILLS MNEMONICS

WILLS

1) A valid will must be SWEPT: S – SIGNED by an adult testator W – In WRITING E – Signed at the END by the testator P – PUBLISHED T – TWO witnesses (who don’t have to be adults) must sign within 30 days of each other, in the testator’s presence

2) A will contest can TIE the executor’s hands: T – Lack of TESTAMENTARY capacity I – Undue INFLUENCE E – Improper EXECUTION (improperly SWEPT)

3) Foreign wills are valid in NY, if valid in SWEDEN: S – SIGNED by the testator W – In WRITING (no nuncupative wills except for military personal), and the will was properly executed in accordance with the laws of EDEN: E – The state where it was EXECUTED D – The testator’s domicile at DEATH E – The testator’s domicile when he EXECUTED the will N – The laws of NY

© 2015 Pieper Bar Review 1 4) I FA²CED SIR sidesteps an in terrorem (“no contest”) clause: I – An INFANT can always object to a will without violating a no contest clause F – Litigating to establish the will as a FORGERY, but only if based on probable cause A – Demanding an ACCOUNTING or questioning the conduct of the fiduciary A – New York’s ATTORNEY General is not bound by an N.C.C. and can contest the will for charities C – Petitioning for a CONSTRUCTION of a will provision to determine the testator’s intent E – Surviving spouse exercising the right of ELECTION D – Pre-Trial DISCOVERY of the SWEPT witnesses, the person who prepared the will, and/or the executor, prior to filing a TIE objection S – Objecting to SUBJECT matter jurisdiction or the court’s jurisdiction over the will I – A person judicially declared INCOMPETENT can object to the will without violating the no contest clause R – Where the will offered for probate was REVOKED by a later will, based on probable cause

5) DAMN CAR LAW can alter an existing will: D – DIVORCE A – AFTER-BORN children M – MARRIAGE of the testator N – NO CONTEST CLAUSE breach C – CY PRES of charitable bequests A – ADVANCEMENT of a bequest R – RENUNCIATION by a beneficiary L – LAPSED legacies (but always consider NY’s Anti-Lapse Statute) A – ADEMPTION or abatement W – WRONGFULLY killing the testator

6) If you can BRA²G IT, J.P., you’ll increase your right of election: B – Jointly-held U.S. savings BONDS R – 50% of decedent’s RETIREMENT plan A – Shareholder AGREEMENTS entered into after the marriage that restrict sale or testamentary disposition of testator’s closely-held corporate stock A – ANNUITY payments surviving decedent’s death G – GIFTS causa mortis I – INTER VIVOS gifts, even to charity, exceeding $14,000 if made within the one year prior to the testator’s death (absent written waiver by other spouse) T – Pre- or post-marriage TOTTEN trust bank accounts J – Post-marriage JOINTLY-HELD bank accounts, stock brokerage accounts, or jointly- held real or personal property, but only to the extent that consideration was furnished by the decedent P – PAY on death securities

© 2015 Pieper Bar Review 2 7) A beneficiary that uses I-DROPS is deemed to predecease the testator: I – INTERROREM clause breach D – DADS decree R – RENOUNCES O – Death within ONE hundred and 20 hours from testator’s death P – PREDECEASES testator S – SLAYS the testator

8) AL IS can use the anti-lapse statute: ANTI-LAPSE  ISSUE or SIBLING of testator

9) A DADS judgment [Divorce, Annulment, Dissolution, or Separation Judgment] impliedly revokes the survivorship interest of the former spouse named in TRIP JAW:

1. A TOTTEN trust 2. A REVOCABLE lifetime trust 3. A life INSURANCE policy 4. A PENSION plan (if not inconsistent with federal pension plan law) 5. A JOINTLY held realty or a joint bank account 6. A power of ATTORNEY 7. A WILL

10) A killer is permitted to acquire property from the victim’s estate if the killing was in SIN: S – Done in SELF-DEFENSE I – The killer was INSANE at the time of the homicide N – The homicide was accidental (NEGLIGENT homicide)

11) DIE rights are defeated by DAVIS: D – Wrongful DEATH proceeds from the other spouse’s death I – INTESTATE share where the deceased spouse had no will E – Right of ELECTION against the deceased spouse’s will

D – A DAD decree: DIVORCE ANNULLED marriage DISSOLVED marriage A – ABANDONMENT by the surviving spouse without the other spouse’s consent, which continued until the spouse’s death V – A VOID marriage (bigamous or incestuous) I – The surviving spouse, as a plaintiff, had earlier obtained an INVALID DAD decree outside of NY S – The testator obtained a SEPARATION judgment against the surviving spouse, based on the surviving spouse’s fault

FAMILY EXEMPTION: EPTL § 5-3.1

Exempt property passes outside of the estate and is not considered part of the estate for intestacy or right of election purposes. Exempt property cannot be claimed by the decedent’s judgment creditors. Exempt property passes directly to a surviving spouse, or, if there is no surviving spouse, to children under the age of 21. EPTL § 5-3.1. In that regard, the following property is not an asset of the estate but vests in the surviving spouse or children:

1. All housekeeping items, clothing of the decedent, computers, musical instruments, electronic devices, clothing, furniture, appliances, and jewelry not to exceed $20,000. This does not include items used exclusively for business purposes.

Also, if jewelry was a specific bequest in the testator’s will, then it is not considered exempt property.

2. Videotapes, discs, software, religious items, pictures, and books not to exceed $2,500;

3. Cash or other personal property not to exceed $25,000 (but only after payment of funeral expenses);

4. One of the decedent’s cars or the value thereof not to exceed $25,000 net value; and

5. Domestic and farm animals, feed for 60 days, farm machinery, a tractor, and lawn tractor not to exceed $20,000.

If the automobile’s value exceeds $25,000, the spouse can take the car and reimburse the estate for the value exceeding $25,000. The spouse also can take the value of the car (not to exceed $25,000) in lieu of the car itself. If the testator made a specific bequest of the car, the spousal exemption will defeat that bequest, but if the car’s value exceeded $25,000, then that excess amount paid back to the estate by the spouse goes to the specific legatee.

If the decedent did not have any of the above, then no allowance can be made for the value. Exempt property (which can total up to $92,500), together with the right of election or intestate right to the first $50,000, guarantees the surviving spouse approximately $142,500.

The surviving spouse’s right to exempt property can be specifically waived in a prenuptial agreement. Matter of Marrone, 36 Misc. 3d 225 (Sur. Ct. Queens County 2012).

Where the decedent was survived by: (1 to 6)

1. Surviving spouse, no issue, but decedent left parent(s) surviving, then S.S. gets 100%.

2. S.S. and issue, then S.S. gets the first $50,000 plus ½ of the balance and the issue gets other ½ “by representation.”

3. Issue and parents but no S.S., issue gets 100% “by representation.”

4. No spouse, no issue but D’s parents and siblings are alive, then parents take 100%.

5. No spouse, no issue, no parents but siblings are alive, then siblings (or issue of predeceased siblings [nephews and nieces] under anti-lapse) take 100% “by representation.”

6. If none of the above survive, the net intestate estate is divided into two equal parts with one part passing to T’s maternal grandparent’s side and one-part to the paternal grandparent’s side of the family [in search of living heirs (grandparents, aunts, uncles, 1st cousins, but only as distant as children of first cousins)].

If there are no surviving heirs within this degree of kinship, (1 to 6 above), then the intestate estate escheats to the State of New York.

ABATEMENT: EPTL § 13-1.3

Interests in T’s estate are extinguished by abatement in the following order:

1. The intestate distributees forfeit first; then

2. The residuary legatees, “all the rest, residue and remainder I leave to X and Y”; then

3. General legacies (sums of money); also, if the source behind a demonstrative legacy (the bank account or the shares of stock) has vanished, then the demonstrative legacy is treated as a general legacy; then

4. Specific and demonstrative legacies; and then

5. The last to abate is a disposition to a surviving spouse regardless of whether it is a specific, demonstrative or a general legacy.

RIGHT OF ELECTION – 5 Examples

Scenario 1. T dies with a $900,000 net estate, which in her will she leaves 100% to Charity. If her surviving spouse elects against T’s estate, he is entitled to 1/3, i.e., $300,000. Charity will take the remaining $600,000.

Scenario 2. T dies with a $900,000 net estate, which in her will she leaves 100% to Charity. She also has a $300,000 totten trust named “T in trust for Joe.” If her surviving spouse elects against the estate, he is entitled to 1/3 of the net estate plus any testamentary substitutes. Here, the net estate ($900,000) plus the totten trust ($300,000) equals $1,200,000 against which the surviving spouse may elect. Thus, the surviving spouse’s 1/3 entitles him to $400,000.

How do we come up with the $400,000? Everyone who received under the will or from a testamentary substitute must contribute proportionately (the EPTL says “ratably”) toward the surviving spouse’s elective share based on what the individual received. Thus, Charity, which received 75% of the combined bequests and substitutes, will contribute 75% toward the $400,000, i.e., $300,000. Joe, who received 25% of the combined bequests and substitutes, will contribute 25% toward the $400,000, i.e., 100,000. Thus, the surviving spouse will take $400,000, Charity will take $600,000 and Joe will take $200,000.

Scenario 3. T dies with a $900,000 net estate. She leaves $600,000 to Charity and $300,000 to her surviving spouse. She also has a $300,000 totten trust named “T in trust for Joe.” If her surviving spouse elects against the estate, he is entitled to 1/3 of the net estate plus any testamentary substitutes. Here, the net estate ($900,000) plus the totten trust ($300,000) equals $1,200,000. Thus, the surviving spouse’s 1/3 entitles him to $400,000.

Here, the surviving spouse was not disinherited, but rather under-inherited; he received only $300,000 under the will, and is entitled to elect to get his total up to $400,000. So how do we come up with the $400,000? Because he received an outright bequest of $300,000, that’s where we get the first $300,000. Now we only need to come up with another $100,000 to make the spouse’s 1/3 election whole. As before, everyone who received under the will or from a testamentary substitute must then contribute proportionately (the EPTL says “ratably”) toward the surviving spouse’s elective share. Thus, Charity, which received 2/3 of the combined bequests and substitutes (notice here, we use the $900,000 again and leave out the spouse’s bequest because he’s already pulled it back), will contribute 2/3 toward the $100,000, i.e., $66,666. Joe, who received 1/3 of the combined bequests and substitutes, will contribute 1/3 toward the $100,000 net elective share, i.e., $33,333. Thus, the surviving spouse will take $400,000, Charity will take $533,333, and Joe will take $266,666.

© 2015 Pieper Bar Review 6 Scenario 4. T dies with a $900,000 net estate. She leaves $600,000 to Charity and $300,000 to her brother. She also has a $300,000 joint bank account with her surviving spouse. If her surviving spouse elects against the estate, he is entitled to 1/3 of the net estate plus any testamentary substitutes. Here, the net estate ($900,000) plus the one-half of the joint bank account ($150,000) because it is held with H equals $1,050,000. Thus, the surviving spouse’s 1/3 entitles him to $350,000.

Here, the surviving spouse was not disinherited, but rather under-inherited; he received nothing under the will, and only $150,000 by virtue of T’s death, and is entitled to elect to get his total up to $350,000. So how do we come up with the $350,000? Because he received $150,000 from the JBA, that’s where we get the first $150,000. Now we only need to come up with another $200,000 to make the spouse’s 1/3 election whole. As before, everyone who received under the will or from a testamentary substitute must then contribute proportionately (the EPTL says “ratably”) toward the surviving spouse’s elective share. Thus, Charity, which received 2/3 of the combined bequests and substitutes (notice here, we use the $900,000 again and leave out the spouse’s bequest because he’s already pulled it back), will contribute 2/3 toward the $200,000, i.e., $133,333. The brother, who received 1/3 of the combined bequests and substitutes, will contribute 1/3 toward the $200,000 net elective share, i.e., $66,666. Thus, the surviving spouse will take $350,000 (plus the 150 from the JBA that he pocketed right at the start), Charity will take $466,666, and Joe will take $233,333.

Scenario 5. If in any of the scenarios above, the facts stated that T left a life insurance policy for the benefit of anyone, even the surviving spouse, nothing would change in that scenario’s calculation of the elective share because life insurance policies are not testamentary substitutes. So, e.g., if in Scenario 3, T also left $100,000 life insurance policy payable to the surviving spouse, the surviving spouse would take $500,000 (the $100,000 from the insurance policy plus his $400,000 elective share), and Charity and Joe would still take $533,333 and $266,666, respectively.

I just had a meeting with Tess and Rob. Tess is the surviving spouse of Sam, who died last week. Sam and Tess had three sons. Rob is their only surviving son, and he has a son, Tot. Another son, Sol, predeceased Sam, survived by one child, Joe. Jim, the oldest child, also predeceased Sam, and is survived by two children, Jack and Jill.

Tess gave me an original will, duly executed by Sam two years ago, before Sol and Jim died, and a life insurance policy on Sam's life for $50,000, owned by Sam, and payable to Tess as beneficiary. Sam's will contains the following dispositive provisions:

First: I give my wife, Tess, $75,000, and the $50,000 I have maintained in an account at Big Bank in the name "Sam, in trust for Rob". This, together with the life insurance policy for $50,000, payable to Tess as beneficiary, should be sufficient for Tess.

Second: I give the rest of my estate to my issue.

At his death, Sam had a net distributable estate of $900,000, including the account at Big Bank, plus the life insurance policy payable to Tess. Tess has expressed disappointment at the extent of her inheritance, and she wants to know if she has any legal remedies. Rob shares his mother's disappointment, and he is willing to renounce his inheritance if that will benefit her.

1. How should the account “Sam, in trust for Rob” be directed?

2. What, if anything, may Tess do to increase her inheritance?

3. How should Sam’s residuary estate be distributed?

4. Will a renunciation by Rob benefit Tess?