A will is a written declaration of a person's wishes as to the disposition of his or her property to take effect after his or her death. It is important to have a Will to guarantee your assets are distributed according to your wishes.

A Will also names an executor, who is the individual responsible for carrying out the terms of your Will. If you have minor children, your Will can designate guardians for those children in the event both you and your spouse die.

Probate is the legal term for the process in which a Will is proven to the satisfaction of the Surrogate's Court to be the valid Last Will and
Testament of the decedent and the person named in the Will as executor is appointed.

It is important to have your Last Will and Testament drawn by an attorney to ensure that your intentions are properly stated and to ensure that your Will is formally valid and admissible to probate. There are also strict requirements which must be followed in the execution (signing) and witnessing of the Will.

A person who dies leaving a Will is said to die "testate" and a person who dies without leaving a Will is said to die "intestate". If you die without a Will, an "administrator" is appointed by the court (who performs the same duties as an executor), and your estate is distributed to your heirs as specified under New York State Law. For example, if you die leaving a surviving spouse and
children, your surviving spouse would receive $50,000 plus one-half of the balance of the estate. The other one-half would be distributed equally to your children.

The primary duties of both an executor and administrator, once formally appointed by the Surrogate's Court, are to collect and liquidate the estate assets, pay all of the legitimate expenses and debts of the estate and distribute the remaining assets to the beneficiaries according to the decedent's Will, or to the heirs entitled to inherit if there is no Will.

Assets owned by the decedent can be characterized as either "probate" assets or "non-probate" assets. Generally speaking, probate assets are those assets owned individually by the decedent and titled to the decedent alone.

Probate assets become part of the decedent's estate and are distributed by the executor to the beneficiaries named in the Will, or by the administrator to the decedent's heirs at law.

Non-probate assets include certain assets that pass by operation of law immediately upon the decedent's death, such as assets held jointly between the decedent and another individual with right of survivorship and Totten Trust
accounts held in trust by the decedent for a named beneficiary. Other non-probate assets include those that pass to a named beneficiary other than the estate, such as life insurance policies, retirement benefits and United States Savings Bonds payable upon death. An executor or administrator has no control over the
non-probate assets.

Both executors and administrators are entitled to collect commissions for serving as the personal representative of the estate. The commissions are set forth by statute and are based upon the size of the probate assets in the estate as follows:

5% of the first $100,000 in assets;
4% of the amount between $100,000 and $200,000;
3% of the amount between $200,000 and $700,000;
2 1/2% of the amount between $700,000 and $4 million;
2% for amounts above $5 million.

For example, if the size of the estate is $140,000, the commissions would be $6,600 computed as follows:

.05 x $100,000 = $ 5,000.00
.04 x $ 40,000 = 1,600.00

$ 6,600.00

It is important to note that all personal representatives must include in their gross
income all commissions paid to them from an estate.

Property received as a gift, bequest or inheritance is not included in your income
for tax purposes. However, if property you receive in that manner later produces income, such as interest, dividends, rental, etc., that income is taxable to you.

It is the executor's or administrator's duty to file the following tax returns on behalf of the decedent and/or the estate:

1. Final personal income tax returns for the decedent: The personal representative must file the appropriate final income tax returns for the decedent for the year of death and any returns not filed for preceding years. If the decedent left a surviving spouse, the fiduciary (executor or administrator) and the surviving spouse can generally file a joint return for the decedent and the surviving spouse.
   
2. Federal and State Fiduciary Income Tax Returns for the estate: Generally speaking, any income generated on a decedent's assets (such as interest, dividends, rentals, capital gains and losses) after the date of death is required to be reported on a federal and state fiduciary income tax return for the estate. When an individual dies, their estate becomes a separate entity for taxation purposes. It exists until the final distribution of its assets to the beneficiary.

   The fiduciary income tax returns are required to be filed when the estate generates $600 or more of gross income during a tax year. On the returns, the estate is allowed an annual exemption deduction of $600 in figuring its taxable income. In addition, the expenses of administering an estate, such as attorney fees and fiduciary commissions, can be deducted on the return.

3. Federal (United States) and State Estate Tax Returns: It is necessary to file an estate tax return for the estate of every U.S. citizen or resident whose "gross estate" plus adjusted taxable gifts made during the decedent's lifetime, is more than $1.5 million.

The gross estate of a decedent include both the probate assets owned individually by the decedent, in addition to the non-probate assets, such as assets owned jointly by the decedent and another individual, assets payable to a named beneficiary, etc. Also included are any gifts or transfers made during the decedent's lifetime for which a gift tax return was required to be filed. Currently, an individual can gift or transfer up to $11,000 each to any number of individuals per taxable year without any gift tax consequences.

Once the executor or administrator has been formally appointed by the court, the estate must remain open in Surrogate's Court for a periodof at least seven months from the date of appointment. Those seven months give any creditors of the decedent the right to file claims against the estate for that period of time.

If the person representative were to close the estate or distribute any estate assets to the beneficiaries before that period of time expires, the personal representative could be held personally obligated for any legitimate debts of the estate or the decedent.

Once the seven months have expired, the personal representative must prepare an accounting of his/her receipts and disbursements and the proposed distribution to the beneficiaries. The accounting can be accomplished through either a formal judicial settlement with Surrogate's Court involvement, or an informal agreement between the executor/administrator and the beneficiaries. The informal agreement is generally used where all parties are competent adults who can sign a binding release, particularly if they are all relatives and there is no dispute.

The Surrogate's Court charges a filing fee when an estate is initially opened, which is based upon the total value of the probate assets in the estate. Those filing fees range from $45.00 for an estate in which there is less than $10,000 in probate assets, to $1,250.00 for an estate in which the assets total $500,000 or more.

There are also miscellaneous filing fees charged by the court if there are additional proceedings necessary during the course of the estate, such as the appointment of a trustee named in a decedent's will, etc.

There is a simplified procedure known as a "Small Estate Proceeding" or "Voluntary Administration" which may be available when the decedent dies
leaving personal property (not real estate), such as bank accounts, vehicles, shares of stock, etc. having a total value of $20,000 or less.

The person appointed to administer a small estate is referred to as a "voluntary administrator" and is usually the executor named in the decedent's Will, or the decedent's surviving spouse or child, if there is no Will.Unlike an executor or administrator, the voluntary administrator does not have unlimited control over the decedent's estate, but only limited authority to liquidate the specified assets, pay any expenses and distribute the remaining funds according to the decedent's
Will or to the decedent's heirs. A voluntary administrator is not entitled to collect
commissions.

In general, a trust is a legal instrument by which an individual gives control over his or her assets to another (the "trustee") to disburse according to the instructions of the individual creating the trust (the "settlor"). The individual creating the trust designates the beneficiaries, the trustee(s), the purposes for the trust, and provides the funding for the trust.

The trustee is the legal owner of the trust assets. Trustees can be individuals or corporate. The trustee is subject to a high duty of care and responsibility, and must act for the benefit of the trust rather than his or her own personal interests. The trustee is responsible for the proper and prudent investment of the assets of the trust.

The "beneficiary" of the trust is the person or entity for whose benefit the assets are held.

There are a number of different types of trusts, some of which are the following:

1. "Intervivos" trusts : These are trusts which you create during your lifetime. The trust can terminate on your death or during your lifetime. A trust which you create during your lifetime can "pour over" into another trust in your Will so that it continues even after your death.

   An intervivos trust can be either "revokable", meaning that the creator can revoke and stop it, or "irrevocable", meaning that the creator cannot terminate it; it goes on without control by the creator once it has been made.

   If the intervivos trust is irrevocable it can save you estate taxes. An intervivos trust can also save on income taxes, because they will be paid either at the trusts' rate or at the beneficiaries' rate.

2. "Testamentary" trusts : These are trusts created in your Will and come into effect only upon your death. They are contained in your Last Will and Testament, and can be changed or eliminated if you decide to change your Will. The property in the trust remains yours during your lifetime. However, the trust property is taxed (for estate tax purposes) along with the rest of your estate.

A "Living Will" is a legal document used to declare that you do not wish to be kept alive by extraordinary means if you have an incurable or irreversible condition that is likely to cause your death within a relatively short period of time. The Living Will also directs that nutrition and hydration should be withheld or withdrawn unless necessary for your comfort or to alleviate pain. In most instances, the patient who needs to rely on the Living Will is unable to express his or her wishes to the doctor, by reason of physical or mental incapacity. The "Health Care Proxy" fills this gap.

A "Health Care Proxy " is signed at the same time as the Living Will, and names a person to make medical decisions for you when you are unable to do so. The Proxy goes into effect when the attending physician determines that the patient lacks the capacity to make health care decisions. The agent has the full authority to make health care decisions on behalf of the patient. The agent's responsibility is to act in accordance with the patient's best interests.