May 16

Estate Planning for Digital Assets in New York

Starting today you may wish to start planning for your digital assets. We live in a world where a decedent can more often that not have a tremendous amount of digital property: an email account on Gmail, a Youtube channel with a multitude of videos, a successful Yelp page for their business, a personal and business Twitter account, a personal and business Facebook account, an Instagram account, a PinInterest account and whatever else comes next in the expanding internet world we live in. The numbers are truly mesmerizing. In their fourth quarter results of 2014, Facebook reported 1.393 billion monthly active users.(1) Thirty-one percent of all United States senior citizens use Facebook.(2) Twenty-six percent of internet users have a Instagram account.(3) Twenty- three percent have a Twitter page.(4)

At first, it was hard to wrap my own head around thinking about these digital assets as true assets. Where is the hard value? Besides a rare Youtube channel that may be bringing in revenue, the value may not always be monetary when it comes to a digital asset. For example , an executor may want to memorialize a Facebook page to let the decedent’s friends know she has passed. There may be that tweet on Twitter that agonizes the decedent’s daughter every time she looks at it and she begs you to take it down. Maybe there is that lost email the decedent’s son can’t find, that he knows would bring him peace just to read it. Yet, the hard value does exist in the digital age, i.e. a business owner may have kept all their financial records in the cloud. The situations are countless.

So what happens to all this growing information when someone dies?

The Law Today

Currently if a New York decedent fails to plan for her digital assets, they are stuck in the vortex of attempting to deal with each provider that holds their digital information. Remember that click-through terms of service agreement you agreed to when setting up your Gmail or Facebook account? That is the one that governs.

Executors aren’t automatically granted power to go in and disable, reconfigure, or memorialize accounts in New York. Without a login and password for the account, attempts may be futile. Even with a login and password, you are probably going to run afoul of the terms of service agreement that the decedent electronically signed.

The Smart Solution

Across the United States the question as to what power an estate fiduciary has when it comes to digital property is slowly being concretely answered. At the time of this article, 21 states have enacted the Uniform Fiduciary Access to Digital Assets Act (UFADAA). The purpose of the UFADAA is to vest fiduciaries with the authority to access, control, or copy digital assets, while respecting the privacy and intent of the account holder.(5) Currently, New York does not have that law, and an executor, administrator, or trustee is still held at the whim of the account holder, i.e. Gmail.

New York does have proposed legislation on the table which is currently under review. It comes as an update to New York Estates Powers and Trusts Law (EPTL):

S 11-1.12 ACCESS TO DECEDENT’S ELECTRONIC MAIL, SOCIAL NETWORKING AND/OR
MICROBLOGGING ACCOUNTS
(A) THE EXECUTOR OR ADMINISTRATOR OR AN ESTATE OF A DECEASED PERSON
WHO WAS DOMICILED IN THIS STATE AT THE TIME OF HIS OR HER DEATH SHALL
HAVE THE POWER TO TAKE CONTROL OF, CONDUCT, CONTINUE OR TERMINATE ANY
ACCOUNTS OF THE DECEDENT ON ANY SOCIAL NETWORKING WEBSITE, ANY MICROB-
LOGGING OR SHORT MESSAGE SERVICE WEBSITE OR ANY EMAIL SERVICE WEBSITE.
(B) ANY SERVICE PROVIDER OF A SOCIAL NETWORKING WEBSITE, A MICROBLOG-
GING OR SHORT MESSAGE SERVICE WEBSITE OR AN EMAIL SERVICE WEBSITE SHALL
PROVIDE TO THE EXECUTOR OR ADMINISTRATOR OF SUCH ESTATE ACCESS TO ANY
ACCOUNT HELD BY THE DECEDENT UPON RECEIPT BY THE SERVICE PROVIDER OF:
(1) A WRITTEN REQUEST FOR SUCH ACCESS MADE BY THE EXECUTOR OR ADMINIS-
TRATOR, ACCOMPANIED BY A COPY OF THE DEATH CERTIFICATE AND A CERTIFIED
COPY OF THE CERTIFICATE OF APPOINTMENT AS EXECUTOR OR ADMINISTRATOR; AND
(2) AN ORDER OF THE COURT OF PROBATE WITH JURISDICTION OVER THE ESTATE
OF THE DECEDENT DESIGNATING THE EXECUTOR OR ADMINISTRATOR AS AN AGENT
FOR THE DECEASED SUBSCRIBER AS DEFINED IN THE ELECTRONIC COMMUNICATIONS
PRIVACY ACT, 18 U.S.C. 2701, ON BEHALF OF HIS OR HER ESTATE, AND ORDER-
ING THAT THE ESTATE SHALL FIRST INDEMNIFY THE SERVICE PROVIDER FROM ALL
LIABILITY IN COMPLYING WITH SUCH ORDER.
(C) NOTHING IN THIS CHAPTER SHALL BE CONSTRUED TO REQUIRE SUCH SERVICE
PROVIDER TO DISCLOSE ANY INFORMATION IN VIOLATION OF ANY APPLICABLE
FEDERAL LAW.

We will see where it goes, but this would be a tremendous step in the right direction for any future appointed executor or administrator of an estate.

What can you do in the meantime?

Currently I advise my clients to take these simple steps in order to help ease the transition of the data when the time comes:

1) Make a list of all accounts and passwords. Keep it in a secure place.
2) Backup your important digital data on a schedule to a separate, secure hard drive or other secure device.
3) And lastly it is imperative that a person explicitly authorize the companies that hold their electronic data to release that data to their fiduciaries during incapacity and after their death. This would be done through their estate planning documents, including, but not limited to any wills, trusts, and power of attorney.

 

1. http://expandedramblings.com/index.php/by-the-numbers-17-amazing-facebook-stats/
2. http://www.pewinternet.org/2015/01/09/social-media-update-2014/
3. http://www.pewinternet.org/2015/01/09/demographics-of-key-social-networking-platforms-2/
4. http://www.pewinternet.org/2015/01/09/demographics-of-key-social-networking-platforms-2/
5. http://www.digitalpassing.com/2014/07/16/uniform-fiduciary-access-digital-assets-act-ufadaa/

April 24

Dying without a Will in NY: Administration and Intestacy (EPTL § 4-1.1)

Intestacy Flow ChartWhen a person who lives in New York dies without a will, the state law of intestacy applies. This means that an administration petition must be brought and since there is no will stating the decedent’s last wishes, the law dictates who gets what. Although the proceedings are similar, there are some differences. Some are superficial: what people refer to as “beneficiaries” during a probate proceeding are actually distributees in an administration proceeding, the former executor is now called an administrator. Yet, in an administration proceeding the administrator is appointed by law, specifically Surrogates Court Procedure Act (SCPA) 1001, “Order of Priority for Granting Letters Administration”. This is an invitation for fiduciary appointment contests. A common example comes when the surviving spouse has predeceased and there are multiple children. When these children oftentimes cannot come to an agreement on who should be appointed, estate litigation ensues and estate litigation is not inexpensive. The easy remedy for this is creating a will and appointing an executor and successor executor, but oftentimes it is too late for that antidote. Regardless, these things happen and it is not the end of the world when they do. Everything can be dealt with.

This law of intestacy in New York is codified in Estate Power and Trust Law (EPTL) § 4-1.1:

“The property of a decedent not disposed of by will shall be distributed as provided in this section. In computing said distribution, debts, administration expenses and reasonable funeral expenses shall be deducted but all estate taxes shall be disregarded, except that nothing contained herein relieves a distributee from contributing to all such taxes the amounts apportioned against him or her under 2-1.8. Distribution shall then be as follows: (a) If a decedent is survived by:

(1) A spouse and issue, fifty thousand dollars and one-half of the residue to the spouse, and the balance thereof to the issue by representation.

(2) A spouse and no issue, the whole to the spouse.

(3) Issue and no spouse, the whole to the issue, by representation.

(4) One or both parents, and no spouse and no issue, the whole to the surviving parent or parents.

(5) Issue of parents, and no spouse, issue or parent, the whole to the issue of the parents, by representation.

(6) One or more grandparents or the issue of grandparents (as hereinafter defined), and no spouse, issue, parent or issue of parents, one-half to the surviving paternal grandparent or grandparents, or if neither of them survives the decedent, to their issue, by representation, and the other one-half to the surviving maternal grandparent or grandparents, or if neither of them survives the decedent, to their issue, by representation; provided that if the decedent was not survived by a grandparent or grandparents on one side or by the issue of such grandparents, the whole to the surviving grandparent or grandparents on the other side, or if neither of them survives the decedent, to their issue, by representation, in the same manner as the one-half. For the purposes of this subparagraph, issue of grandparents shall not include issue more remote than grandchildren of such grandparents.

(7) Great-grandchildren of grandparents, and no spouse, issue, parent, issue of parents, grandparent, children of grandparents or grandchildren of grandparents, one-half to the great-grandchildren of the paternal grandparents, per capita, and the other one-half to the great-grandchildren of the maternal grandparents, per capita; provided that if the decedent was not survived by great-grandchildren of grandparents on one side, the whole to the great-grandchildren of grandparents on the other side, in the same manner as the one-half.

(b) For all purposes of this section, decedent’s relatives of the half blood shall be treated as if they were relatives of the whole blood. (c) Distributees of the decedent, conceived before his or her death but born alive thereafter, take as if they were born in his or her lifetime. (d) The right of an adopted child to take a distributive share and the right of succession to the estate of an adopted child continue as provided in the domestic relations law. (e) A distributive share passing to a surviving spouse under this section is in lieu of any right of dower to which such spouse may be entitled”

The statute is wordy, but it’s all there. In most cases the estate will pass to the spouse and children, but everyone’s situation is different. Life is not static though. Also see my previous post here: the statutory results of EPTL 4-1.1 may not be what you would have wished.  Any questions regarding your specific situation can be asked in my Contact page.

December 4

“I received a NY Notice of Probate in the mail. What is this?”

Once every other week I receive a phone call from a concerned party about receiving a Notice of Probate in the mail. We all know the real question that sparks this phonecall, but I’ve broken it down into five parts for added suspense.

I. What is a Notice of Probate?

Notice of Probate is explained in Surrogate’s Court Procedure Act (SCPA) § 1409. (1) Essentially it is a statutory formality that puts certain classes of people on notice that the decedent has died and that your name is listed somewhere in the will.

So, the question you really called for? Yes. You are named in the will if you receive a notice of probate. Does that mean what you want it to mean? Eh, please read “named” as literally as possible.

II. What do the terms that appear on the notice of probate actually mean?  Legatee, devisee, trustee, guardian, executor, testator and successor terms defined. (2)

For the truly inquisitive I’ve placed some working definition of these terms in the footnotes. Most of them are archaic words that the law has never been able to let go of, and probably never will. I like to sum it up as simply as possible: legatees and devisees get stuff and trustees/guardians/executors do stuff. Don’t worry, the law doesn’t expect the doers to work for free though. They are eligible for compensation also. See SCPA §§ 2307, 2308, 2309.

Please note that on the Notice of Probate it will state what title you have, so you can begin to formulate a hypothesis for the most important question.

III. Am I going to receive money?

And here is the let down: it depends.

First off, is the estate solvent? Are there debts and liabilities that essentially negate the estate? If the debts plus the costs of administration are greater than the estate’s assets then no, you are not going to receive any money.

Secondly, what are you named in the will? There is no requirement that the will be sent along with a Notice of Probate, therefore you will probably be in the dark as to what the will states. It is impossible to know if you are receiving money without a copy of the will. I can play the “if this then that” game with you for 15 minutes, but we still won’t know for sure . You could be named solely as a successor executor. If that is the case you are probably not going to see any money. This leads up to our next question.

IV. Can I see a copy of the will?

Yes. A will is a public document that is accessible and it is possible to obtain a copy.

V. What do I do next?

Again this is another one of those questions where it just plainly depends. For example, if you are a specific legatee, you may just have to wait for Letters Testamentary to be issued to the executor and your bequest to be distributed. Feel free to contact me with any other questions.

 

Anthony Nigro is a Surrogate’s Court practitioner that primarily works out of the following counties: Westchester, Bronx, New York, Kings, Queens, Rockland, Orange, and Dutchess. Appointments can be set up by telephone, email or through his “Contact” page.

 

(1) “Before letters are issued there shall be filed in the court a notice…that the will has been offered for probate or probated, as the case may be. The notice…shall state whether such person is named or referred in the will as legatee, devisee, trustee, guardian or substitute or successor executor, trustee or guardian…”

(2) legatee: any person designated to receive a transfer by will of personal property (SCPA § 103.33).

devisee: any person to whom real property is transferred by will. (SCPA § 103.13).

trustee: the person appointed, or required by law, to execute a trust (Blacks Law Dictionary).

guardian: A guardian is a person lawfully invested with the power, and charged with the duty, of taking care of the person and managing the property and rights of another person, who, for some peculiarity of status, or defect of age, understanding, or self-control, is considered incapable of administering his own affairs. (Blacks Law Dictionary).

testator: One who makes or has made a testament or will; one who dies leaving a will. (Blacks Law Dictionary).

executor: A person appointed by a testator to carry out the directions and requests in his will, and to dispose of the property according to his testamentary provisions after his decease (Blacks Law Dictionary).

successors: are those named in a will that will take the place of the initial parties named due to incapacity or death.

November 16

What Happens When You Die Without a Will in NY or How I Learned to Stop Worrying and Love the Idea of a Will

Luckily, and unluckily for some, the state of New York has devised a law that states exactly what happens to a person’s estate when they die without a will, or intestate as we lawyers like to call it. It is codified in EPTL § 4-1.1. It’s easy not to be familiar with this section of the law, because, let’s face it, we only die once.

It states, in part:

“Distribution shall then be as follows:
(a) If a decedent is survived by:
(1) A spouse and issue, fifty thousand dollars and one-half of the residue to the spouse, and the balance thereof to the issue by representation.”

Please note that there are six other distribution mandates when the above does not apply, but for now I just want to focus on this one. At first blush it seems to be ok. You probably would have left everything to your immediate family anyway right, so what’s the big deal?

Let’s specify some more:

You were a middle aged, middle/upper-income earning man with two children and a wife who you were lucky to have been living in beautiful Westchester, NY getting by working 10 hours a day to support your property taxes. You had your children later in your thirties because you had been so focused on work and then when 52 hits so does the big one- the big heart attack that is. You leave your wife with a twelve and fourteen year old, $450,000 in the bank and a mortgage to pay. And you never saw Paris.

So, by the letter of the law the first $50,000 goes to your wife. That’s seems reasonable. Then she takes half of the rest- $200,000. Ok, not bad.

And then what: your two children, minors at the time, inherit $200,00 equally? What? Why? Of course this raises more questions: why do I want my minor children inheriting money that my wife needs to raise them? You don’t. Then more practically: how does the Surrogate’s court actually give my minor children $100,000 each? The specifics can be summed up to one word: expensive. Oh and time consuming. So in a situation where your family needs money now and doesn’t want to spend any of it needlessly, they will be doing the opposite.

A Last Will and Testament in New York is, in my mind, an effective insurance policy that not only can direct your wishes and desires, but it can end up saving your family time and money when life is at its hardest.