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Category Archives: Wills & Trusts

Demystifying Wills And Trusts

“I’m not afraid of death; I just don’t wanna be there when it happens,” said Woody Allen.

On the matter of Wills 

And how right he is. When a family member leaves this world, further than the loss of their kin, their legacy could be one fraught with legal battles, conflict, mess, and confusion, coupled with mourning. 

To avoid such regrettable outcomes, one can communicate in a written document how they wish for  their property (called an estate) to be divided upon death. This document is called a will

In the absence of a will, a court will enforce the state laws pertaining to intestacy to the estate, that is to say the division of the estate when there is no will.  

In New York, the estate is generally transferred first to a spouse and/or children, then to parents, and then to siblings. If no living relatives can be found to the decedent, the estate may even pass to the state. 

There are several legal requirements for a will to be considered valid and enforceable, and therefore effective. 

Firstly, the person making the will, the “testator,” has to be of legal age (18 years old), and intend for the legal document to be a will as defined above. 

The testator must also be of “sound mind,” when he signs the document. For the courts, that means that he must be able to name the persons that will benefit from the will and understand the nature of the property that would be passed on to them.

Finally, the document itself has to be witnessed by two disinterested individuals (people who do not have a stake in the will). Albeit not mandatory, it is also recommended that a notary executes the document thereafter, as it makes the will a “self-proving instrument,”. Self proving instruments have additional protections, and such wills are more easily probated (enforced) in court. 

On the matter of Trusts

After we speak of wills and estates, we should also speak about trusts. A trust is an agreement wherein the grantor (that is, the creator of the trust) gives legal rights to the trustee (that is, the person who manages the trust) for the benefit of the beneficiary (that is, the person who receives a benefit from the trust). The reason that wills and trusts go hand-in-hand is because the assets held in trust are not included in the estate. The trust assets transfer by operation of law as indicated in the trust instrument—similar to how a life insurance policy or bank accounts payable upon death give entitlement to the beneficiary named.

On the one hand, for example, when a home property is devised in a will, the will must be probated to assure validity—the common adage is, “where there is a will, there is a probate.” That simply means that the executor (that is, the person named in the will to make the distributions according to the will) will need to go to court to probate the will. Then, the executor can distribute the home asset.

On the other hand, when a home property is held in trust, the trustee is empowered to give the property to the beneficiary without court supervision. This process is similar to recording the deed and/or mortgage when buying a home. Therefore, there is a private and efficient nature in the latter transfer.

References

¹Estate, Power, and Trusts Law for the State of New York, Article 3

²In re Delmar’s Will, 243 NY 7, 14 (1926) (“The mind of testatrix as to its thinking and judging powers at the time of executing the instrument proposed for probate must be clear enough to be capable of interfering with the disposition of the estate by a prior will with some degree of judgment and discretion. The testatrix must retain sufficient active memory to collect in her mind without prompting the necessary elements of the business to be transacted and to hold them a sufficient length of time to understand their relations to each other and to form some rational judgment in relation to them.“)

 ³Lewis v Lewis, 11 NY 220, 225 (1854) (“the attesting witnesses must be informed at the time and by the testator, or in his presence and with his assent, and have a knowledge of all the facts necessary to a due execution and publication of the will, and to which they are called to attest.”)

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