Administration Proceedings in Surrogate s Court Antar P. Jones, Esq. New York State Bar Association Fall 2014 Seminar, Probate and the Administration of Estate, November 19, 2014 1 What is Intestate Administration? A procedure in Surrogate s Court for collecting and distributing assets of an individual who died whose property is greater than $30,000. Amount does not include non testamentary assets. If under $30K then use a simpler voluntary administration proceeding. Generally, a person interested in the estate petitions the Court for letters of administration. Authority from Court to collect assets, pay debts and distribute the estate as a fiduciary. Generally, one uses a petition form provided by the Court. Judicial administration is generally not required if only real property in estate. Matter of Aleskas, NYLJ., Dec. 9, 2002. But an administration proceeding may be advisable/required by title company. 2 1
Bodies of Law Governing Estate Administration in New York The Surrogate s Court Procedure Act (SCPA) Concerns the procedural law of estate administration. Estates, Powers and Trusts Law (EPTL) Concerns the substantive issues affecting estates. Uniform Rules for Surrogate s Court Notably Rule 207.16. Close review of these rules are a must before acting as counsel for petitioner. Case Law Research: Don t forget cases in New York Law Journal. 3 Basics: Things You Will Definitely Need as Counsel to a Petitioner 1. A death certificate of decedent. 2. A paid funeral bill. 3. Filing fee for the petition. As much as $1,250.00 for estates $500K and over. SCPA 2402. 4. Probably, $ to file a bond. Discussed later. 5. When discussing the matter with your client, you will need to draft a as complete as possible family tree diagram ASAP. 6. Find out ASAP what decedent owned, what were decedent s debts and their monetary values. 4 2
First Things You Should Consider as Counsel to Petitioner Flat fee vs. Hourly Rate? Generally, it is difficult to judge how much work will go into an administration proceeding at first glance. However, usually estates with big families will take more time and will have more costs. The more distributees who are NY residents, the more costly the administration proceeding will be. The general principles that govern administration proceedings are Notice and Opportunity to Be Heard. Who is the petitioner? Criminal record? Drug use? Shady? Working in Estate Admin, you re gonna be a sleuth Fun! Your goal: petitioner to get letters of administration. 5 Distributees Decedent s distributees and their distributive share governed by EPTL 4 1.1. If spouse and issues survived, then spouse gets $50K plus ½ of the estate, issue gets rest by representation. If spouse and no issue, spouse takes all. But, parents are distributees in wrongful death actions. EPTL 5 4.4. If issue and no spouse, issue take all by representation. Terms to know concerning how distributees received their share of property: Representation. EPTL 1 2.16. Per capita distribution. EPTL 1 2.11. 6 3
Distributees, continued If one or both parents and no spouse or issue, parents take all. If issue of decedent s parents and no spouse, issue or parent, then the issue of decedent s parents take all by representation. If decedent is survived by one or more grandparents or issue of grandparents and no spouse, issue, parent or issue of parents, then the grandparents or their issue are distributees. 7 Distributees, continued (the nitty gritty) First cousins once removed take only where there are no closer relatives. Matter of Shumavon, 260 AD 2d 140 (2d Dept 1999). Common law spouses: a common law marriage valid in another jurisdiction will be recognized as valid in New York for determining whether a spouse is a distributee. Same sex marriages legal in New York, effective July 24, 2011. Effective date determines whether using old or new law. But, if same sex marriages valid in other jurisdiction, valid in NY. Half blood relatives: treated as full blood relatives. Adopted children take in same manner as natural children. But child may take from natural parent if adopted by a relative, as long as adopted parent was a descendant of adoptee s natural grandparent. After born children take as if they were born during decedent s life. 8 4
Distributees, continued (the nitty gritty, vol. 2) Non marital children take if: There has been a judicial order of filiation; The father has signed an instrument acknowledging paternity; Paternity is established by clear and convincing evidence; or DNA test for father, and other evidence establishes paternity. Persons disqualified as distributees: Murder or wrongdoing. Surviving spouse: If a final decree or divorce judgment, annulment, declaration of a nullity, or dissolution of marriage on grounds of absence. If decree or judgment not recognized in NY, surviving spouse still won t take. A separation judgment does not make surviving spouse ineligible. Failure to support. Parents who failed or refused to provide support to child under 21. 9 Identifying and Locating Distributees If decedent is survived by only one distributee, or where the relationship of distributees is grandparents, aunts uncles, first cousins, or first cousins once removed, then proof must be submitted to establish (i) how each distributee is related to the decedent and (ii) that no other persons of the same or nearer degree of relationship survived the decedent. Uniform Rule 207.16(c). Unless otherwise allowed by Court, proof must be submitted in affidavit form of a disinterested person, ex. a neighbor. If only one distributee survived, proof may not be given by spouse of children of the distributee. Family tree diagram (provided by court) required unless the only distributee is spouse or child of the decedent. 10 5
Identifying Distributees Interview decedent s relatives, friends and neighbors, doormen, landlord, co workers. Review decedent s address book. A family bible. Check Surrogate s Court records distributees may be listed as interested parties. Check birth and death certificates. Go to family s funeral parlor and check funeral books. Check cemetery records. Contact all leads personally, by phone, letter, or e mail. Keep good track of all correspondences and notes! 11 Locating Distributees Once distributees are identified, the petitioner must diligently attempt to locate them. One must find identities of distributees before the estate is distributed. If distributees not found at the time of an accounting, process will have to be served upon the unknowns by publication and their share will likely be deposited with the Commissioner of Finance until they commence a proceeding to withdraw it. Tip: Finding date of birth or SSN s can aid in finding lost heirs. Look in government sources e.g., DMV and armed forces records. Conduct a Lexis Nexis search if you have the name of the heir. 12 6
Affidavit of Due Diligence If a petitioner alleges that the identity or the whereabouts of an individual who must be served with process is unknown, the affiant must file and affidavit of due diligence. Uniform Rule 207.16(d). Affidavit should show due diligence re: Examination of personal effects. Inquiry of relatives, neighbors, friends, former business associates, employers and post office and financial institutions. Correspondence to the last known address of missing distributees. Correspondence or telephone calls to, or internet searches. Examination of the DMV and board elections of state or county of the last known address of the person. Success is not the goal, just a diligent search as defined by Court. 13 Serving as Administrator, Eligibility and Priority for Letters Letters will be issued to persons specified in SCPA 1001. Persons must be adult, competent and distributees, or else Public Administrator will serve. Surrogate has no discretion unless equal priority. Persons must be eligible and willing. 14 7
Serving as Administrator, Eligibility and Priority for Letters, con t The order of priority is as follows: Surviving spouse. A disqualified spouse can serve if as guardian of a child. Children Grandchildren Mother or father Brothers or sisters Any other distributee, preference given to one w/largest share. If issue of grandparents other than aunts and uncles, public administrator will serve. If distributee post deceased, then fiduciary for estate can serve. If infant distributee, guardian, etc. can serve, even if corp. fiduciary Upon consent of all distributees, distributee or non distributee can serve. 15 Serving as Administrator, Eligibility & Priority for Letters, con t, II When letters are not granted via foregoing provisions & not made upon consent, then to: 1. Public Administrator or chief fiscal officer of county; 2. The petitioner, in the discretion of the court, or 3. To any other person. Letters of administration may be granted by court in a case where a will has been filed, proceedings for probate have not been instituted w/i a reasonable time or have not been diligently prosecuted. 16 8
Ineligible Persons Letters to a natural person or a person authorized by law to be a fiduciary, except: a) An infant b) An incompetent c) A non domiciliary alien, provided can serve if serves together with a co administrator who is a NY resident. The NY resident doesn t need to be interested in the estate. d) Felons e) Persons incompetent by reason of substance abuse, dishonesty, improvidence, want of understanding, or other unfitness in court s discretion. 17 Method of Qualifying as Administrator Must file an oath swearing that he/she will honestly fulfill the duties and account for all property he/she receives as administrator and that clerk of the court may act as service of process if administrator cannot be found after diligent search. Oath must be notarized 18 9
Bond Administrator must procure (and file) a bond to secure the rights of persons interested in the estate. Do so by going to a bond company, usually a bonding agent. Credit score an issue. Bonds cost money. Probably $2K to secure $1,500,000 in property. If all distributees consent, then the court may dispense with the bond or limit the amount. The value of bond is generally limited to value of personal property received plus 18 months in rent from real property. SCPA 801. No bond if value of the estate is under $30K. If the only asset in the estate is a cause of action, court may dispense with the bond requirement or issue restrictive letters. 19 How to Commence an Administration Proceeding Commenced by filing a petition for letters. Will need additional documents: Any divorce or adoption papers, etc. Death certificate of decedent. Affidavit of heirship, if required. Citation, if applicable; and/or waivers of service of process Statement of attorney/administrator, if applicable. Filing fee. See SCPA 2402 for exact amounts. Copy of a paid funeral bill. (If can t find one, call up the funeral parlor). Look at checklist at nycourts.gov/forms/surrogate s court/ administration proceedings. This is you guide. Don t be afraid to go to the clerk in admin dept and ask questions. 20 10
How to Commence an Administration Proceeding, II Once a complete application is filed, court will issue a citation. (You will draft the citation and the court will sign and stamp it, and enter a return date). The attorney will appear at the return date on the citation and if service is improper or incomplete, the matter will be adjourned and a supplemental citation will be issued. If jurisdiction is complete and there are no objections, the file will be marked for decree. 21 Drafting the Petition The Petition for letters of administration can be found on nycourts.gov/forms/surrogate s court/administration proceedings. 1 of the petition asks for info of petitioner. If the sole petitioner is an attorney, you must state in a statement that: 1. Fiduciary is an attorney; and 2. Whether the fiduciary or law firm will act as counsel. The attorney/fiduciary is required to later account and disclose commissions. Uniform Rule 207.52. 22 11
Drafting the Petition, II 2 concerns info regarding the decedent. You will enter the relevant info found on the death certificate. BTW: funeral director will get the first death certificates. Try to get at least 3 of them (from the funeral director). You may need more than one original in the future. They are $15 each. They can be purchased on office of vital records website. (Also, make sure the info on the death certificate is correct). 23 Drafting the Petition, III 3 concerns assets of the estate. Only testamentary assets. Don t include non probate assets. Don t include joint assets. The value of the assets is going to affect your filing fee. 6 concerns which distributees survived decedent. Write No until a distributee exists. Indicate number of distributees in a category. Then place an X in the box in all subsequent categories. Example: if spouse and three children survived, place a 1 for spouse, a 3 for children and the subsequent boxes place an X. 24 12
Drafting the Petition, IV 7(a) list all distributees who are adult, competent, not otherwise under disability. 7(b) list all infants, under disability, whose identity or whereabouts are unknown. 8 is for outstanding debts and funeral expenses. 25 The Citation The citation is process in Surrogate s Court. Process must be served on: All presumptive distributees. All persons in 7(a) and 7(b) of the petition who are eligible and right to letters prior or equal to π. Process must be served on infant s parent or guardian. If Infant over 14, infant served, too. Public Administrator may be cited if unknown distributees. 26 13
The Citation, II The petitioner will draft the citation, but will leave certain information blank, such as the return date. The citation will include names of all distributees. Generally, citation must be served w/i 120 days of filing petition. Time for service at least 10 dates before return date if person within NY; and 20 days if person outside NY but w/i the US; and 30 days if outside the US. Procedure for service of process and proof of service found in SCPA 307 314. Generally, NY distributees must be personally served. Non NY residents may be served by registered or certified mail, return receipt requested. Service upon unknowns is generally upon publication. Waiver of Process: waives need to serve process. SOP may be dispensed with if diligent search made. 27 The Decree Obtaining the decree is what you have been working for. Some time after the matter has been marked for decree, you will need to draft the decree and provide it to the Surrogate to sign. Provide the Court with a self addressed stamped envelope so the decree can be sent to your office. (This is often done upon submitting the application). Notice of Settlement must be served on anyone who appeared. 5 days before settlement date if personally served. 10 days before settlement date if served by mail. 6 days before settlement date if served by overnight mail. Notice of Entry: decree & n/e served on appearing parties. 28 14