If you have young kids, you need an estate plan.

There is a financial trap that can occur if one spouse passes, and there is no will or trust in place. The Surrogate, following New York’s Estates, Powers and Trusts Law (EPTL), will be compelled to divide the assets of the deceased spouse between the surviving spouse and the children. This can tie up assets for years in guardianship accounts and cause real financial hardships for the family if assets must be liquidated.

When one spouse passes away, in the absence of a will or trust, the balance of the deceased's estate does not automatically go to the surviving spouse. Instead, pursuant to NY EPTL 4-1.1, the first $50,000 and one-half of their estate passes to their surviving spouse. The balance of the estate goes to their children. The Court must follow the EPTL and cannot modify this division of the estate assets - even if it causes hardship for the family.

This partition of the assets can have devastating effects. In the administration proceeding in Surrogate’s Court, the court will appoint a guardian ad litem to represent the children, whose job is to collect this money for the children -- even from the grieving spouse (i.e. their own parent). And since many couples' primary asset is their house, they may not have liquid assets available to pay the children their share of the estate. In drastic circumstances, a surviving spouse may have to partition and sell their house to satisfy a Court order. They may also have to sell ownership in a business.

Even if there are liquid assets available, tying them up in guardianship accounts for a decade following the passing of a spouse is infrequently something many people want, or can afford. That is why we suggest that any couple with children must have a will or a trust. At Raimond & Staines, LLC, we are deeply familiar with these and other heritability issues, and would be happy to discuss the same.

If you are interested in creating an estate plan, please contact Raimond & Staines, LLC. Out of office consultations are available.

305 Broadway, 7th Floor, New York, New York 10007

(212) 884-9636

tim@raimondstaines.com
frank@raimondstaines.com

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