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Frank W. Streng, White Plains lawyer, Strategies for Avoiding Will Contests

Frank W. Streng, Esq.

Partner

McCarthy, Fingar, Donovan,

Drazen & Smith, L.L.P.

11 Martine Avenue

White Plains, NY 10606-1934

914-946-0134 (fax)

914-946-3817 ext. 256 (voice)

e-mail:

web:

www.mfdds.com www.mfdds.com
fstreng@mfdds.com

Gary E. Bashian, Esq.

Partner

Bashian, Enea & Sirignano

235 Main Street

White Plains, NY 10601

914-946-5100 (voice)

914-946-5111 (fax)

e-mail:

 

garybashian@aol.com

Joseph M. Accetta Esq.

Law Assistant

Surrogate's Court

140 Grand Street

White Plains, NY 10601

914-995-3727 (voice)

e-mail:

 

jaccetta@courts.state.ny.us

Westchester County Bar Association – Trusts & Estates Section

 

Strategies for Avoiding a Will Contest . . . But Winning if you Can’t

 

June 10, 2002

 

NOTES

 

INTRODUCTION:

 

 

  • What is Defensive Estate Planning?
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      • Attorney’s Assignment: Representing One or More member of "Dysfunctional" Families – assume that your client’s family is dysfunctional
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      • Dysfunctional – Webster defines it as "impaired or abnormal functioning"
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      • Examples of Dysfunctional Families (after death scenarios)
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      • "Bad families with No Parental Control": No one likes each other, including the parents
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      • "Bad families with Parental Control": No one likes each other, but the parents are able to require members of the family to act with propriety and respect
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      • Good Family with Bad Marriage: Children seem to respect each other, but parents hate each other
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      • "Good Families that are Broken through Divorce"
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      • "Good Families that are Broken through Remarriage (with children from second marriage)
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      • "Good Families that are Broken through Remarriage (without children from second marriage)
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      • "Good/Bad Families" on the Death of the Survivor Parent: Throw out the Family Rule Book and Become Super Dysfunctional
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      • "’Good Families" that have Very Good Actors in which One or More members Hate Each other
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      • Client’s Goal: Hiring you to protecting integrity of client’s decisions in estate plan (e.g., preparing will where client cuts out distributees or makes so-called unequal distributions)
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        • Your engagement as counsel

             

          • Separation between Mom and #1 child
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          • Attorney-client privilege
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          • Joint representation issues
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        • Diligence in legal work

             

          • Detailed interview with memoranda
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          • Detailed description of assets and liabilities
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          • Discussion with client as to nonprobate assets, including joint assets and intentions of client as to whether #1 child is the intended beneficiary of joint account

               

            • Note: POA account v. joint account; joint account v. Totten trust account
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          • Obtaining copies of existing and prior wills/trust agreements/power of attorney forms/health care proxies
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          • Satisfying yourself that client has capacity and is not subject to undue influence
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          • Sending drafts of instruments with letters of explanation
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          • Dealing with Mom, and Mom alone, as to drafts and redrafts
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          • Supervision of execution
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          • No shortcuts
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          • Exclusion of #1 child from room for will execution
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          • Other estate planning
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          • Living will/health care proxy
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          • Durable power of attorney
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          • Revocable trusts

               

            • Attorney’s Perceived Resistance of Revocable Trusts
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            • Client’s perspective: attorneys have self-interest in assuring probate through earning a huge percentage fee in estate
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            • Client’s Misperceptions

                 

              • Revocable trusts always avoid probate
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              • Assets cannot pass through revocable trust unless asset is transferred to trust
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              • Revocable trusts avoid estate and other taxes
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              • Tax neutrality of revocable trusts
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            • Advantages of revocable trust re procedural and substantive obstacles to "will contest"
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            • Revocable trusts as "continuing" will

                 

              • Effect of client managing financial matters through all-inclusive features of brokerage account for trust
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            • Mechanics of Creation of Trusts – EPTL 7-1.17
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        • To be effective lifetime trust must be in

             

          • Writing
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          • Executed by the creator and at least one trustee
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          • Acknowledged or executed in the presence of two witnesses
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        • Grantor can be sole trustee
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        • Oral trusts not recognized in statute
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        • Amendment/Revocation is effective if in

             

          • Writing
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          • Executed by the person authorized to amend or revoke
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          • Acknowledged or executed in the presence of two witnesses
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          • Notice of amendment or revocation shall be delivered to at least one other trustee

               

            • Effective date the date of execution
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            • Failure to give notice does not make invalid
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            • No liabilities for actions of trustee prior to actual notice
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        • Funding of Lifetime Trust

             

          • Valid as to assets transferred to trust
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          • Transfer is not accomplished by "recital of assignment, holding or receipt in the trust instrument:
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          • Transfer is accomplished through "written assignment describing the assets with particularity" or, in the case of "real estate, stocks, bonds, bank and brokerage accounts and the like" a recording of deed or "completion of registration of the asset"
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        • Additional procedural obstacles for challenging validity of revocable trusts, or transfers to trusts

             

          • Contrasts of Will Contests v. Trust Contests
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          • Lack of identified procedural remedies in trust contests
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          • Challenging client’s capacity in execution of documents that results in transfer to revocable trusts
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      1.  

           

        1. Scenario #2.
        2.  

          Same facts as 1 above. But now, after you have engaged in initial work for Mom on Will, Power of Attorney, Health Care Proxy, Mom may be mentally incompetent and #1 child retains you for "Medicaid Planning" and related services

       

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        • What is Medicaid planning

             

          • Planning to assure that Mom becomes eligible for Medicaid and that part or all of Mom’s assets is sheltered from payment to health care providers/nursing home
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        • Planning Options

             

          • Conventional (if Mom competent to act on her own):
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          • Rule of halves: making outright gifts through use of prescribed monthly rate – Westchester rate for 2002 is currently $7,138 per month
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          • Possible transfer of residence with retained life estate
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          • Tax consequences for planning recommendations
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          • Options on "gifting" to #1 child

               

            • Outright v. trust
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            • Nonprobate: Joint v. Totten trust
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          • If Mom not competent to act on her own
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          • Does the durable power of attorney form have gift powers beyond statutory form (i.e., gift tax exclusions)?

               

            • If gift powers exist, can #1 child, as agent, make gifts to herself
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            • Consider cases and the effect of self-dealing (they don’t work)
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            • If gift powers do not exist, "extra legal" options for family unit acting together
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          • Medicaid planning under Article 81
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          • Interrelationship with Will Contest, Medicaid Planning and Article 81
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          • Medicaid Planning

               

            • Did Mom transfer assets to #1 child with the intention of gifting assets to child?
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            • Was #1 child acting as a type of agent, thereby encouraging other children to commence proceeding against child?
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          • Preparing Will/Revocable Trust Agreement for Client with Diminished Capacity and/or Client who is the subject of Article 81 proceeding

               

            • Same considerations as above for estate plan
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        • Detailed interview with memoranda
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        • Detailed description of assets and liabilities
        •  

           

        • Discussion with client as to nonprobate assets, including joint assets and intentions of client as to whether #1 child is the intended beneficiary of joint account

             

          • Note: POA account v. joint account; joint account v. Totten trust account
          •  

        •  

           

        • Obtaining copies of existing and prior wills/trust agreements/power of attorney forms/health care proxies
        •  

           

        • Satisfying yourself that client has capacity and is not subject to undue influence
        •  

           

        • Sending drafts of instruments with letters of explanation
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        • Dealing with Mom, and Mom alone, as to drafts and redrafts
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        • Supervision of execution
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        • No shortcuts
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        • Exclusion of beneficiary from room for will/trust execution
        •  

           

        • Other estate planning
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        • Living will/health care proxy
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        • Durable power of attorney
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        • Revocable trusts
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        • Video type Will/Trust Executions
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        • Admissibility is assured, subject to proper evidentiary submission, but should you use them
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        • Possible Use of Psychologists/Psychiatrists/Other Medical Providers to Establish Client’s Capacity
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        • Be careful
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      1. How to Win a Will Contest: Perspectives of Petitioner, Objectant and Court
      2.  

       

       

       

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        • Marshalling of assets and other matters incident to estate
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        • Administer the estate irrespective of litigation
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      • Objectant’s Perspective
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      • Petition for temporary letters (SCPA 901)
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      • If preliminary letters granted, consider a petition to revoke

           

        • if Will is facially (arguably) improper
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        • if proper grounds under SCPA 711 or 719
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      • If preliminary letters not sought, then possibly seek temporary letters
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        • Petition to compel production of Will (SCPA 1401) for prior instruments
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        • Pursuant to SCPA 1412(4)(b), take whatever actions necessary to make sure that "papers and records of the decedent" are properly preserved by the preliminary executor
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      • Options on Return date of Probate Citation
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        • Objectant’s Perspective
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          • Consider options as to status of parties, e.g., is the spouse a distributee or not?
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        • Petitioner’s Perspective
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          • If you have not yet gotten preliminary letters, seek them
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          • Make sure that your client is doing his/her/its job as fiduciary, i.e., ignore Will contest and administer the estate
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          • Make sure records of the decedent are preserved
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          • If a beneficiary under contested Will is also a petitioner, make sure that, at all times, your client is acting properly
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          • Court’s Perspective
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            • Notice of Objections Filed: Before discovery can begin, a citation for notice of objections filed must be obtained from the Court and served upon all beneficiaries under Will whose interest are adversely affected by objections (SCPA 1411; Rule 207.27); conduct discovery after return date of citation
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            • Document production

                 

              • Pursuant to local rule, duces tecum subpoenas for medical records are returnable at Surrogate's Court
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            • Depositions

                 

              • 3 and 2 rule – Unless there are "special circumstances", discovery limited to the period of three years before and two years after the execution of Will (Rule 207.27)
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              • Attesting witnesses out of state: Pursuant to SCPA 508 and Rule 207.22, the Court may direct testimony to be taken outside of the state by a commission
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            • Bills of Particulars

                 

              • Generally, the petitioner is entitled to bill as to those objections in which the objectant has the burden of proof
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              • See Rule 207.23 for further details
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            • Summary Judgment Motions
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            • Place burden on objectant to flesh out objectant’s case, if one exists
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            • With volume of cases, summary judgment motions are getting greater sympathy from Surrogates
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            • CPLR 4519 (death man statute) problems do not help movant on summary judgment motion
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            • Objections on lack of due execution

                 

              • Submit transcripts of 1404s and other examinations
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            • Objections on lack of testamentary capacity, undue influence and fraud
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            • Make motion after the end of discovery
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            • More difficult motion: do not make unless your case is compelling
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            • Settlement Options
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            • Factors:

                 

              • Non probate and gifted assets
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              • Estate tax apportionment
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              • Distributions under the intestacy statute
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              • Distributions under the elective share statute
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              • Interest of beneficiaries under prior Wills
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              • Appointment of executors and trustees
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              • Interest of persons under a disability and working with GAL
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              • Outright share or trust share for spouse
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            • Types of Settlements:
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            • Admit propounded Will to probate, subject to lump sum payment to objectant
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            • Deny probate to propounded Will, admit prior Will to probate, subject to lump sum payment to petitioner
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            • Revise testamentary scheme to accommodate interests of petitioner and objectant
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            • Pursuant to SCPA 1411(6), settlement is binding on all persons under propounded Will who has not appeared upon service of the citation upon the filing of objections
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            • Trial
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            • In jury trial, case is not scheduled for trial until the filing of a note of issue and statement of readiness and an order framing issues
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            • In court trial, you need to file a note of issue and statement of readiness and statement of issues
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            • Consider possible withdrawal of jury demand to compel court trial if you are the objectant and have asked for a jury trial (SCPA 503(b))
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            • Critically evaluate your case
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            • Withdraw objections that you cannot support, such as due execution on a lawyer supervised execution
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            • Consider CPLR 4519 and how it impacts on petitioner or objectant
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            • Consider expert witnesses and whether your expert knew the decedent
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            • Consider relevancy of financial transactions with decedent on objections and effect of such evidence
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      • Make sure probate proceeding is aggressively prosecuted
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      • Interview attesting witnesses and make sure they are available for SCPA 1404 examinations
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      • If you want to expedite the proceeding, seek a discovery order
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      • If there is a person under a disability adversely protected by the Will and represented by a Guardian ad Litem (GAL), work closely with GAL
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      • Objections to issuance of letters

           

        • Grounds generally under SCPA 711 and 719
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        • For Attorney-fiduciaries, see SCPA 2307-a
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      • Permits immediate use of CPLR discovery devices

           

        • Objectant generally pays for transcripts of depositions, including examinations of attesting witnesses
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      • File objections to probate and to the issuance of letters
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      • Grounds for objections to probate of will

           

        • Due execution
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        • Consider not filing objection if it cannot be arguably supported based upon 1404 examinations
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        • Testamentary Capacity
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        • Fraud
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        • Undue Influence
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      • Demand for jury trial
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      • Conduct examination of attesting witnesses pursuant to SCPA 1404
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      • Defer date for objections to probate until conclusion of examination of witnesses

           

        • Permits attorney and client to make studied decision as to whether to object to probate
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        • If there is an in terrorem clause (EPTL 3-3.5), puts off decision as to possible forfeiture of client’s interest that may be caused by unsuccessful objections to probate
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      • Pursuant to local rule of Surrogate's Court, Westchester County, expense of transcripts of examinations of witnesses are paid by estate
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      • Defers other CPLR discovery devices until after objections are filed and issue is joined
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      • 1404 examinations are to take place at Surrogate's Court pursuant to Rule 207.28, unless the Court otherwise provides; and usually cannot be conducted until personal jurisdiction is complete
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    • Petitioner’s Perspective
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    • Petition for probate and for Preliminary letters
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    • Requirements for Attorney-Fiduciary under SCPA 2307-a
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    • Issuance of citation

         

      • Do not delay on account of missing waivers and consents if you sense a problem; have citation issue and file waiver when you get it
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    • Need for appointment of Guardian ad Litem for persons under a disability
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    • Preliminary letters

         

      • Assured under SCPA 1412
      •  

         

      • Control the estate as part of your strategy in will contest
      •  

         

      • If you delay and end up with an actual or potential application for temporary letters, you may be involved with "haggling" a less than satisfactory solution to obtain preliminary letters, including a bond or other restrictions
      •  

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    • Representation of Client in Different Factual Scenarios and Options for Counsel
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      Dad is deceased and Mom, age 78, is in poor health and has 4 children. #1 child, who is 1 of 4 children, is closest to Mom, both physically and emotionally. Mom wishes to give all of her property to #1 child, and you are engaged by Mom but #1 child arranges for the initial meeting.
    • Scenario #1.
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  • Attorney’s Perspective for New Client Assignment
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  • Ethical Considerations

       

    • Attorney-Client Privilege
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    • Who is your client
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    • Protecting communications
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    • Benefits of protecting communications from client’s point of view in protecting integrity of estate plan
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    • Actual or Potential Conflict of Interest
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    • Irreconcilable conflicts of interests (send the client elsewhere)
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    • Reconcilable conflicts of interests

         

      • Exoneration by multiple clients with full disclosure
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    • Engagement Letters
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    • Ethical considerations (effective 3/1/2002, an engagement letter is necessary if amount will exceed $3,000
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    • Financial considerations (loss leader concept)
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  • Estate Planning To Avoid Litigation – a how to
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  • Probate Litigation Practice and Procedure
  •