EPTL Article 1

This marks the beginning of our weekly discussion on the law - things you should know about how your estate will be handled should you not craft a will that caters specifically to your needs and desires.

We will begin by taking a look at Article 1 of the New York Estates, Powers, and Trust Law (EPTL). The first Article deals with definitions. Let's review the most important definitions you need to know.

1-2.1 Codicil: A supplement to the will that either adds, removes, or alters the terms of the will, or confirms any part of the will in whole or part by republication (i.e. by writing the part it affirms again)

1-2.4 Disposition: A disposition is the transfer of property by a person during his lifetime or by will

1-2.7 Fiduciary: This is a person who meets the qualifications of a personal representative or who is designated by the creator (a person who makes a disposition of property) or by the court to act as an assignee for the benefit of creditors, or a committee, conservator, curator, custodian, guardian, trustee, or donee of a power during minority.

1-2.10 Issue: These are the descendants in any degree from a common ancestor and include adopted children.

Different Types of Distribution
1-2.3 Demonstrative Disposition: This is a testamentary disposition or property that is to be taken out of a SPECIFIC or IDENTIFIED property.

1-2.8 General Disposition: This is a testamentary disposition of property NOT amounting to a demonstrative, residuary, or specific distribution.

1-2.11 Per Capita Distribution: A disposition or distribution that is done per capita means it is made to persons, each of whom is to take in his own right an equal portion of such property.

1-2.14 Per Stirpes Distribution: This type of distribution is made to persons who take as issue of a deceased ancestor in the following manner:
The property is first divided into as many equal shares as there are (i) surviving issue in the generation nearest to the deceased ancestor which contains one or more surviving issue and (ii) deceased issue in the same generation who left surviving issue, if any. Each of these people get 1 share.

What this means: Let's suppose Andrea passes away with $100,000 in total assets. She is predeceased by her 3 sisters who leave behind 5 nieces Beatrice, Catherine, Deborah, Eliza, and Francesca, and 3 nephews: Gary, Harry, Ivan. And Andrea leaves 2 sons: John and Kevin.

The law says first: Lets look at the nearest generation - her sons. There are 2, so they get a total of 2 shares (1 each). Then its says lets look at her generation - were there any siblings? Yes? Did they leave children? Yes? They each get a share.

The end result is that everyone in this example gets 1 share each, or $10,000.

1-2.16 Distribution by Representation ** This is the Default method of distribution **
This is essentially the same as Per Stirpes, EXCEPT, in how they distribute the shares to the second class of issue (deceased issue in the same generation who left surviving issue, if any)

Here is how it's different:
After the surviving issue in the nearest generation receive their 1 share, "the remaining shares, if any, are combined and then divided in the same manner among the surviving issue of the deceased issue as if the surviving issue who are allocated a share had predeceased the decedent, without issue."

So instead of everyone getting 1 share, the nearest generation would each get 1 share, and if there is anything left over in the estate it gets combined and then redistributed to who ever is left.

New York Probate Estate Tax Forms

When it comes to Probate in New York there are a lot of forms that you're going to be responsible for as an executor. So what I've done here is broken down the relevant Estate Tax Forms by category, one by one, and provided a description as well as links to download them.


If the estate is in control of real property that it wants to sell:

• ET-706 New York Estate Tax Return (download)
  

This is basically a tax return for the estate. It details the gross taxable estate for purposes of New York's Estate tax. Now, for many estates, this form does not need to be filed - mostly because the majority of estate's in New York are valued under $1 million. However, if the estate is in control of Real Property, then this form MUST be filed with the state.

• ET-30 Application for Release of Estate Tax Lien. (download)

If the estate is controlling real property and you want to sell the home while the estate is in probate you need to submit this form to the court so that the estate tax lien can be taken off the property.

This form can only be submitted with copies of Letters Testamentary or a copy of the Letters of Administration and if it has been less than 9 months since the passing of your loved one.
If more than 9 months have passed you must use ET-85 when:

1. The estate is not required to file ET-706 & more than 9 months have passed, or if no executor/administrator has been appointed.
2. When the estate does have to file ET-706 and either:

A. Less than 9 months have passed and no executor has been appointed
B. Between 9 and 15 months have passed and an extension to file has been granted.

* It would be a good idea to file this along with ET-117 (Release of Lien of Estate Tax)

• ET-117 Release of Lien of Estate Tax (download)
  

You must use this form when you want to sell any of the real property that is being controlled by the estate. This form must be accompanied either by form ET- 706, 90, 85, or 30.

Payment of Estate Tax

• ET-95 Claim for Credit or Refund of New York Estate Tax (download)

You can only use this form if you are claiming a credit or refund of the tax for the following claims:
1. Protective claim
2. Protest for a paid bill that was based on a statement of audit change or notice and demand for payment of estate tax.

For ALL OTHER CLAIMS: Use form ET-90 (New York Estate Tax Return)(**) & write AMENDED at the top

• ET-130 Tentative Payment of Estate Tax (download)

This form only needs to be filled out if the estate plans on making a tentative payment of estate tax. This means that you might not know what the total amount of the tax is going to be, but you want to make a payment in anticipation of what you might think the payment is going to be.

If you decide you want to sell the real property controlled by the state you will have to make an estimated payment of estate tax - therefore you are going to need this form.

• ET-133 Extension of Time to File and/or Pay (download)

As an executor, you have 9 months to file all your papers - the 9 months begins from the date that your loved one passed away. If for any reason you need an extension you must submit this form to the state. However, in order for it to be considered you must have a very good reason as to why the court should grant you the extension.

Now, if they grant you an extension to file, that doesn't mean you have an extension on your time to pay. You will still have to pay the Estate Tax within 9 months of your loved one's passing. If you do not pay, late charges and interest will accrue that will be assessed against all the named beneficiaries.

• ET-415 Application for Deferred Payment of Estate Tax (download)

If your loved one's estate mostly consists of a closely held business then you should file this form with the estate. A business is not a very liquid asset, therefore if you need to pay taxes on it, then you will either have to sell the business or run it and collect revenue so as to pay the taxes.

Other Forms

• ET-14 Estate Tax Power of Attorney (download)

This form is for Executors that want to give Power of Attorney to someone they trust to deal with all the tax issues. This is particularly important if you are out of state, or for whatever other reason, and you cannot afford to deal with the Dept. of Taxation and Finance.

This has to be signed by both the Executor and his Personal Representative.

• ET-141 New York Estate Tax Domicile Affidavit (download)

This form should be used only if your loved one was not living in New York at the time of their death.

• ET-20 Stipulation Reserving Domicile (download)

You would use this form when you put in an application with the State requesting the Commissioner of Taxation and Finance to issue a Waiver of Citation in order to facilitate the investigation of the fact that your loved one did not live in the State.

This agreement says that you will file ET-706 in a timely fashion


These are all the forms that the State provides and requires. As always, consult with your lawyer regarding these forms and their necessity given your situation.

(**) ET-90 is the Estate Tax Return for people who have passed away between May 25, 1990 and February 1, 2000. If this does not apply to you, use ET-706