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Firm news and client alerts that may be beneficial
There is no question we are facing issues unlike any we have seen before. As a result, it is important to ensure not only that your estate planning and power of attorney documents are up to date, but that your bank and other accounts are properly titled for ensuring access to them now and so your family and others have access to them in the event of your death. Banks are open – courts are not. One of the courts closed here in New York is the Surrogate Court – the equivalent of our probate court. Why is this relevant to how your accounts are titled? When someone passes away, any accounts that are titled solely in the account holder’s name are immediately “frozen” under the law. There can be no access to those accounts until a legal representative or executor of the estate has been appointed by the Surrogate Court. Even in the best of times, this is a process that can take a few weeks if not more to get through the paperwork of probating a person’s estate.
In many cases, having accounts titled in one person’s name rather than jointly or in some other form is for estate planning purposes, asset protection or for other personal reasons. But, if the court is closed, these accounts will remain frozen until the estate’s legal representative is appointed and even if the courts reopen soon, the backlog could be significant leading to additional delays in having the legal representative appointed.
If you establish a joint account with right of survivorship (JTWROS) with a co-owner upon your death, the account immediately belongs to the joint account owner – there is immediate access to that account by your co-owner. If an account is established so it is Payable on Death (POD), Transferable on Death (TOD) or “In Trust For” another individual (ITF), there is the immediate ability to have those accounts available to the party named. Again, there is no need to go through the probate process. It is important to remember that although you may have a Power of Attorney or POA for someone, that POA terminates upon the Principal’s death – there is no ability to utilize a POA for someone after their death for any purposes.
If you are operating your business as a sole proprietorship or under a “dba” as opposed to a corporation or limited liability company, the accounts for that business are your individual accounts and if you die, those accounts are also frozen in the same manner as an individual account. You should consider having another trusted person on those accounts who will ensure that the business can continue to operate, bills can be paid, receipts processed, etc. This is one of the many reasons businesses operate as Limited Liability Companies or Corporations. Unlike a person, those entities do not die and if properly structured business operations can continue rather than having all the assets of the business go through probate.
The banks are open now – take advantage of it! You can take these steps now without any legal technicalities. Talk to your banker or brokerage advisor as to how you can best set up your accounts so there can be immediate access to those accounts in the event of your death – especially if you see that there is a need for your family. If you have any questions, please do not hesitate to contact us.
Since 1979, the Syracuse-based law firm of SCOLARO FETTER GRIZANTI & McGOUGH, P.C. has provided sophisticated tax, business, litigation, employee benefits, estate and trust planning and administration services to its individual, business, entrepreneurial and professional clients throughout New York, Pennsylvania, Florida and other states in which its attorneys are admitted to practice.