Estate Planning Isn’t Just For The Elderly

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Review and Analysis of the AIP’s Real and Personal Property

*By Anthony J. Enea, Esq.

All too often the assets of the AIP and particularly the title to said assets is not the primary focus of an Article 81 guardianship proceeding. The focus of the proceeding is generally upon the physical and mental incapacities of the AIP, and the immediate and necessary need for an appointment of a guardian of the person and property. However, the attorney for the petitioner needs to carefully and thoroughly review all of the assets owned by the AIP and pay particular attention as to how title to said assets is held. The failure to do so may detrimentally impact the AIP as well as the beneficiaries of his or her estate. The process of analyzing the AIP’s assets is critical in formulating the relief to be requested in the petition with respect to how title of the AIP’s assets are to be held once a guardian is appointed, and with respect to the potential transfer of the AIP’s assets for long term care (Medicaid) and estate planning purposes.

In order to properly address how any and all issues relevant to the AIP’s assets are to be addressed in the Guardianship petition, the first step is to obtain a thorough and detailed list of the AIP’s assets from the petitioner. The petitioner should be able to provide the attorney with a detailed list of the AIP’s real and personal property.

The following is a sample of the information and documents regarding the AIP’s assets that should be gathered pre-petition by the attorney:

(a) Copies of all deeds for real property owned by the AIP with the approximate present fair market value of said property. The attorney should pay particular attention as to whether the real property is held jointly with a third party (family/non family) and whether said joint ownership is with rights of survivorship, a tenancy in common or owned in the name of a corporation or other entity. It is advisable to obtain copies of all deeds for real property;

(b) Copies of all recent account statements for all bank accounts and investment accounts showing the present value of the accounts. Again, particular attention should be paid as to whether the joint accounts are accounts which bestow rights upon the joint tenants during the life of the AIP or upon the death of a joint tenant, “in trust for” accounts, “for convenience only” accounts, “transfer on death” accounts; (c) Copies of all recent account statements for any IRA’s, 401 K’s, 403(b), annuities (whether they be qualified or non-qualified assets) with copies of beneficiary designations for said accounts. Remember, if the aforestated do not have a named beneficiary that, upon the death of the account holder, the beneficiary will be his or her estate. It should also be ascertained as to whether or not the AIP is receiving the “minimum required distributions” from any of the aforestated accounts.

(d) Copies of all life insurance policies owned by the AIP with beneficiary designation forms for said policies. It is important to determine if the policies have any cash value;

(e) Copies of all Trust Agreements executed by the AIP and documentary evidence (deeds/account statements) evidencing whether said Trust(s) have been funded with the AIP’s assets or the assets of any third parties;

(f) Copies of any copyrights, trademarks and licensing agreements owned by the AIP;

(g) Copies of any mortgages and/or promissory notes due to the AIP with any amortization schedules. If there exists the possibility of recorded mortgages and/or UCC financing statements, it may be advisable to obtain copies of same.

(h) Obtain information as to the AIP’s annual income. For example, obtain copies of any W-2’s, social security statements and any pension statements if appropriate. If the AIP is receiving any government benefits such as “SSI”, “SSD” or Medicaid, obtain the appropriate documentary proof. In order to ascertain the amount of interest and/or divided income the AIP is receiving, it may be necessary to review the most recent income tax returns filed by the AIP, if available, and/or obtain copies of W-2’s, 1099’s relevant to income.

Once the attorney has gathered the aforestated information and documentary evidence, the next step is to thoroughly analyze the information and documentary proof to ascertain what impact the assets owned by the AIP, and particularly how title to the AIP’s assets is held will have upon the guardianship proceeding and the ultimate relief to be sought in the petition.

In order to make this analysis pre-petition, it is imperative that the petitioner’s attorney have a solid understanding of the relevant laws and legal principles with respect to the ownership of real and personal property and particularly, the impact of the joint ownership thereof. It is indisputable that existence of jointly titled real and personal property has become ubiquitous in 21st century America. Thus, the attorney for the petitioner must have the ability to recognize all potential issues that might arise from the AIP’s ownership of property jointly, “in trust for,” etc. with a third party, and the impact of the property passing by “operation of law” upon the demise of the AIP.

Common Law Rules of Ownership of Property and their Codification

The joint ownership of both real and personal property has been recognized for centuries as a valid legal doctrine. At common law three (3) forms of joint ownership were recognized:

(a) tenancy in common (individuals own an indivisible fractional share with no right of survivorship in the other joint tenants interest;

(b) tenancy by the entirety (applicable to husbands and wives and ownership of real property only, wherein each own undivided interests with a right of survivorship, but, without the right to unilaterally sever or partition their interests); and

(c) joint tenancy (the joint tenants have an undivided interest which can be unilaterally severed or destroyed) where the tenants have a right of survivorship.

These three (3) common law forms of ownership have been codified and recognized in Section 6-2.2 of the New York Estates, Powers and Trusts Law (EPTL).1 With respect to the authorization of conveyances of an interest in real property by one or more persons, the relevant statutory provisions are found in Section 240-b of the New York Real Property Law (RPL).2 As to the severance of an interest(s) in jointly held real property the relevant statutory authority is found in Section 240-c of RPL.3

Relevant Statutory Provisions for Jointly Titled Bank and Brokerage Accounts

It is important to note that the right to receive by operation of law the assets in a joint account upon the death of the joint tenant does not apply to a joint account that is created and held “for the convenience” of the depositor. Accounts “for the convenience” are regulated by 678 of the New York Banking Law.4 678 provides that accounts held “for the convenience” shall not affect the title to such deposit or shares. The depositor is not considered to have made a gift of one-half the deposit or of any additions or accruals thereon to the other person, and on the death of the depositor, the other person shall have no right of survivorship in the account.5

In order for the provision of 678 of the Banking Law to apply, the words “for the convenience” or similarly “for convenience only” must appear on the title of the account.6 If the aforesaid words do not appear, then the presumptions created by 675 of the Banking Law will be applied.7

675 of the Banking Law provides that the making of a deposit in the name of the depositor and another to be paid to either or to the survivor is prima facie evidence that the depositor intended to create a joint tenancy, and that where such a deposit is made, the burden of proof is on the one challenging the presumption of joint tenancy. Under 675 three (3) rebuttable presumptions are created: (i) as long as both joint tenants are living, each has a present unconditional property interest in an undivided one-half of the money deposited; (ii) that there has been a irrevocable gift of one-half of the funds in the account by the depositor to the other joint tenant; and (iii) that the joint tenant has a right of survivorship in said entire joint account upon the death of the other joint tenant.8

675(b) of the Banking Law provides that the burden of proof is upon the one challenging the presumption of joint tenancy.9

With respect to securities’ accounts or brokerage accounts in joint names, the Transfer on Death Security Registration Act and EPTL 13-4.1 through 13-4.12 permits joint securities and brokerage account holders to have the rights and choices that joint bank account holders have.10 The Transfer-on-Death Security Registration Act was enacted on July 26, 2005 and it amended EPTL by enacting a new part four (4) to Article 13. It is essentially codified in EPTL 13-4.1 through 13-4.12.11 Under EPTL 13-4.2 a “transfer on death” or “payable on death” securities or brokerage account can only be established by sole owners or multiple owners having a right of survivorship in the account. The owners of a securities or brokerage account held as tenants-in-common are expressly prohibited from creating a “transfer on death” account. Although the creation of a “transfer on death” or “payable on death” securities or brokerage account does not require that any specific language be utilized to create the account, but evidence of its creation is the usage of the phrases “transfer on death” and “payable on death” or their abbreviations “TOD” or “POD”.12 (EPTL 13-4.5) However, under EPTL 13-4.4, evidence of the establishment of the account is the opening account documentation that indicates whether the beneficiary is to take ownership at the death of the other owner(s).13

The Pitfalls of Jointly Titled, “In Trust For” or other Property Passing by Operation of Law

The manner in which one holds title to property at the time the commencement of a guardianship proceeding and at the time of his or her demise will have a critical and significant impact upon the relief sought in the guardianship proceeding. The impact will be particularly seen upon his or her estate plan and the disposition of his or her assets at the time of death. With the exception of property (real and/or personal) held jointly as tenants in common, all other jointly held property, “in trust for” accounts, “transfer on death” accounts, IRA’s, 401(k)’s and life insurance policies which have a named beneficiary (other than one’s estate) are accounts that pass by operation of law and are non probate assets. Thus, they are assets that are not controlled by one’s Last Will and Testament. While for many individuals (those with relatively small estates), jointly titled property or having property passing by operation of law may be advisable. However, for many others it can have disastrous and unforeseen consequences if not properly addressed prior to death and particularly in the guardianship petition.

Because the ownership of real and personal property jointly with another or in a manner that it will pass by operation of law upon the death of a joint tenant is very common, it is important that said joint accounts be specifically identified in the guardianship petition and the impact upon both the AIP and any joint tenant or account/property recipient upon the death of the AIP be specifically addressed.

It requires the attorney to undertake an assessment and review of how and why the joint account(s) was created and whom is entitled to notice of the relief being sought and his or her right to be heard in the guardianship proceeding. The survivorship rights of a joint tenants(s) cannot and should not be terminated or modified in a guardianship proceeding without the joint tenant being given notice of the proposed change and an opportunity to be heard. To accomplish this, it is necessary that the petitioner undertake a thorough investigation of the account(s) in issue and specifically delineate what is being proposed with respect to the joint account(s).

Identifying the Joint Accounts In The Petition

81.08 of the MHL specifically provides for the disclosure of the approximate value of any property or assets held by the alleged incapacitated person in the petition for the appointment of a Guardian. It is incumbent upon the petitioner to undertake the necessary investigation to determine which bank or brokerage accounts the AIP has in his name alone or holds jointly with others and/or is the beneficiary of, and to disclose same in the Guardianship petition.14

In doing so with respect to any bank or brokerage accounts, the petitioner should specifically identify any jointly held bank or brokerage account(s), and whether or not said joint account(s) are joint accounts entitled to the presumptions of 675 of the Banking Law, or are “for the convenience” accounts under 678 or “transfer on death” accounts with respect to any brokerage account pursuant to the Transfer on Death Security Registration Act and EPTL 13-4.1 through 13-4.12. The petition should specifically identify any person who has an interest in the account, the extent of his or her interest and whether or not he or she has a right of survivorship in the account.15

In most cases this should not be problematic if the joint account holder is the spouse of the alleged incapacitated person (“AIP”), and he or she has a joint account with the AIP. However, if the joint account holder is a child of the AIP or a third party, the petitioner should obtain copies of the account signature cards and any other bank or financial institution record which may describe whether or not the account is a joint account with rights of survivorship that is entitled to the presumptions of 675 or is a “transfer on death” account under EPTL 13-4.1 through 13-4.12 or merely a “for the convenience” account under 678.16

Specifically Delineate Your Proposal As To Any Joint Account(s) or Jointly Held Real Property In The Guardianship Petition

The Guardianship petition should contain a clear and concise description of the relief sought by the petitioner with respect to any joint bank or brokerage account(s) or real property. For example, if a transfer of the title of the joint account or real property from the AIP to the other named joint account holder or to a third party (not a joint tenant) is being sought, it is necessary that same be specifically delineated in the petition and notice be given to the party or possible beneficiary under a will, trust or presumptive distribute, whose interest in said account(s) or property may be impacted by the transfer. The petition should also specifically identify the account by its account number, name of Bank or brokerage firm as well as the existing title on said account. It should also specify the title of the account to be created once the account or any part thereof has been marshaled by the Guardian, or whether an apportionment of the account or outright transfer to the other named account holder or any other party is being sought. Additionally, it is critical to address the survivorship interest of each joint tenant in the petition, and the petitioner’s proposal with respect thereto.17

If the potential exists that the AIP may need Medicaid (either nursing home or home care) and a transfer of the assets in a joint bank or brokerage account is being sought to the spouse, blind or disabled child (exempt transfer(s) for Medicaid eligibility) it is more likely that the Guardianship Court, will approve a transfer of the AIP’s interest in said account(s) to the other named title holder, without any apportionment to the AIP.18 This is also true if no objection to the proposed transfer is made by any other interested party to the Guardianship Proceeding; and the AIP’s testamentary scheme as reflected in any Last Will and Testament or Trust is consistent with the proposed transfer.

Obviously, complications could arise when the proposed transfer is to a joint account holder who is not the spouse of the AIP. If for example the joint account holder is a child, family member or friend, there will be issues as to whether or not the child, family member or friend contributed any of the funds in the joint account(s), and whether or not the proposed transfer will create the five (5) year look back period and a period of ineligibility for nursing home Medicaid purposes (does it qualify as an exempt transfer to a spouse, blind or disabled child). There will also be the issue of whether or not the other interested parties to the Guardianship will consent to the transfer, and if the proceeds of the account are to be apportioned by and between the account holders, how will title to each apportioned account be held, and what impact will the apportionment have on the survivorship interest of each joint tenant. Whether it be in the new Guardianship account created or the other account, the protection of the survivorship interest of each joint account holder must be addressed.

For example, if apportionment is not sought and a complete transfer is made to the non incapacitated account holder, will it be necessary that said account be held “in trust for” the incapacitated person. This could be problematic if the incapacitated person is a potential candidate for Medicaid, and the prior death of the non incapacitated person would result in the passage of the funds by operation of law in the account to the incapacitated person. This problem may be obviated if the incapacitated party can be the beneficiary of a Supplemental or Special Needs Trust (“SNT”). In that event it would be appropriate to title the account of the non-incapacitated party “in trust for” the SNT of the incapacitated party.

Additionally, in order to protect the non incapacitated account holder it may be necessary to seek that the account marshaled by the Guardianship be titled “X as Guardian of his or her property of Y in trust for Z” so as to protect his or her survivorship interest. Clearly, how titles of assets are held at the commencement of the Guardianship proceeding and how they are to be titled once a guardian has been appointed are important issues that need to be thoroughly analyzed.

1 6-2.2 of the Estates, Powers & Trusts Law (EPTL)

2 240-b of the Real Property Law (RPL)

3 240-c of RPL

4 678 of the Banking Law



7 675 of the Banking Law


9 675 of the Banking Law

10 13-4.1 – 13.4.12 of EPTL


12 13-4.2 EPTL

13 13-4.4 EPTL

14 81.08 of the MHL

15 675 and 678 of the Banking Law and EPTL 13-4.1 and 13-4.12

17Section 81.07(d) and 81.21(c) of the MHL

18Section 366 of the New York Social Services Law

Enea, Scanlan & Sirignano, LLP