E-Newsletter • November 2019 No Images? Click here Featured ArticlesQ&A with Thomas C. HaberlackIn this edition of our Newsletter, we highlight the work of Thomas C. Haberlack. Tom concentrates his practice in estate planning, estate administration, elder law, and probate law. Tom discusses about the best time to consider estate planning, and how to protect your assets and loved ones as you prepare for the future. Is it ever too early to prepare an Estate Plan? No, it is never too early to set up your estate plan; nor is it ever too late. If you die and you haven’t provided for the transfer of your assets to your intended beneficiaries, then New York State will decide where your assets will go. Under current New York law, for instance, if you die survived by a spouse and children, then your assets will be divided between them. This can be unduly burdensome because if your children are minors, the portion going to your minor children will be controlled by the Surrogate’s Court until they reach age 18. If minor children become partial owners of any real property, including the primary residence, the surviving spouse would not have the ability to sell or even refinance the property without the prior approval of the Court. Which Estate Planning tool do you recommend- a Trust or a Will? As a practitioner that handles the planning and administration phases of estates, the decision will depend on many factors, including the client’s assets, family circumstances and intentions. Trusts do have some administrative advantages over a Will. A Trust avoids probate and, therefore, there is no need to locate or notify missing or excluded heirs. The transfer of assets upon death can be accomplished immediately, subject to providing for taxes and creditors’ claims. Also, the terms of the Trust remain private while a Will is filed with the court and becomes a public document. When the estate is controlled by a Will, how long does the probate process take? The timeline is fact sensitive, but generally, if all the necessary parties sign off on the probate, the time to probate a Will could be as little as four or five weeks from the date everything is submitted to the Court. However, if the decedent had minor children, the Court will appoint a Guardian Ad Litem to represent their interests, which could delay the proceeding for up to several months. Additionally, if there are missing heirs or if a party contests the validity of the Will, it could delay the probate of the Will for more than a year. What other steps should I take to complete my estate plan to protect my family? A full estate plan not only considers what happens upon death, but also provides for the possibility of a short term or long term disability. So, in addition to a Will or Trust, everybody should have a Power of Attorney, Health Care Proxy, Living Will and Advance Burial Directive. A Power of Attorney designates the person to handle your financial needs. The Health Care Proxy sets forth the person who will speak to your medical professionals if you cannot. The Living Will states your what measures you want taken in the event you are in a permanent coma. And finally, the Advance Burial Directive designates the person to whom you have communicated your burial wishes and directions. You may select either the same or different people for each role. If you do nothing and you become disabled, your family will be required to petition the Court to appoint a guardian to make these decisions for you without you ever having a voice in who handles your affairs. No matter the size of your estate thoughtfully deciding how your assets will be distributed and choosing someone to be in charge of managing your affairs will go a long way towards having loved ones peacefully work together while avoiding family misunderstandings and costly probate proceedings. DANIEL H. BRAFFCan you Insure Development Rights?As a New York City zoning and land use attorney, I regularly represent clients in the purchase of development rights (a/k/a “air rights” transfers). One question that I commonly hear from clients is “can I get title insurance?” I’ll cut to the chase. The answer is no. Although, some background here is important. In order to transfer development rights from one tax lot to another where both are in separate ownership, the tax lots must be merged into a single zoning lot by a mechanism established in the New York City Zoning Resolution. The merger requires that the lots are contiguous for 10 linear feet, located within a single block, and are declared to be a tract of land to be treated as one zoning lot. In addition, this declaration (called a “Declaration of Zoning Lot Restrictions”) must be executed by each party-in-interest except if the party has waived its right to execute the Declaration. Both the Declaration and any waivers must be recorded against the parcels. Parties-in-interest generally include fee owners, mortgagees, holders of recorded or visible easements, contract vendees, holders of options to purchase, the United States as to federal liens, judgement creditors with docketed judgements, mechanic’s lienors, the City of New York for real estate taxes, and holders of reverters or rights of entry. The Zoning Resolution further requires that the title company prepare a certification of parties-in-interest to be provided to the Department of Buildings. Moreover, the tax lot owners will typically enter into an agreement called a Zoning Lot Development Agreement (ZLDA). This is a private agreement between the parties that sets forth the rights and obligations within the merged zoning lot, and typically includes provisions setting forth which party gets the unused floor area within the merged zoning lot. This document is not required pursuant to the Zoning Resolution and lots can be merged without Zoning Lot Development Agreements. So, what do you actually get when you merge lots into a common zoning lot? Nothing...everything. First, unlike purchasing fee title, you walk away with nothing. The rights are invisible. They cannot be touched or seen. It is a creation through zoning. Once lots are merged, any plans and zoning calculations filed for a new development must show the entire merged zoning lot, including any existing buildings on the zoning lot. The Department of Buildings does not care whether there is a Zoning Lot Development Agreement in place or what it says, or what the agreement is between the parties as to which party gets unused floor area. All they care about is whether the lots were properly merged and will require that the owner proposing development prove that a proper merger was completed pursuant to Section 12-10. The Department of Buildings will review the title company’s certification of parties-in-interest and confirm that all parties-in-interest have either executed the Declaration or waived their right to execute the Declaration. So, if there are no tangible rights, are there any protections a title company can provide? The answer is yes. In New York City, title companies can issue a special product called a Development Rights Endorsement. It will insure that all parties-in-interest have joined in, waived, or subordinated their interests to the Declaration. In other words, it will protect the owners of a merged zoning lot against any third-party challenges to the validity of the zoning lot, such as a third-party that claims to be a party-in-interest that never consented to the lot merger. The endorsement will also insure that the seller has consented to the Zoning Lot Development Agreement (if one exists) and that it is valid and effective, and if there are any negative covenants such as light and air easements, but it will not insure the amount of floor area available or transferred, or other specific rights set forth in a Zoning Lot Development Agreement. A failure of a zoning lot merger could be devastating to a project. You could imagine a scenario where a challenge to the validity of a zoning lot was successful after construction has commenced on a building using development rights from an adjoining parcel. Construction will be stopped and it will be impossible to obtain a certificate of occupancy until the proper merger is completed. Having a title company step up to defend the validity of the zoning lot is crucial.
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