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Q: What happens when an estate has many creditors or claims against it?

New York and New Jersey estate planning attorneys and the general public are watching with interest how the administration of the Estate of Jeffrey Epstein will pan out.

Most people have heard the news reports that the late multimillionaire financier committed suicide by hanging while in jail awaiting trial on “federal charges of sex trafficking minors and sex trafficking conspiracy”. Before his death, multiple alleged victims claimed to have been sexually abused as young teens and several were planning to file civil lawsuits in addition to facing their alleged abuser in criminal court.

What impact will all of these claims have on the estate administration?

Civil lawsuits against the estate have reportedly already commenced. Any money judgments awarded to or settlements with any victims, would be claims against the estate– like other creditors’ claims. Legitimate claims and debts of the estate are paid before disbursements are made to beneficiaries.

The Impact

Here are some of the things that may make the estate and trust administration challenging:

  • Jeffrey Epstein apparently made a will only two days before he was found dead. Wills made on the eve of death often give rise to a will contest. If challenged, the court may consider whether Epstein was of sound mind just 48 hours before committing suicide or whether he was under duress.
  • The bulk of his reported $577-million estate was allegedly put in a trust which is private. Reportedly, the trust appears to be revocable which generally means it doesn’t offer protection against the claims of creditors and might not have the estate tax benefits that an irrevocable trust often provides. Another benefit of using a living trust during estate planning is to keep your affairs private since trusts, unlike wills, are not public records.
  • Wills are to be submitted for probate in the state where the decedent was considered to be domiciled at the time of death, which may or may not be the place where the decedent died. The will was filed in the Virgin Islands, one of five reported locations worldwide where the decedent owned real property, presumably because of perceived tax or other benefits to the estate.
  • Whether you are the named executor or trustee of the estate of an “average Joe” or a multimillionaire whose estate is complex or facing litigation, you should seek the advice of a skilled trust and estate administration attorney.

Contact Our New York or New Jersey Estate Planning Attorney

If you need assistance with an initial estate plan or would like to modify an existing one, or if someone died and you are the named executor or trustee, the experts at Merlino & Gonzalez can help you. Contact us today to schedule a consultation.

From our offices in Staten Island, New York and East Brunswick, New Jersey, we represent clients in both states in all aspects of estate planning and trust and estate administration.