[NY] Can I choose a particular account for taxes in a will?
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A beneficiary-designated account passes outside probate. Without specific will language, the executor may not be able to use funds from that account to pay expenses, even if the beneficiary agrees. You would need clear, explicit language in your will directing the executor to use that account first for estate expenses before the beneficiary receives the remainder.
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Regarding my will in NY State: all my financial accounts will go directly to named beneficiaries (I’ve already set this up). There is one particular brokerage account that I’d like to designate to have any taxes, debts, and estate expenses paid from. Can I do that?
I understand your concern about designating a specific brokerage account for taxes, debts, and estate expenses. Have you consulted with an estate lawyer in New York before regarding this matter?
No
Are you looking to set up a specific provision in your will that designates the particular brokerage account for these expenses?
Yes, that would be great!
Is there anything else the estate lawyer should know before I connect you? Rest assured they'll be able to help with your specific provision.
No, that's it
Hello! My name is TJ and I’m an attorney. Thanks so much for the opportunity to assist you! I’ve gone over the details you shared and I’ll post my initial response shortly. I’ll also post a few quick questions to better understand your situation so I can give you a more complete and tailored answer.
Very important information: (1) If you don’t hear back from me right away, please don’t worry — I will get back to you! (2) This is general legal info only. I can’t represent you or form an attorney-client relationship.
Hi again!
You can generally designate a specific brokerage account in your will to cover taxes, debts, and estate expenses in New York. This is a common practice and helps ensure other assets pass cleanly to beneficiaries.
Questions for you: Do you anticipate your estate having significant debts or taxes? Are there any instructions for the remaining funds in that brokerage account after expenses are paid?
I don't expect significant debts or expenses. There should be no estate tax. I think I paid just under $10,000 in combined state and federal taxes last year. The account has around $1,000,000, so that’s a small percentage.
Thanks for clarifying. Have you named a specific executor in your will, and are they aware of your wishes regarding this particular account?
Oh — there is a beneficiary named on that account, and anything remaining should go to him. He understands and has no objections.
Yes, I’ve named the executor — and he is also the beneficiary on that account.
Thanks for that information.
A beneficiary-designated account passes outside probate. Without specific will language, the executor may not be able to use funds from that account to pay expenses, even if the beneficiary agrees. You would need clear, explicit language in your will directing the executor to use that account first for estate expenses before the beneficiary receives the remainder.
You are very clear, thank you — but it brings up another question:
Sure! What’s the other question?
I don’t want that account to go through probate. If I don’t put any of this in the will and leave the beneficiaries as they are, where does the money for taxes, debts, etc. come from?
If you give no instructions in your will, expenses would be paid from your probate estate — your personal accounts, business account, and any other probate assets. A beneficiary-designated account wouldn't be used unless the will directs it.
I have a tiny business account, and a personal account I use to pay bills. I keep very little money in there. Unless I die right after transferring money, there is never more than $10,000 in that account. I don’t own anything of value except a used car.
Rent will need to be paid for a couple months; I always have a $1500–$2000 AMEX bill, etc.
Given your situation, if the probate accounts don’t contain enough, the estate could become insolvent. The executor may need to sell the car to cover expenses. Probate assets are used first unless your will directs otherwise.
That all makes sense. I’m fine with my car being sold and my small probate accounts being emptied. I just want anything beyond that to be paid. The account my executor/beneficiary is on is money he gave to me. He’d like to see that I’ve left the world with a clean slate. So, theoretically, can I leave his account as non-probate, and just request personally that he pay those things?
It would be up to his discretion, but if I ask, he will do that.
I want to be sure my nieces and nephew, who are beneficiaries of my other accounts, will not have money taken from them.
A personal request is not legally binding. Your executor’s legal duties follow the will, not informal wishes. If you want certainty and legal authority to use that account for expenses, the will must include explicit instructions.
Ok — so if I put in the will that expenses beyond probate assets should be paid from the account where he is beneficiary, does that mean the whole account goes through probate, or just the amount necessary? I want to have it both ways!
It does not mean the whole account goes through probate. Carefully drafted language can direct only the amount needed to be used for expenses, while the remainder still passes directly to the beneficiary outside probate.
