"Until Death Do Us Part"

 What exactly should these words, “Until Death Do Us Part” mean to a monied spouse who, having lived separate and apart from his/her betrothed for countless years, has simply, not because of some vestige of love but rather because of fear

of losing the lion’s share of the assets that he/she has worked so hard to accumulate over the years through equitable distribution, never wanted a divorce?
Such an arrangement can never be one-sided.  Suffice it to say, more than likely the monied spouse has paid a small ransom to buy off his/her estranged spouse to keep that spouse content with staying married and away from the courthouse steps.  One, the other or both may have had significant others over the passage of time, but both are content at being unable to tie the knot in their new relationships while still legally married to each other.  This type of relationship can suffice for twenty, thirty years or more.  Alas, such an arrangment cannot go on forever.  At some point in time, one of them is going to check out on the time-clock of life.  
What happens when the monied spouse is nearing the end of his/her days and the estranged spouse is still going strong?  Because they are still legally married, New York law says that the surviving spouse takes all should the monied spouse die without a Will and without children.  Estate Powers and Trust Law   §4-1.1(a)(2) (hereinafter referred to as “EPTL”).  The result is less draconian should the monied spouse who dies without a Will be survived by a spouse and children.  In that case, the surviving spouse takes the first $50,000 of the estate and then fifty percent of what’s left over; the balance or remaining fifty percent is divided equally amongst the children.  EPTL §4-1.1(a)(1).
The result is similar even if there is a Will which expressly excludes/”leaves nothing to” the estranged  spouse.  In that situation, New York gives the surviving spouse who has been cut out from a Will, the right to elect fifty percent of the estate as his/her spousal right of election, or one-third of the estate if there are children.  EPTL §5-1.1(c). 
Now it’s time to look at the math.  The monied spouse during his/her lifetime has paid “hush” money every month for years just to keep the estranged spouse away from divorce court.  What has this bought the estranged spouse?  Well it’s a business decision.  Looking at it from this perspective, the monied spouse has keep his assets intact at a price; sometimes at a great price if the monthly “hush” money payout has been doled out for decades.  Yet perhaps for this individual, it was a sound decision to payout over time rather than split the assets all at once in divorce court. 
No matter what the rationale, there will come a point in time, namely at the end of life, when the monied spouse is forced to contemplate what we set forth in our opening query, what then does the phrase “Until Death Do Us Part” mean, or should mean, to the spouse who has refused to divorce for fear of losing too much money under equitable distribution?  If the monied spouse dies first, it would appear that the surviving spouse would still get his/her equitable distribution at the time of death under New York’s estate laws.  See EPTL §§4-1.1 and 5-1.1-A(c).  If monthly “hush” money payouts have been doled out for decades, perhaps then that was not the soundest business decision.  In such a case, it would appear that the monied spouse, by avoiding divorce, has in effect paid out more than he/she would have if equitable distribution had been allowed to split up the assets all at once.  
What then should the smart spouse do to insure that his estranged spouse doesn’t step in and walk away with every cent?  Well there’s a loophole in New York’s estate laws.  Crafty lawyering can help that spouse leave his/her monies to the one he prefers rather than having the estranged spouse step in and help  him/herself to half the estate.
No pun intended, but that loophole is buried deep within estate laws of New York.  EPTL §5-1.1(c)(1)(D) states, in pertinent part, the following:
Where the elective share is over ten thousand dollars and the decedent has by testamentary provision created a trust in an amount equal to or greater than the elective share, with income therefrom payable to the surviving spouse for life, the surviving spouse has the limited right to elect to take the sum of ten thousand dollars absolutely, which shall be deducted from the principal of such trust and the terms of the instrument making the testamentary provision remain otherwise effective.
EPTL §5-1.1(c)(1)(D).
Legalese aside, this statute says, in layman’s language, that if your surviving spouse’s elective share of your estate (remember if you die with children, then that share is one-third of your estate; if no children, then the elective share is fifty percent) adds up to more than $10,000, then if the Will sets up a trust with income for life to the surviving spouse that springs to life upon the monied spouse’s death and is funded in an amount that at least equals the elective share of the surviving spouse, then the surviving spouse can only elect to take $10,000 cash outright.  The money that is used to fund the trust—in this case the surviving spouse’s elective share of the total estate—is called the “principal” or “corpus”.   Off the top of the trust principal, the surviving spouse’s right to elect to take cash outright has been drastically reduced to $10,000.  Whatever monies are left in the trust after the $10,000 payout  is then invested and the income only—never the principal—is paid out each year to the surviving spouse for the rest of his/her life.
If you think about it carefully, this is quite a good deal. Let’s consider that the monied spouse dies with a cash estate worth $10-million dollars.  The estranged spouse’s elective share is $5-million and this would be tax-free!  Do you really think that the deceased monied spouse would, in his/her right mind, want to fork over $5-million tax-free dollars to a person that he/she long ago fell out of love with?  Of course not.  So what that monied spouse did was have a Will drawn up leaving half his estate (in our example $5-million) in trust with income for life payable to his surviving spouse.  The only cash the surviving spouse can elect to take up from is limited to $10,000 and no more.  Any other monies the surviving spouse gets will be from the income generated each year by the trust principal.
Who is the trustee of this income-for-life trust?  Well just about anyone, which would mean that the monied spouse could name his/her paramour as the surviving spouse’s trustee or an adult child of the monied spouse from another marriage could even be named as the trustee.  
Who then gets the principal/corpus of the trust once the surviving spouse dies?  Anyone the monied spouse named as the trust principal’s beneficiary.  This means income-for-life to the surviving spouse.  In our example, when the surviving spouse’s lifetime ends, as all lifetimes must do, the trust would then distribute the $5-million in principal to the monied spouse’s favorite charity, children, paramour—namely anyone but the estranged surviving spouse’s estate, if named by the monied spouse as the principal/corpus beneficiary. 
A related provision, EPTL §5-1.1(c)(1)(F), basically does the same thing but eliminates the estranged surviving spouse’s right of election.  In reality, this is not something that the monied spouse should think really sticks it to the estranged surviving spouse.  Under this provision of the estate law, if you want to eliminate the right of election, then you must, in addition to setting up a trust with sufficient principal that at least equals the elective share of the surviving spouse, give an outright gift (testamentary disposition) in the Will to that surviving spouse of at least $10,000. 
In pertinent part, EPTL §5-1.1(c)(1)(F) states as follows:
Where an absolute testamentary provision is made for the surviving spouse of or in excess of ten thousand dollars, and also a provision in trust with income payable to such spouse for life of an amount equal to or greater than the difference between such absolute testamentary provision and his elective share, the surviving spouse has no right of election.
EPTL §5-1.1(c)(1)(F).  New York will always allow the estranged surviving spouse to pocket at least $10,000.  Anything more than that the estranged surviving spouse will have to wait for each year by way of a distribution of trust income for life.
Therefore, with crafty lawyering, the phrase, “until death do we part”, can have the desired meaning that the estranged spouse does not get to take one-third or one-half of your estate.  By setting up a trust with income-for-life in a Will, the monied spouse has effectively eviscerated the spousal right of election to $10-Grand (either by right of election under EPTL §5-1.1(c)(1)(D) or testamentary gift under EPTL §5-1.1(c)(1)(F)).  The surviving spouse is left with income for life that is generated by the trust principal/corpus and upon that spouse’s death, the principal/corpus (in our example, $5-million) would then go to whoever the monied spouse intended and not to the estranged spouse’s estate.  Until that eventuality, the monied spouse can derive great satisfaction as he/she heads off to the great beyond knowing that this income-for-life trust will be administered by someone of his/her own choosing and not by the surviving spouse who will have absolutely no control whatsoever over it.
At Doniger & Engstrand, LLP, we can help you draft your estate plan to meet your desired needs whatever your matrimonial status might be.  Call us for a consultation.

Eliminate Entire Credit Card Debt When Bank Acts Like Loan Shark

Dan Engstrand lecturing at the Suffolk County Bar AssociationCredit card debt overwhelming; being sued in court by the bank, don’t want to file for bankruptcy protection, then fight back!  Many credit card companies act like loan sharks by unfairly hitting consumers with onerous default rates of interest at 29.99 percent or greater.  If you can show that the bank is charging you a usurious rate of interest, not only will their lawsuit be dismissed, but the entire underlying debt that the bank is seeking to collect upon will be discharged—meaning, you won’t have to pay back a cent!

New York sets criminal usury at a rate greater than twenty-five percent (25%).  Penal Law §190.40.  The civil usury rate is set at a rate greater than sixteen percent (16%).  N.Y. Banking Law §14-a.  A 29.99% interest rate is clearly usurious under New York law.  However, if the credit card issuer is a national bank (most of them are) federal law (29 U.S.C. §85) allows national banks to charge their “home state’s” interest rate, which in the case of credit card issuers is typically greater than New York’s usury limit.  If the issuer is a state chartered bank, then New York’s usury limits (see above) apply.

To determine if the credit card issuer is a national bank, log onto the United States Comptroller of the Currency website to see if the bank in question is a listed national bank (click onto List of Credit Card National Banks from U.S. Comptroller of the Currency or visit our "Useful Links" tab at the top of our website).  The United States Comptroller of the Currency regulates national banks, not the N.Y.S. Banking Department which only has jurisdiction over state banks.

If the credit card issuer is a national bank, which it probably is, the federal statute (29 U.S.C. §85) that allows it to charge a higher rate of interest than New York’s usury rate does not automatically preempt New York’s usury limits. 

Before a national bank is entitled to collect on an interest rate that exceeds New York’s usury limit, the national bank plaintiff must prove that “at least one significant non-ministerial action associated with the account took place in the ‘bank’s home’”. Citibank (S.D.), N.A. v. Hansen, 28 Misc.3d 195, 196, 902 N.Y.S.2d 299, 301 (Dist. Ct. Nassau County 2010).

It has long been the law in New York that usurious contracts are void and unenforceable.  Gen’l Oblig. Law §5-511.  Therefore, the bank’s failure to specify the law governing its right to recover 29.99% interest and to plead a non-ministerial act performed on the account in its “home state”, would make its contract usurious and unenforceable in New York. 

Our firm is experienced in consumer protection and we have successfully represented debtors being sued by credit card companies.

In the News

 Sue A Debt Collector--Make a Quick & Easy $1000 in Small Claims Court

Want to make a quick $1000?  Sue a debt collector in Small Claims Court.  Federal law requires debt collectors to inform you that they are debt collectors, the name of the creditor, the amount of the debt, that you have the right to contest the validity of the debt within the first 30 days of receiving the debt collector's notice and that you have the right to request written verification of the debt.  15 U.S.C. §1692g(a).  If any of these required notices are not included in the debt collector's initial communication with you, you can sue in Small Claims Court and you don't need to hire an attorney to do so.  The federal Fair Debt Collection Practices Act states that you are entitled, as a matter of law, to statutory damages for a debt collector's failure to provide any or all of these required notices in the amount of $1,000.00, plus court costs and attorney fees.  15 U.S.C. §1692k(a)(2)(A).  However, if you believe that there may be the potential for a class action against the attorney debt collector, the monetary awards are significantly greater--up to $500,000 (15 U.S.C. §1692k(a)(2)(B))--you should call Doniger & Engstrand, LLP, immediately.  We are experienced in successfully handling class actions and, more importantly, we are experienced in consumer protection.