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Recession leads to surge in New York estate lawsuits

By: DOLAN MEDIA NEWSWIRES//April 9, 2012//

Recession leads to surge in New York estate lawsuits

By: DOLAN MEDIA NEWSWIRES//April 9, 2012//

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By John Callegari
Dolan Media Newswires

One unexpected side effect of the bad economy: Souring sibling rivalries that are feeding a frenzy of lawsuits over parental estates.

The legal battles come amid an unprecedented transfer of wealth in the United States, during which baby boomers will inherit an estimated $8.5 trillion – or an average of nearly $300,000 per inheriting household, according to the Center for Retirement Research at Boston College.

Legal experts say poor planning is the biggest culprit behind the court battles, but the growing number of blended families is also a factor. The Pew Institute reports that 40 percent of U.S. households now have at least one step-relative, often complicating who gets what.

Cain and Abel-style disputes, of course, still lead the way.

In New York, estate litigation cases are up as much as 50 percent, and the suits can get ugly, said Avi Kestenbaum, an equity partner with Mineola, NY-based Meltzer, Lippe, Goldstein & Breitstone, the Island’s largest trusts and estates firm.

“Typically, clients will only sue if they stand to gain financially from it, but some of these disputes are so bitter and extend far beyond money,” Kestenbaum said. “That’s why family litigation has become so nasty. The parties care more about the vengeance and airing out their frustrations than winning.”

The estates business is so strong that the firm has recently added staff and could use more, Kestenbaum said.

Jack Barnosky, a partner at Uniondale, NY-based Farrell Fritz, has seen a similar increase in his firm’s estates business, including a new influx of cases from New York City, where some large firms have abandoned their estates practices in favor of more glamorous practice areas.

“I’ve been doing this for 30 years and for first 15 to 20 years, 75 percent of my clients were from Nassau, Suffolk or Queens,” Barnosky said. “Now, about half of them are from New York County.”

Need further proof the trusts and estates business is booming? Consider the T&E and elder law firm Genser, Dubow, Genser & Cona, which moved into sumptuous Melville, NY, digs in February that offer natural light and a Zen garden. Bennies include weekly one-hour massages for employees.

Paul Hyl, a partner at the firm, said initial calls concerning potential estate fights are up about 50 percent. Like Kestenbaum, Hyl sees the economy playing the largest role.

“I’ve seen situations where a son lives with mom and is the executor, but was also taking care of her at the end of her life,” Hyl said. “He may feel more entitled to the money than his sister who lives in California and feels her brother has done nothing to sell the house mom left behind because he’s still living there. Financially she needs the money and the matter winds up in court.”

Kestenbaum also pointed to sibling fights as the most common, usually one child bringing suit against a brother or sister who was appointed the will’s executor. The fight is almost always about one getting a bigger share.

In one case Kestenbaum handled, a sibling who was divorced and feeling the effects of the recession felt she was entitled to more of the inheritance than a well-off, happily married sibling. As a result, she made fraudulent transfers out of the estate that should have gone to the other sibling.

“There tends to be a permanent rift that’s put in there,” Hyl said. “Many estate litigation attorneys are acutely aware of that potential. Many of us try to balance that with the desire to receive the best outcome for our client. We don’t want to be the cause for a further rift.”

So, will a strengthening economy reverse the trend? Not significantly, according to Barnosky.

“I think younger people are more apt to litigate than the older generation people,” he said. “So that will probably continue to be the case going forward.”

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