ABA ESTATE PLANNING, PROBATE & TRUST COMMITTEE Newsletter Winter, 2007 ABA General Practice, Solo and Small Firm Division American Bar Association Chairs - Kenneth Vercammen, Edison, NJ and Jay Foonberg, Beverly Hills, CA In this issue: 1. 2008 PUBLIC BENEFIT NUMBERS 2. DUTIES OF EXECUTOR AND REMOVING AN EXECUTOR OF AN ESTATE 3. More Elder Law & Estate Planning articles added to website http://centraljerseyelderlaw.com/ 1. 2008 PUBLIC BENEFIT NUMBERS By Thomas D. Begley, Jr., Esquire Every year selected public benefit numbers change. These are indexed to the cost of living. Here are some of the important numbers for 2008: $1,911 $104,400 $20,880 $2,610 $1711.25 $513 2.3% $637 $956 $940 $1,570 7.65% 15.30% $102,000 $1,050.00 $670.00 $2,185.00 $128 $96.40
Medicaid Income Cap Maximum CSRA Minimum CSRA Maximum MMMNA MMMNA (until July 1, 2007) Excess Shelter Allowance (until July 1, 2007) Social Security Social Security Increase SSI – Single SSI – Couple SGA - Disabled SGA – Blind Tax Rate Employee Tax Rate Self Employed Maximum Taxable Earnings Quarter of Coverage Trial Work Period Maximum Social Security Benefit
Medicare Medicare Co-Payment – NSF Medicare Part B Standard Premium ($82,000 income or less)
Medicare Part B –Related Premium $135/year $96.40/mth
Deductible Standard Premium
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Part B Income-Related Premium Income-related monthly adjustment amount
Total monthly premium amount
Beneficiaries who file an individual tax return with income:
Beneficiaries who file a joint tax return with income:
Less than or equal to $82,000
Less than or equal to $164,000
$0.00
$96.40
Greater than $82,000 and less than or equal to $102,000
Greater than $164,000 and less than or equal to $204,000
$25.80
$122.20
Greater than $102,000 and less than or equal to $153,000
Greater than $204,000 and less than or equal to $306,000
$64.50
$160.90
Greater than $153,000 and less than or equal to $205,000
Greater than $306,000 and less than or equal to $410,000
$103.30
$199.70
Greater than $205000
Greater than $410,000
$142.90
$238.40
Cost-Sharing for Part A and Part B On October 1, 2007 the Centers for Medicare & Medicaid Services (CMS) announced Part A and Part B premiums and deductibles for 2008.[1] $1,024/benefit period
Hospital
Hospital Coinsurance $0 Days $256/day Days 61-90 $512/day Days 91-150 Skilled Nursing Facility Coinsurance $0 Days 0-20 $128/day Days 21-100 $233/mth $423/mth Part B $135/year $96.40/mth
Part A Premium (for voluntary enrollees only) With 30-39 quarters of Social Security coverage With 29 or fewer quarters of Social Security coverage Deductible Standard Premium
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Part B Income-Related Premium Beneficiaries who file an individual tax return with income:
Beneficiaries who file a joint tax return with income:
Income-related monthly adjustment amount
Total monthly premium amount
Less than or equal to $82,000
Less than or equal to $164,000
$0.00
$96.40
Greater than $82,000 and less than or equal to $102,000
Greater than $164,000 and less than or equal to $204,000
$25.80
$122.20
Greater than $102,000 and less than or equal to $153,000
Greater than $204,000 and less than or equal to $306,000
$64.50
$160.90
Greater than $153,000 and less than or equal to $205,000
Greater than $306,000 and less than or equal to $410,000
$103.30
$199.70
Greater than $205000
Greater than $410,000
$142.90
$238.40
In addition, the monthly premium rates to be paid by beneficiaries who are married, but file a separate return from their spouse and lived with their spouse at some time during the taxable year are: Beneficiaries who are married but file a separate tax return from their spouse: Less than or equal to $82,000 Greater than $82,000 and less than or equal to $123,000 Greater than $123,000
Income-related monthly adjustment amount
Total monthly premium amount
$0.00
$96.40
$103.30
$199.70
$142.00
$238.40
Standard Part D Cost-Sharing for 2008 On April 2, 2007 CMS issued information about Part D cost-sharing for 2008:[2] $27.93 Base Beneficiary Premium $275.00 Deductible $2,510.00 Initial Coverage Limit $4,050.00 Out-of-pocket Threshold 3
$5,726.25 Total Covered Part D Drugs to Get to Catastrophic Limit $2.25 Catastrophic cost-sharing: Generic/ Preferred Drug Low-Income Subsidy Co-Payments (LIS) Full Benefit Dual Eligibles w/incomes ≤ 100% Federal Poverty Level $1.05 Generic/Preferred Drugs $0.00 Above Catastrophic Limit Full Benefit Duals with Incomes >100% Federal Poverty Level & Other Full-Subsidy Eligible Beneficiaries $2.25 Generic/preferred drugs $0.00 Above Catastrophic Limit Partial Subsidy $56.00 15% $2.25 $5.60
Eligible Beneficiaries Deductible Co-insurance to ICL Generics above catastrophic limit Others above catastrophic limit
Copyright 2007 by Begley & Bookbinder, P.C., an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and Oxford Valley, Pennsylvania and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania. Tom Begley Jr. is one of the speakers with Kenneth Vercammen at the NJ State Bar Association's Annual Nuts & Bolts of Elder Law and co-author with Kenneth Vercammen, martin Spigner and Kathleen Sheridan of the 400 plus page book on Elder Law. The Firm provides services in connection with protecting assets from nursing home costs, Medicaid applications, Estate Planning and Estate Administration, Special Needs Planning and Guardianships. If you have a legal problem in one of these areas of law, contact Begley & Bookbinder at 800-533-7227. 2. DUTIES OF EXECUTOR AND REMOVING AN EXECUTOR OF AN ESTATE by Kenneth A. Vercammen, Esq. Under New Jersey Law, the people selected as an executor of a Will have numerous legal responsibilities following the death of the person who signed the Will. Primarily, they have a duty to probate the Will, liquidate assets, pay bills and taxes, file all necessary court and tax returns, and then distribute the assets to beneficiaries. If there is no will, someone can petition the surrogate to be appointed as "administrator" of the estate. In New Jersey, the court and surrogate do not supervise how an executor or
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administrator handles the estate. Unfortunately, the Executor occasionally fails to timely carry out their duties. They may fail to file tax returns, fail to keep records, misappropriate funds or ignore instructions under the Will. If you are not satisfied with the handling of the estate, you can have an attorney file a Complaint in the Superior Court. The New Probate Statute of NJ revised various sections of the New Jersey law on Wills and estates. law makes a number of substantial changes to the provisions governing the administration of estates and trusts in New. Duty of Executor in Probate & Estate Administration 1. Conduct a thorough search of the decedent's personal papers and effects for any evidence which might point you in the direction of a potential creditor; 2. Carefully examine the decedent's checkbook and check register for recurring payments, as these may indicate an existing debt; 3. Contact the issuer of each credit card that the decedent had in his/her possession at the time of his/ her death; 4. Contact all parties who provided medical care, treatment, or assistance to the decedent prior to his/her death; Your attorney will not be able to file the NJ inheritance tax return until it is clear as to the amounts of the medical bills and other expenses. Medical expenses can be deducted in the inheritance tax. Under United States Supreme Court Case, Tulsa Professional Collection Services, Inc., v. Joanne Pope, Executrix of the Estate of H. Everett Pope, Jr., Deceased, the Personal Representative in every estate is personally responsible to provide actual notice to all known or "readily ascertainable" creditors of the decedent. This means that is your responsibility to diligently search for any "readily ascertainable" creditors. Other duties/ Executor to Do Bring Will to Surrogate Apply to Federal Tax ID # Set up Estate Account at bank (pay all bills from estate account) Pay Bills Notice of Probate to Beneficiaries (Attorney can handle) If charity, notice to Atty General (Attorney can handle) File notice of Probate with Surrogate (Attorney can handle) File first Federal and State Income Tax Return [CPA- ex Marc Kane]
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Prepare Inheritance Tax Return and obtain Tax Waivers (Attorney can handle) File waivers within 8 months upon receipt (Attorney can handle) Prepare Informal Accounting Prepare Release and Refunding Bond (Attorney can handle) Obtain Child Support Judgment clearance (Attorney will handle) Let's review the major duties involvedIn General. The executor's job is to (1) administer the estate--i.e., collect and manage assets, file tax returns and pay taxes and debts--and (2) distribute any assets or make any distributions of bequests, whether personal or charitable in nature, as the deceased directed (under the provisions of the Will). Let's take a look at some of the specific steps involved and what these responsibilities can mean. Chronological order of the various duties may vary. Probate. The executor must "probate" the Will. Probate is a process by which a Will is admitted. This means that the Will is given legal effect by the court. The court's decision that the Will was validly executed under state law gives the executor the power to perform his or her duties under the provisions of the Will. An employer identification number ("EIN") should be obtained for the estate; this number must be included on all returns and other tax documents having to do with the estate. The executor should also file a written notice with the IRS that he/she is serving as the fiduciary of the estate. This gives the executor the authority to deal with the IRS on the estate's behalf. Pay the Debts. The claims of the estate's creditors must be paid. Sometimes a claim must be litigated to determine if it is valid. Any estate administration expenses, such as attorneys', accountants' and appraisers' fees, must also be paid. Manage the Estate. The executor takes legal title to the assets in the probate estate. The probate court will sometimes require a public accounting of the estate assets. The assets of the estate must be found and may have to be collected. As part of the asset management function, the executor may have to liquidate or run a business or manage a securities portfolio. To sell marketable securities or real estate, the executor will have to obtain stock power, tax waivers, file affidavits, and so on. Take Care of Tax Matters. The executor is legally responsible for filing necessary income and estate-tax returns (federal and state) and for paying all death taxes (i.e., estate and inheritance). The executor can, in some cases be held personally liable for unpaid taxes of the estate. Tax returns that will need to be filed can include the estate's income tax return (both federal and state), the federal estate-tax return, the state death tax return (estate
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and/or inheritance), and the deceased's final income tax return (federal and state). Taxes usually must be paid before other debts. In many instances, federal estate-tax returns are not needed as the size of the estate will be under the amount for which a federal estate-tax return is required. Often it is necessary to hire an appraiser to value certain assets of the estate, such as a business, pension, or real estate, since estate taxes are based on the "fair market" value of the assets. After the filing of the returns and payment of taxes, the Internal Revenue Service will generally send some type of estate closing letter accepting the return. Occasionally, the return will be audited. Distribute the Assets. After all debts and expenses have been paid, the executor will distribute the assets. Frequently, beneficiaries can receive partial distributions of their inheritance without having to wait for the closing of the estate. Under increasingly complex laws and rulings, particularly with respect to taxes, in larger estates an executor can be in charge for two or three years before the estate administration is completed. If the job is to be done without unnecessary cost and without causing undue hardship and delay for the beneficiaries of the estate, the executor should have an understanding of the many problems involved and an organization created for settling estates. In short, an executor should have experience At some point in time, you may be asked to serve as the executor of the estate of a relative or friend, or you may ask someone to serve as your executor. An executor's job comes with many legal obligations. Under certain circumstances, an executor can even be held personally liable for unpaid estate taxes. Let's review the major duties involved, which we've set out below. In General. The executor's job is to (1) administer the estate--i.e., collect and manage assets, file tax returns and pay taxes and debts--and (2) distribute any assets or make any distributions of bequests, whether personal or charitable in nature, as the deceased directed (under the provisions of the Will). Let's take a look at some of the specific steps involved and what these responsibilities can mean. Chronological order of the various duties may vary. Probate. The executor must "probate" the Will. Probate is a process by which a Will is admitted. This means that the Will is given legal effect by the court. The court's decision that the Will was validly executed under state law gives the executor the power to perform his or her duties under the provisions of the Will. An employer identification number ("EIN") should be obtained for the estate; this number must be included on all returns and other tax documents having to do with the estate. The executor should also file a written notice with the IRS that he/she is serving as the fiduciary of the estate. This gives the executor the authority to deal with the IRS on the estate's behalf. Pay the Debts. The claims of the estate's creditors must be paid. Sometimes a claim must be litigated to determine if it is valid. Any estate administration expenses, such as attorneys', accountants' and appraisers' fees, must also be paid.
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Manage the Estate. The executor takes legal title to the assets in the probate estate. The probate court will sometimes require a public accounting of the estate's assets. The assets of the estate must be found and may have to be collected. As part of the asset management function, the executor may have to liquidate or run a business or manage a securities portfolio. To sell marketable securities or real estate, the executor will have to obtain stock power, tax waivers, file affidavits, and so on. Take Care of Tax Matters. The executor is legally responsible for filing necessary income and estate-tax returns (federal and state) and for paying all death taxes (i.e., estate and inheritance). The executor can, in some cases be held personally liable for unpaid taxes of the estate. Tax returns that will need to be filed can include the estate's income tax return (both federal and state), the federal estate-tax return, the state death tax return (estate and/or inheritance), and the deceased's final income tax return (federal and state). Taxes usually must be paid before other debts. In many instances, federal estate-tax returns are not needed as the size of the estate will be under the amount for which a federal estate-tax return is required. Often it is necessary to hire an appraiser to value certain assets of the estate, such as a business, pension, or real estate, since estate taxes are based on the "fair market" value of the assets. After the filing of the returns and payment of taxes, the Internal Revenue Service will generally send some type of estate closing letter accepting the return. Occasionally, the return will be audited. Distribute the Assets. After all debts and expenses have been paid, the distribute the assets with extra attention and meticulous bookkeeping by the executor. Frequently, beneficiaries can receive partial distributions of their inheritance without having to wait for the closing of the estate. Under increasingly complex laws and rulings, particularly with respect to taxes, in larger estates an executor can be in charge for two or three years before the estate administration is completed. If the job is to be done without unnecessary cost and without causing undue hardship and delay for the beneficiaries of the estate, the executor should have an understanding of the many problems involved and an organization created for settling estates.
COMPLAINT FOR ACCOUNTING A Complaint for Accounting is filed with the Probate Part to request on accounting, removal of the current executor and selection of a new person to administer and wrap up the estate. A signed certification of one or more beneficiaries is needed. In addition, an Order to Show Cause is prepared by your attorney. The Order to Show Cause is to be signed by the 8
Judge directing the executor, through their attorney, to file a written answer to the complaint, as well as appear before the court at a specific date and time. As with a litigated court matter, trials can become expensive. Competent elder law/probate attorney may charge an hourly rate of $225-$350 per hour, with a retainer of $3000 needed. Attorneys will require the retainer to be paid in full up front. The plaintiff can demand the following: (1) plaintiff.
That the named executor be ordered to provide an accounting of the estate to
(2) Executor be ordered to provide an accounting for all assets of d1 dated five years prior to death. (3)
Payment of plaintiff's attorney's fees and costs of suit for the within action.
(4) Declaring a constructive trust of the assets of the decedent for the benefit of the plaintiff and the estate. (5) That the executor be removed as the executor/administrator of the estate and that p1 be named as administrator of the estate. (6) That the executor be barred from spending any estate funds, be barred from paying any bills, be barred from taking a commission, be barred from writing checks, be barred from acting on behalf of the estate, except as specifically authorized by Superior Court Order or written consent by the plaintiff.
EXECUTOR'S COMMISSIONS Executors are entitled to receive a commission to compensate them for work performed. Under NJSA 3B:18-1 et seq., Executors, administrators and other fiduciaries are entitled to receive a commission on both the principal of the estate, and the income earned by assets. However, if you have evidence that the executor has breached their fiduciary duties or violated a law, your Superior Court accounting complaint can request that the commissions be reduced or eliminated. SALE OF REAL ESTATE AND OTHER PROPERTY
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Occasionally, a family member is living in a home owned by the decedent. To keep family harmony, often this family member is permitted to remain in the home temporarily. However, it may later become clear that the resident has no desire on moving, and the executor has neither an intention to make them move nor to sell the house. The remedy a beneficiary has can be to have your attorney include in the Superior Court complaint a count to 1) remove the executor 2) remove the tenant and make them pay rent to the estate for the time they used the real property since death without paying rent 3) compel the appraisal of the home and, thereafter, the sale of the property 4) make the executor reimburse the estate for the neglect or waste of assets. CONCLUSION As a beneficiary, you will probably eventually be requested to sign a release and refunding bond. If you have evidence of misappropriation, you may consider asking the executor for an informal accounting prior to signing the release and refunding bond. If you have concern regarding the handling of an estate, schedule an appointment to consult an elder law attorney. Kenneth A. Vercammen is a Middlesex County, NJ trial attorney who has published 125 articles in national and New Jersey publications on Probate and litigation topics. He often lectures to trial lawyers of the American Bar Association, New Jersey State Bar Association and Middlesex County Bar Association. He is Chair of the American Bar Association Estate Planning & Probate Committee. He is also Editor of the ABA Elder Law Committee Newsletter 3. More Elder Law & Estate Planning articles added to website http://centraljerseyelderlaw.com/: Wills Answers to Probate Questions Power of Attorney Living Wills Executor - Duties & Responsibilities Trusts v. Wills Wills & Estate Administration Medicaid Wills, Children & Guardianship Removing an Executor of an Estate Ten Estate Planning Ideas for Divorced/ Separated Persons 10
Guardianship of Disabled Adults Wills & Estate Planning Codicil to a Will Elective Share of Spouse _______________________ The ABA ESTATE PLANNING, PROBATE & TRUST COMMITTEE of the General Practice Division focuses on improving estate planning skills, substantive law knowledge and office procedures for the attorney who practices estate planning, probate and trust law. Kenneth Vercammen, Esq. co-Chair Jay Foonberg, Beverly Hills Co-chair, Author of Best Sellers "How to Start and Build a Law Practice" , Beverly Hills, CA KENNETH VERCAMMEN & ASSOCIATES, PC ATTORNEY AT LAW 2053 Woodbridge Ave. Edison, NJ 08817 (Phone) 732-572-0500 (Fax) 732-572-0030 Central Jersey Elder Law www.centraljerseyelderlaw.com NJ Elder Blog http://elder-law.blogspot.com/
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