Probate & Estate Planning speech

2010 update Wills and Estate Planning

The new Probate Law and court decisions made a number of substantial changes in Probate and the administration of estates and trusts in New Jersey.

1. Recent cases & suspicious circumstances Preparation of Wills When there is a confidential relationship coupled with suspicious circumstances, undue influence is presumed and the burden of proof shifts to the Will proponent to overcome the presumption.

If there is undue influence in making of Will and transfer by Deed of a

house by persons in Confidential relationship, this could subject those persons to punitive damages in some instances, plus voiding of the Will. In the Matter of the Estate of Madeleine Stockdale, Deceased 196 NJ 275 (2008)

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The New Probate Law SENATE Law No. 708 made a number of substantial changes to the provisions governing the administration of estates and trusts in New Jersey.

The adoption of portions of the Uniform Probate Code attempted to bring greater uniformity to the rules governing testamentary and non­testamentary transfers to make most state laws similar.

2. Almost Wills.

The law expands situations where writings that are intended as Wills would be allowed, but requires that the burden of proof on the proponent would be by clear and convincing evidence. Possibly a Christmas card with handwritten notes could be presented as a Will or Codicil.

To present a non formal Will or writing requires an expensive Complaint and Order to Show Cause to be filed in the Superior Court, and a hearing in front of a Superior Court Judge.

Be careful, have a Will done properly by an experienced attorney.

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3. The recommendation for Self­ Proving Wills An old New Jersey Probate law required one of the two witnesses to a Will to travel and appear in the Surrogate’s office and sign an affidavit to certify they were a witness. This often created problems when the witness was deceased, moved away, or simply could not be located. Some witnesses would require a $500 fee to simply sign a surrogate paper. My Grandmother’s Will was not self­ proving, and the witness to Will extorted a $500 fee.

The New Jersey Legislature later passed a law to create a type of Will called a “Self­Proving Will.” In such a Will, the person for whom the Will is made must sign. Then two witnesses sign. Then the attorney or notary must sign; with certain statutory language to indicate the Will is self proving.

When done properly, the executor does not have to locate any witnesses.

This usually saves time and money. If your Will is not “self­proving” or if you are unsure, schedule an appointment with an elder law attorney. Some law offices ignore the revised law, and fail to prepare self proving Wills. Do not use the office in Carteret that follows 1978 laws.

The elective share provisions of the present Code has still not been changed yet. Currently, a spouse who is not given money in a Will can challenge the terms of the Will. This is called "electing against the Will by a spouse". A spouse could receive up to 1/3 of the estate, even if only married for 2 weeks. The spouse must file a caveat or lawsuit in Superior Court. We suggest a formal prenuptial agreement in 2nd marriage situations.

A Testator now means both male and female individuals, removing the term “Testatrix”. Will forms used by attorneys will need to be revised.

4. No Will? Who gets?

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Prior to 2005, when a decedent leaves only a spouse and children by that spouse, the spouse got $50,000, then the spouse and children split the rest 50­50. So, if someone was married for 50 years, under the old law the kids got half.

The 2005 law makes substantial revisions to the laws governing intestate succession.

The surviving spouse is now be entitled to a larger share of the estate in the event that either a parent of the decedent survives a decedent who has no descendants, or there are descendants of the surviving spouse who are not descendants of the decedent.

WHEN THERE IS NO WILL

INTESTACY PROVISIONS

Spouse & Children of the Decedent, all of who are also children of the spouse (and spouse has no Children by any other relationship).

Spouse: 100% of the estate

Spouse and children of the Decedent some of who are not children of the Spouse.

Spouse: the first 25% (but not less than $50,000.00 nor more than $200.000.00) plus one half of the balance.

Children: nothing

Children of the Decedent: All other estate assets. [less than 50%] Spouse and children of Decedent, all of who are also children of spouse and spouse

Spouse: the first 25% (but not less than $50,000.00 nor more than

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has children by another relationship.

$200,000.00) plus one half of the balance.

Children of the Decedent: All other estate assets. [less than 50%]

Spouse & Parents No Children

Spouse: the first 25% (but not less than $50,000.00 nor more than $200,000.00) plus three fourths of the balance.

Parents: All other estate assets. [less than 25%]

Spouse and step­children (children of spouse who are not Decedent’s Children).

Spouse: 100% of the estate

Children of spouse (step­ children), but no descendants, parents, descendants of parents or descendants of grandparents

(And if the spouse is an Administrator, no bond is required.)

If you get married, have a Will prepared. You could be married 25 years, have no children, but if you die your spouse may not receive the entire estate.

25% could go to a parent in a nursing home.

5. Effect of divorce The new statute expanded the present law that a divorce nullifies Will provisions to the ex­spouse. The law provided that divorce or annulment of a

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marriage, under certain circumstances, would revoke not only provisions of the former spouse's Will, but also non­probate transfers occurring by reason of the decedent's death to the former spouse. Ex­ accounts payable upon death. However, separated or divorced persons should prepare a new Will anyway.

The law provides a statute of limitations with respect to creditor claims against a decedent's estate. There is no longer a need to publish a Notice Limiting Creditors.

6. 2010 increases in Federal Estate and Gift Tax exemption The amount to leave without Federal Estate Tax is temporarily unlimited.

It was increased to 3,500,000 for 2009.

2009 over $ 3,500,000 taxed at 45% 2010 No estate tax if person dies in 2010 only, but 35% (gift taxes only) [2010 is best year for your rich uncle to pass away, but Congress can change the law, and impose a tax on everyone dying in 2010.]

2011 $1,000,000 55% 2012 ­??? Waiting for Congress to decide Gifts permitted without Federal Estate & Gift tax was increased to $13,000 per person. The amount permitted for Medicaid transfers is

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zero.

7. FEDERAL ESTATE TAX RETURN & NJ Estate Taxes New Jersey law requires that a copy of the Federal estate tax return be filed with the NJ Inheritance Tax Branch within 30 days after the filing of the original with the Federal government. Also, the Branch must receive a copy of any communication from the Federal government making any final change in the return, or confirming, increasing or reducing the tax shown to be due.

New Jersey has an Estate Tax on amounts over $675,000. So, even if no Federal Estate Tax due, the estate must still file a Federal Estate Tax Return, plus NJ Estate Tax Return.

8. NJ Inheritance tax

The NJ Inheritance Tax Return instructions were revised in October, 2009. Throw out your old forms. Even if no inheritance tax due, a Tax Waiver on a house must be obtained and filed if the house was not co­owned by the spouse.

9. Power of Attorney Do not use a form purchased online, unless it contains reference to the NJ statute requiring banks to honor the Power of Attorney. Section 2 of P.L. 1991, c. 95 (c. 46:2B­11).

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10. Federal Health Privacy Law (HIPAA) A federal regulation known as the Health Insurance Portability and Accountability Act (HIPAA) was adopted regarding disclosure of individually identifiable health information. This necessitated the addition of a special release and consent authority to all healthcare providers before medical information will be released to agents and interested persons of the patients.

The effects of HIPAA are far reaching, and can render previously executed estate planning documents useless, without properly executed amendments, specifically addressing these issues.

Any previously executed Powers of Attorney, Living Wills, Revocable Living Trusts, and certainly all Medical Directives now require HIPAA amendments.

Powers of attorneys and Living Wills should be updated to reference this New law. More information on the HIPAA law at http://www.njlaws.com/hipaa.htm Living Wills After you sign the Living Will in your attorney’s office, provide a copy to your doctor and family.

11. Administering the Estate/ Probate/Surrogate

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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 Executor or 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.

Certain Duties of Executor and attorney: Bring Will to Surrogate – attorney will prepare Fact Sheet 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) Apply for Federal Tax ID # Set up Estate Account at bank Pay bills from estate account Prepare Inheritance Tax Return within 8 months and obtain Tax Waivers (Attorney can handle) File Inheritance Tax waivers upon receipt (Attorney can handle) File first Federal and State Income Tax Return [CPA ] Prepare Informal Accounting Obtain Child Support Judgment clearance (Attorney will handle)

Prepare Release and Refunding Bond (Attorney can handle)

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Contact a Probate Attorney for an in office consultation KENNETH VERCAMMEN & ASSOCIATES, PC ATTORNEY AT LAW 2053 Woodbridge Ave. Edison, NJ 08817 (Phone) 732­572­0500 More information at www.CentralJerseyElderLaw.com

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