Frequently Asked Questions

Why Should I Hire An Elder Law Attorney?

As Elder Law attorneys, we have training and experience in the areas of law relating to Wills, Trusts, Powers of Attorney, Living Wills, and the intricacies of estate and inheritance taxes. Our skills and knowledge allow us to provide clients with a complete plan for caring for yourself or a loved one. Aside from the legal aspects of estate planning, we are sensitive to the unique needs of elderly clients and their families. We have handled matters for clients who have not properly planned and seen the consequences of that failure. We are dedicated to rendering our services with compassion and kindness.

ESTATE PLANNING

What Is An Estate Plan?

Put in its most simple terms, an estate plan maximizes the benefits that your assets can provide to you during your life and to those you desire to benefit from them after your death.

Why Is It So Important That I Make A Will And Estate Plan?

Having an estate plan is important, regardless of how much money and property you own.

An estate plan, including a Will, allows you to:

  1. ensure that your property will go to the people you want, in the way you want, and when you want
  2. save as much money as possible on taxes, court costs and attorneys' fees
  3. take comfort in the fact that your loved ones will be able to mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion
  4. remain in control
  5. prevent unnecessary complications and family discord after your death
  6. provide for your intended beneficiaries -- those you love the most -- without extra administration costs, unnecessary taxes or squabbling among your heirs

What Will Happen If I Die Before I Make A Will And Estate Plan?

A person that has died intestate is a person that has died without having made a valid Will. All states, including New Jersey, have a legal process – known as Intestacy Laws – that determines who will inherit the property of a person who dies intestate.

If a person dies intestate, then the intestacy laws will determine who will inherit their property. While each state has different laws, they all follow the same general pattern - first your spouse and your children will inherit your property; if you don’t have a spouse or any children, then your parents will inherit your property; if your parents have predeceased you then your brothers and sisters will inherit your property; if not, then your property will go to more remote relatives. Ultimately, your estate would go to the State of New Jersey if you have no living relative.

If I Die Without A Will, What Will My Surviving Spouse Or Domestic Partner Be Entitled To?

There are several possible scenarios if you die with a surviving spouse:

  1. If you and your surviving spouse or domestic partner have children and no stepchildren, then your surviving spouse or domestic partner will inherit your entire estate.
  2. If you and your surviving spouse or domestic partner have children and your surviving spouse or domestic partner has children of a prior union, then your surviving spouse or domestic partner will inherit the first 25% of your estate (but not less than $50,000.00 nor more than $200,000.00), plus one-half of any balance. Your children, from this marriage or any prior union, will share the other half equally.
  3. If you have children from a prior union, then your surviving spouse or domestic partner will inherit the first 25% of your estate (but not less than $50,000.00 nor more than $200,000.00), plus one-half of any balance. Your children, from this marriage or any prior union, will share the other half equally.
  4. If you do not have children, but you are survived by a parent(s), then your surviving spouse or domestic partner will inherit the first 25% of your estate (but not less than $50,000.00 nor more than $200,000.00), plus three-fourths of any balance. Your parent(s) will inherit the other one-fourth.

What Should An Estate Plan Include?

Your foundational estate plan should include the following three important legal documents:

  • Last Will and Testament
  • Living Will/Health Care Proxy
  • Financial Power of Attorney

Do I Need A Last Will And Testament?

A Last Will & Testament states the intentions of a deceased person concerning the distribution of his or her property, as well as the management of his or her affairs following his or her death. In other words, it allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want, and when you want.

A Last Will & Testament also allows you to designate an Executor to administer your estate.

If you do not create a Last Will & Testament, your assets with be distributed in accordance with your state’s Intestacy Laws.

Do I Need A Living Will?

Planning for what happens to you if you suffer from a terminal illness or are critically injured should be made a part of your estate plan; otherwise, these difficult decisions will be left to your family and doctors. The legal document necessary to put your wishes in writing is called a Living Will.

A Living Will contains a written set of instructions to your physician as to whether or not you want to receive life-sustaining procedures if you have been diagnosed with a terminal condition, end stage condition, or are in a persistent vegetative state. It also gives guidelines for your family members to follow if you become terminally ill.

A Living Will also allows you to appoint a particular person to speak for you should you be unable to speak for yourself with respect to medical decisions. This can also be referred to as a Health Care Proxy.

Do I Need A Financial Power Of Attorney?

A Financial Power of Attorney allows you to delegate to the person of your choice the ability to manage assets that are titled in your individual name, including retirement plans, as well as assets titled in joint names as tenants in common.

Essentially all Powers of Attorney that are done in connection with an estate plan are "durable." A durable Power of Attorney is simply a Power of Attorney that will take effect upon the signing of the document and will remain in effect even if you become incapacitated. Generally, unless the Power of Attorney document specifically indicates it is durable, it is not durable and will terminate upon your incapacity. A non-durable Power of Attorney would, by its nature, be less useful in connection with estate planning or disability planning.

What Is The Main Reason For Having A Power Of Attorney And Living Will?

Signing a general Power of Attorney and Living Will is a much better way to deal with incapacity than a guardianship proceeding.

If you become disabled, a general Power of Attorney authorizes your agent to act on your behalf and sign your name to financial and/or legal documents. A Living Will authorizes your representative to act on your behalf with respect to medical decisions.

Having these documents will generally avoid the need for time consuming, expensive, and publicly embarrassing court proceedings whereby someone has to go to court to have you declared mentally or physically incapacitated and then seek appointment to serve as your legal guardian subject to ongoing court supervision.

When Should An Estate Plan Be Reviewed?

If you already have an estate plan, it should not be considered permanent. Conditions, as well as your desires, may change. Estate plans should be reviewed at least every two-three years and, additionally, any important change in your life demands immediate review.

Life changes that require a review of your estate planning documents might include: birth, death, marriage, divorce or disability of you or a beneficiary; large increase or decrease in the net worth of you or a beneficiary; substantial change in the type of your assets; purchase or sale of a business; change of residence to another state; change in tax law.

A Will can be changed by a codicil, which is an addition or supplement made to change or add provisions to your Will, or by a new Will. The codicil will republish the Will in all other respects. Remember that handwritten changes and markings made can invalidate the Will. The Surrogate will be unable to act and probate will need to be done in the Superior Court.

Do Jointly Held Or "In Trust For” Assets Pass Under The Terms Of My Will?

No. Jointly held assets pass to the other joint owner at your death and "In Trust For” assets will pass to whomever you have designated as the beneficiary. It is a common, erroneous mistake to believe that if you draft a Will that its terms cover an IRA, Life Insurance Policy or a Bank Account that names a beneficiary.

Can I Disinherit My Spouse, Domestic Partner, Children Or Family Under My Will?

The answer is yes; however, a surviving spouse or domestic partner may be able to file for an elective share against the estate and if good cause is shown a disinherited child may also seek to recover a share of the estate.

Do I Need An Attorney To Prepare My Will Or Represent An Estate?

The answer is no. However, it is strongly suggested that you seek the services of an attorney to prepare your Will as defects can cause more problems than the initial cost to have the Will properly drafted.

GUARDIANSHIPS

What Is A Guardianship Proceeding?

A Guardianship Proceeding is a court supervised proceeding through which an individual or entity is appointed to manage the affairs of an incapacitated person. A Guardian can be appointed for a person who needs assistance making decisions. A Guardian can only be appointed if a court hears evidence that convinces it that the person lacks mental capacity in some or all areas of their life and needs assistance. The individual alleged to be incapacitated has a right to an attorney and to object to the appointment of a guardian for him or her.

A Guardian is sometimes necessary to prevent the exploitation or abuse of a vulnerable person, or to recover assets wrongfully taken from the vulnerable person.

What Are The Disadvantages And Advantages Of A Guardianship Proceeding?

A primary disadvantage to a Guardianship Proceeding is that it is a public proceeding, thereby exposing the incapacitated individual to embarrassment as the details of their incapacity are discussed at length. It is also expensive, and is a restrictive procedure. In addition, there is no guarantee that the end result will be in accordance with the incapacitated person's wishes, and someone unacceptable to the incapacitated person could be placed in charge of his or her affairs.

A major advantage to a Guardianship Proceeding is that the courts watch every move the guardian makes in relation to the assets. Some feel that this oversight provides increased protection for the incapacitated person.

MEDICAID and MEDICARE

What Is The Difference Between Medicare And Medicaid?

Both Medicaid and Medicare offer access to health services, but they are very different in key areas. While Medicare is not predicated upon the assets of the beneficiary, (in general) Medicaid is a "needs-based" program for those individuals 65 years or older, or blind, or disabled (or who fall into another category of eligibility) and those who do not have sufficient income and assets to pay for their long term medical treatment. Medicaid also covers custodial and skilled long-term care, with no limits to the length of said care. In contrast, Medicare will only cover a specified period of time spent in a nursing home.

Will Medicare Cover My Medical Costs If I Need To Stay In A Nursing Home?

Yes and No. Medicare will cover a percentage of the costs associated with your stay in the skilled nursing facility for a maximum of one-hundred (100) days. To receive Medicare benefits in a skilled nursing facility you first must be hospitalized for three (3) successive days (not counting the day of discharge), a physician must indicate that skilled care is needed on a daily basis, the care must be provided in a Medicare certified skilled nursing facility and the need for care and services must be due to a condition that was treated in the hospital. Once eligibility has been determined, Medicare will pay for the entire cost incurred for the first twenty (20) days, but for days twenty-one (21) through one-hundred (100), there will be a co-payment that must be paid for by the patient.

If I Apply For And Accept Medicaid Benefits, Will My Spouse Be Forced To Sell Our Home And Liquidate Our Remaining Assets?

No. Medicaid allows the "community spouse" (the non nursing home bound spouse) to keep the home (so long as he or she is living in the home or there is an intent to return to the home) and a modest amount of "disregarded" or "exempt" assets from the marriage.

I Am Married. What Happens If My Spouse Has To Go To A Nursing Home?

In New Jersey, the spouse of a nursing home resident is allowed to keep one-half (1/2) of the couple's countable assets, not to exceed $109,560.00. In addition, as a general rule, the nursing home resident is allowed to keep $2,000.00 in countable assets.

Note: This amount is subject to adjustment every year.

I Am Single. What Happens If I Have To Go To A Nursing Home?

As a general rule, if you are single you are allowed to keep $2,000.00 of countable assets. However, amounts exceeding $2,000.00 may be able to be protected. Please consult with a qualified elder law attorney who will be able to explain the options available to you for your exact situation.

Can I Give Away Some Or All Of My Assets To My Kids And Still Be Eligible For Medicaid?

As part of your Medicaid application the Medicaid rules allow for the Department of Social Services to look back at your financial records. If you have transferred assets to a third-party for less than valuable consideration at any point in the past five (5) years, the transfer should be evaluated by a skilled elder law attorney to determine how the transfer will be treated for purposes of a Medicaid application.

What Does "Spend Down" Mean?

Individuals who meet all of the requirements necessary to qualify for Medicaid, but whose income and/or asset levels are above predetermined levels, are permitted to "spend-down," or reduce the amount of, their countable assets in order to qualify for Medicaid services. A spend down is very similar to a deductible on an insurance policy.

A Medicaid applicant will not be penalized or refused if excess funds were spent on things for which value was received. For example, the most common spend down is to pre-pay for a funeral. Other allowable spend downs include repairs needed for the home of a married couple, legal fees, and the purchase of things that may be needed for the nursing home resident (i.e. glasses, hearing aids).

In the case of a Medicaid spend down, the individual is allowed to use their available income to pay for their medical bills.

It is very important that you keep copies of all medical bills, prescription receipts, and records of other expenses. When you accumulate enough bills to meet your spend-down amount, you can then submit copies of the bills to your Board of Social Services caseworker.

The timing of any spend down must be carefully considered. It is important to make sure that all purchases have been completed prior to the date on which eligibility is requested.

What Is A Countable Asset?

Countable assets include cash, retirements accounts, stocks, bonds, the cash surrender value of life insurance policies (only if the face value is more than $1,500.00), and real estate other than the principal residence.

In the case of a married couple, for most of these assets, it does not matter which spouse’s name is on the account. If either spouse's name is listed as the owner of the asset, then the total value of the asset will be countable.

PROBATE

What is Probate?

Probate generally is the legal process whereby the real and personal property owned by a Decedent alone is transferred to another. No probate can be completed until the day following the tenth day after death. Fees will be charged as set forth by the New Jersey legislature. It is a relatively inexpensive process.

If the Will appoints an Executor, the person named must apply for Probate to the Surrogate of the County where the Decedent resided at the time of death. The Executor must provide the original Will and a certified copy of the death certificate.

The initial step in Probate is to authenticate the writing being presented as the Decedent’s Will. The Will is proved to be valid by a Surrogate, who has the authority to determine the authenticity of such a document. If the Will is self- proving (language added to the will that allows the document to prove itself), no further proof or testimony will be necessary to probate the Will. If the Will is not self-proving, a proof of one of the witnesses to the Will signing is necessary to complete the probate.

Once the Will is proved to be valid, the named Executor must qualify for the office and sign qualification papers.

Thereafter, the Surrogate will issue Letters Testamentary evidencing the appointment of the individual as the Executor to the estate. The Letters Testamentary provide written authorization for the Executor to lawfully act on behalf of the Estate and allow the Executor to access and transfer the Decedent’s assets such as bank accounts, stocks, bonds, etc.

Probate also involves appointing an individual for an estate when someone dies without a Will.

If a Decedent dies intestate, or without a Last Will and Testament, the court will appoint an Administrator. An individual can make application to the Surrogate of the County where the Decedent resided at the time of death to be appointed as Administrator to represent the estate. The surviving spouse or domestic partner of the Decedent has the first right to be appointed as Administrator of the Estate. However, any heir may be appointed assuming they obtain the appropriate renunciations from any other heir who has an equal or prior right to be appointed.

The Administrator must qualify for the office. The Administrator must post a bond (which acts as an insurance policy on the Estate to ensure that the assets are distributed properly) that represents the full value of the estate, file renunciations from any individual that has a prior or equal right to be appointed, and sign qualification papers.

Thereafter, the Surrogate will issue Letters of Administration evidencing the appointment of the individual as the Administrator to the estate. The Letters of Administration provide written authorization for the Administrator to lawfully act on behalf of the estate and allow the Administrator to access and transfer the Decedent’s assets such as bank accounts, stocks, bonds, etc...

Can The Probate Process Be Stopped In The Surrogate's Office?

The answer is yes; before a probate is begun or completed, a caveat can be filed that restricts or prohibits the Surrogate from taking any other action on the probate. The process would then have to proceed in the Superior Court by Verified Complaint and Order to Show Cause for a hearing and determination.

Can I Challenge A Probate After It Is Completed?

The answer is yes. New Jersey Court rules set forth the time frame in which an application can be made to set aside a probate. The time differs on the residency of the person making the application. The complaint must be made in the Superior Court, Chancery Division.

How Can I Access A Bank Account That I Jointly Owned With The Decedent?

Certain bank accounts or certificates of deposits may be owned with right of survivorship, which means that upon the death of one party to the account, the surviving party becomes the sole owner.

Where the surviving party is a spouse or domestic partner, he/she can simply fill out an affidavit of waiver or L-8 form at the bank to access the funds.

Where the surviving party is not a direct descendent of the Decedent, the account is determined to be owned entirely by the Decedent and subject to death taxes. As such, the monies from the joint account cannot be fully accessed until a tax waiver is provided by the State of New Jersey.

How Can A Decedent’s Safe Deposit Box Be Accessed?

The Personal Representative is permitted to remove the original Will and deeds to a cemetery plot from a safety deposit box. Other items in the box can only be accessed and removed by a joint owner, if the box is jointly owned, or upon the presentation of a Surrogate's certificate.

What Are The Basic Requirements Of An Executor/Executrix Or Personal Representative?

The Executor/Executrix or Personal Representative is required to collect and safeguard the assets of the estate, to pay the debts of the Decedent and any taxes due, to make distribution of the beneficiaries, and if required, to provide and accounting of his or her administration of the estate. Your attorney can give you further advice as to specific duties and obligations.

How Does The Executor Obtain The Funds To Pay The Debts?

Normally, the representative of the estate will open and maintain an estate checking account to pay the bills and debts of the estate. Assets in the Decedent's name alone are usually liquidated and placed into the checking account. One-half of the value of existing accounts can be accessed pending the receipt of tax waivers.

As A Personal Representative, Am I Protected Against Creditors Of The Estate?

Creditors must come forward and pursue their claims within 9 months of the Decedent's death. If a claim is not presented within the 9 month period, the Personal Representative shall not be liable to the creditor with respect to any assets he/she may have delivered or paid in satisfaction of any lawful claims or shares due to beneficiaries of the Estate before the presentation of the claim.

Do I Need To File A Formal Accounting If I Represent An Estate?

No, not necessarily. In most cases, the estate is settled without formal court proceedings. A representative may, however, file an informal accounting with the court or obtain consent from all of the beneficiaries to the estate that dispenses with the accounting, approves the actions of the representative, and provides for the method or manner of distribution.

Am I Entitled To Compensation As A Personal Representative?

Yes. The New Jersey Legislature has set commissions based on corpus and income amounts that are allowable on all estates, Trusts and Guardianship matters. As a Personal Representative, you are entitled to 5% corpus commissions of the first $200,000.00 of estate assets, 3.5% on the excess over $200,000.00 up to $1,000,000.00, and 2% over $1,000,000.00. In addition to corpus commissions, a Personal Representative is entitled to income commissions of 6% of income earned during the administration of the estate.

Is The Probate Process Expensive?

No. While fees are set by the New Jersey legislature, most probates cost less than $200.00.

When Do I Have To Act And What Do I Have To Do?

A timetable of events is dictated in part by statutory filing periods within which tax and non-tax events must occur. At a minimum, the events will include the following items that should take place within the periods shown:

Event When?
Appear at Surrogate's Office to Probate Will. Any time after death, but letters may not be issued sooner than 10 days after death (except when there is no Will then 5 days after death is required time)
Identify Assets Owned And Debts Owed By The Decedent. Marshall Debts And Assets. Immediately after letters are issued.
Provide Notice Of Probate To All Interested Parties – Heirs At Law, Next Of Kin, And Beneficiaries. No later than 60 days after probate.
Complete Post-Mortem Tax Analysis. 5th month after death.
Maintain Open Communication With Beneficiaries Regarding All Steps To Be Taken Throughout Administration. Throughout administration.
Expiration Of Surviving Spouse's Or Domestic Partner's Right To File For Elective Share. 6 months after appointment of Personal Representative.
Date For Alternate Valuation Of Assets (For Tax Purposes). 6 months after death.
File New Jersey Inheritance Tax and Estate Tax Returns (if applicable). Within 8 months after death.
File And Serve Disclaimers. Within 9 months after death.
File Decedent’s Final Income Tax Return. By April 15th of the year following the year of death.
File Federal Estate Tax Return (if applicable). Within 9 months after death.
Distribution Of Tangible Personal Property. As soon as practical.
Distribution Of Specific Bequests. Within one year if feasible.
File Fiduciary Income Tax Returns (State and Federal). If estate’s tax year is calendar year then by April 15th of the year following death. If estate elects a fiscal year, then within three and one-half months of end of fiscal year.
Prepare Final Accounting (Along With Release And Refunding Bonds) And Provide To Beneficiaries For Approval. When all above are complete.
Perform Child Support Judgment Search On Each Beneficiary Before distribution of balance of residue to beneficiaries.
Distribute Balance Of Residue And Pay Fees And Commissions. When accounting is approved.
File Release And Refunding Bonds With The Surrogate's Court. After distributions are made.

DEATH TAXES

What Are The Applicable Death Taxes?

The applicable death taxes are New Jersey Inheritance Tax, New Jersey Estate Tax, and Federal Estate Tax.

What Is The New Jersey Inheritance Tax?

The New Jersey Inheritance Tax is a tax on the right to receive an inheritance or property at the time of someone's death and is determined on the relationship of the beneficiary to the Decedent.

There is currently no tax imposed on a transfer to a spouse, domestic partner, child, adopted child, step-children, grandchildren, parent, or grandparent.

On a transfer to a brother or sister of the Decedent, a wife or widow of a son of the Decedent or husband or widower of a daughter of the Decedent, the first $25,000.00 is exempt. Any amount over that up to $1,075,000.00 is currently taxed at 11%.

Any other beneficiaries (other than those entirely exempt such as charities or educational institutions) will be currently taxed after the first $499.00 at the rate of 15% up to $700,000.00 and 16% on anything over that amount.

What Is The New Jersey Estate Tax?

Transfers to charities, a surviving spouse, a surviving civil union partner or a surviving domestic partner are exempt from the New Jersey Estate Tax. Transfers to anyone else are taxable to the extent that the transfer exceeds $675,000.00.

The New Jersey Estate Tax is a progressive tax, meaning that the more you pass on, the higher the tax rate. The New Jersey Estate Tax rate generally varies from 0% to 16% depending upon the amount of the transfer.

What Is The Federal Estate Tax?

Starting January 1, 2012, estates are taxable to the extent that the transfer exceeds $5,120,000.00. The federal estate tax rate remains constant at 35%.

Unless Congress acts, starting in 2013, the current estate tax exemption amounts will revert to their 2001 level adjusted for inflation (likely to be about 1,300.000.00). The federal tax rate will return to a graduated rate, with the highest tax at 55%.