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PROPER ESTATE PLANNING ESSENTIAL IN ENSURING YOUR WISHES ARE HONORED AFTER YOUR DEATH

Friday, January 13th, 2012

By Fredrick P. Niemann, a NJ Estate Planning Attorney

 
The death of a family member can be one of the most stressful periods of a person’s life. Adding to this stress can be conflict among family members over how to honor the deceased. Where should the funeral be held? Who will pay for it? Should the body be buried or cremated? These and many more questions must be answered by family members if the decedent did not elect to create a will or trust indicating their wishes. Unfortunately, family members sometimes disagree as to how the situation should be handled, adding controversy to this already stressful period. Proper estate planning, whether it be creating a will or trust, can help you ensure your wishes are honored and help avoid any disputes among family members

 New Jersey law states that if a deceased individual has not indicated their wishes in a will or trust, the disposition of the body is to be determined by the individual with the  highest priority from the following:

 1. The surviving spouse or partner in a domestic partnership or civil union;
 2. The majority of any surviving adult children of the deceased;
 3. Surviving parent or parents;
 4. The majority of any surviving brothers and sisters of the deceased;
 5. Any other relatives of the decedent, with priority given to closer relatives;
 6. Anyone else acting on behalf of the decedent.

As one can imagine, disputes often arise among interested individuals when it comes time to bury a loved one. Different factors uniquely affect each family, but concerns such as religion, money, and location often come into play. Sometimes disputes arise when there is a second marriage involved, particularly when there are children from both marriages. A properly crafted will or trust will make sure your wishes are met and help avoid any controversy among your family members. Estate planning is a crucial tool that cannot be underestimated. You owe it not only to yourself, but to your loved ones as well to appropriately plan for your funeral and burial arrangements.

Fredrick P. Niemann is an experienced Estate Planning Attorney who has practiced throughout the state of New Jersey. He encourages you to contact him immediately if you have any questions regarding the process of setting up a trust or will. He can be reached toll-free at 855-376-5291 or by email at fniemann@hnlawfirm.com. He looks forward to hearing from you.

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WHAT TO DO IF A DISPUTE ARISES REGARDING GUARDIANSHIP

Tuesday, December 13th, 2011

By Fredrick P. Niemann, Esq. a New Jersey Guardianship Attorney

Adult guardianship disputes arise when more than one person asserts them self as the guardian of an older, incapacitated person. This issue typically arises when two children are fighting over who will be the guardian of an older parent who no longer has the capacity to manage his or her own affairs. When all parties to the dispute live in the same state, the issue will be relatively straightforward. However, when the two parties arguing over who should be the guardian live in separate states, jurisdictional issues often complicate the matter, due to the fact that many states have different laws pertaining to how jurisdiction of the matter should be determined.  If a son claims guardianship in New Jersey and a daughter in another state, say Minnesota, the courts in these two separate states may follow different laws dictating which court should have jurisdiction, meaning each court may claim they have jurisdiction over the parent.

New Jersey follows a jurisdictional standard related to the “domicile” of the incapacitated adult over whom the dispute is about.  Domicile means the place where the incapacitated adult has made a permanent home with the intention of staying. Domicile can be acquired by three ways:

1. Birth or place of origin
2. Geographical choice of a person who is cognitively able to make that choice
3. Judicial declaration by a judge when a person lacks capacity to choose.

New Jersey law states that wherever an incapacitated adult’s domicile is proven to be, that state has jurisdiction over the guardianship dispute. Therefore, it becomes vitally important to determine exactly where the person is domiciled, rather than where they are living at the time the dispute occurs, since the domicile of the adult will determine what state’s court has jurisdiction over the matter. If a New Jersey court finds that the adult is domiciled in a state other than New Jersey, it will refuse to hear the case, instead deferring to the court of that person’s domicile.

Determining the domicile of an incapacitated adult is done by the courts on a case-by-case basis. New Jersey courts have found that a person who lacks the mental capacity to manage his or her own affairs can nonetheless be capable of deciding where they want to live, although their intention must be more than a “glimmering of rationality.” New Jersey cases often involve a dispute over whether the adult has the mental capacity to choose where they want to be domiciled, as one party will argue the adult is choosing to be domiciled with them in their home state while the opposing party will claim the adult is domiciled where the adult has resided in the past and the adult lacks the mental capacity to change such a decision. An adult guardianship case may then proceed in New Jersey only if the incapacitated adult is found to be domiciled in New Jersey.

While New Jersey law follows the domicile standard, other states have different laws determining the jurisdiction of adult guardianship cases. Many states have adopted the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA), which states that jurisdiction over adult guardianship cases is determined by a three-level priority system. The highest priority goes to courts in the “home state” of the incapacitated adult, which is defined as the state where the adult has been physically present for at least six months immediately before the proceeding. The second priority goes to a state which the adult has a “significant connection”, while third priority goes to “other jurisdictions”.

Since the “home state” standard differs from the “domicile” standard, a conflict can develop between courts in different states, with each court asserting jurisdiction over the matter. Because of these differing standards, it is imperative that parties act immediately when an adult guardianship dispute arises.  The doctrine of comity states that courts are generally to defer to other courts that have already acquired jurisdiction, so jurisdictional disputes are often settled by which party files the action in their state first. For this reason, acting as soon as possible in adult guardianship disputes is of the utmost importance.

The attorneys at Hanlon Niemann routinely handle adult contested guardianship cases.  If you have issues regarding an adult guardianship dispute, please contact Fredrick P. Niemann, Esq., an experienced NJ guardianship attorney.  He can be reached at 732-863-9900 or by email at fniemann@hnlawfirm.com.  He welcomes the opportunity to meet with you to address your matter.

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An Agent with a general Power to Gift under a New Jersey Power of Attorney Cannot Make Unlimited Gifts or Change Retirement Beneficiaries

Tuesday, December 6th, 2011

By Fredrick P. Niemann, Esq. a New Jersey Power of Attorney Lawyer

A recent case in New Jersey held that a durable power of attorney that allows the agent to “make gifts” does not accord the power to change retirement plan beneficiaries or to make large gifts of personal property absent specific authorization in the document.  In this case, the document authorized the attorney-in-fact to “make gifts” but it did not contain further instructions regarding gifting powers. Before death, the agent, acting under the power of attorney, changed the beneficiary designation from her step-children to her siblings. The agent also used the document to distribute some $115,000 of the decedent’s assets to her siblings. The agent claimed that she was acting on her son’s instructions.

The decedent’s step-daughters and his estate sued claiming that the agent (his mother) lacked the proper authorization to make gifts. They argued that New Jersey law requires that a power of attorney specifically grants the authority to make unlimited gifts. The agent maintained that New Jersey law grants an attorney-in-fact broad powers to manage bank accounts and retirement plans and that the change in beneficiaries should not count as a “gift.” The trial court ruled that the agent had the power to change the beneficiary designations but not to make the large distribution to the siblings. Both sides appealed.

On appeal the Court found that the power of attorney does not grant the agent the power to make unlimited gifts or to change the beneficiaries of the retirement plan. Contact me personally today to discuss your power of attorney matter.  I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns.  You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.

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Can Creditor’s make a Claim against Joint Account Assets in New Jersey after Death?

Wednesday, November 2nd, 2011

By Fredrick P. Niemann, Esq., a New Jersey Probate Attorney

Recently a New Jersey intestate estate (death without a will or trust) passed under New Jersey law to the surviving spouse.  The decedent owned several joint bank accounts with his wife. The decedent had quite a few debts, including credit card and medical bills.  The question raised is whether non-probate assets are subject to creditor claims or if the estate can be deemed insolvent. 

The answer may surprise you.  Non probate assets are not immune from creditors against an estate of a deceased party to pay debts, taxes, and expenses of administration, if other assets of the estate are insufficient.  A surviving party, P.O.D. payee, or beneficiary who receives payment from a joint-party account after the death of a deceased party shall be responsible to the extent necessary to discharge the claims and debts unpaid by the decedent’s estate.  A proceeding in the Chancery Division of the New Jersey Supreme Court to assert this liability must be commenced no later than 2 years following the death of the decedent.  Sums recovered by the estate representative are to be administered as part of the decedent’s estate. 

If you have any questions regarding New Jersey Probate Law, please contact Fredrick P. Niemann, Esq. today. He can be reached at toll free 732-863-9900 or by email at fneimann@hnlawfirm.com. Mr. Niemann would be more than happy to answer any questions you may have.

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Estate Planning in New Jersey with Premarital Agreements Involving Second Marriages and Death

Wednesday, November 2nd, 2011

By Fredrick P. Niemann, Esq., a New Jersey Estate Planning Lawyer

New Jersey law allows a waiver of right to inherit an estate of a deceased spouse.  A widow’s premarital waiver of an elective share to the Estate of her late husband will however be voided after lawsuits are filed when the underlying premarital contract is found unenforceable. 

Often there are conflicts between a step-parent and the children of the deceased parent.  The issues involve the enforceability of the steps-parents’ rights to inherit a portion of his/her late husband’s estate, even though she had waived her rights to the estate before marriage.

Under New Jersey Law, because of the requirements of N.J.S.A. 3B:8-10 and N.J.S.A. 37:2-30, if a premarital agreement cannot be enforced then a waiver of rights is unenforceable.

Fredrick P. Niemann, Esq. of Hanlon Niemann, a central New Jersey law firm commented that a married person needs to exercise extreme caution and adherence to both form and substance who contemplate second and/or successive marriages and who want to protect their estate for the benefit of their children.  Mr. Niemann cautions that without a carefully prepared pre-marital agreement, “Older, financially successful men and women must be aware of the significant, almost enormous risks to them should the marriage fail.  By consulting with a qualified New Jersey Estate Planning attorney, the individual can take meaningful steps to protect their life’s savings for the benefit of all who are intended to receive it.”

If you have any questions regarding Premarital Agreements and New Jersey Estate Planning, contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or e-mail him at fniemann@hnlawfirm.com.  He will be happy to assist you.

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ESTATE AND GIFT TAX RETURNS: WHAT ARE THE REQUIREMENTS: AVOIDING MISTAKES

Friday, October 28th, 2011

By Fredrick P. Niemann, Esq. a New Jersey Estate Administration and Probate Lawyer
The Requirement of Filing Federal Gift Tax Returns – Under the tax code the general rules applicable to income tax returns apply to annual gift tax returns.  That is, a 3-year statute of limitations applies to the initiation of an audit based on the value of the gift.  The IRS has issued regulations describing substantiation requirements to ensure the protection of the statute of limitations for gift purposes. The IRS can challenge the substantiation or appraisal information on gift tax returns many years after the expiration of the statute of limitations under certain cases, mainly based on fraud.  The IRS may challenge the gift value based on the adequacy of the substantiation provided with the initial return and will most likely occur when the donor’s estate is audited.  Our recommendation at this time is that all records, such as valuation reports, bank records, and any other items substantiating a gift tax return, should be kept until the donor’s estate tax return is settled.

New Jersey and Federal Estate Tax Returns – The federal statute of limitations is, again, 3 years from the date the return is filed.  However, in many cases, the federal estate tax return is extended by 5 months beyond the normal due date of 9 months following the date of the decedent’s income tax returns as long as the estate is open.  These income tax returns will also have a 3-year statute of limitations.  A good rule of thumb is to keep the estate records for 5 years after the decedent’s death or until a final closing agreement is reached with the IRS, if later.

If you have any questions regarding gift taxes, contact Fredrick P. Niemann, Esq. toll free at (888) 800-7442 or e-mail him at fniemann@hnlawfirm.com.  He will be happy to assist you.

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Picking the Right Executor as your Estate Fiduciary Under your Last Will and Testament?

Friday, October 21st, 2011

By Fredrick P. Niemann, Esq., a NJ Will Attorney

When creating your last will and testament as part of estate planning, an important decision you will have to make is who to name as your executor fiduciary. By fiduciary, I mean your Executor under your Last Will and Testament.  An estate fiduciary is a fancy legal term for the person who will take care of your assets and Estate if you are unable to do it yourself, such as the 1) executor of an estate, 2) the trustee of a trust, or 3) an attorney-in-fact under a power of attorney. Your first reaction might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best option.

When naming a fiduciary, be confident you can rely upon the individual.  This is why people often name family members as fiduciaries. However problems can arise when a parent with two or more children names one child as a fiduciary. According to Fredrick P. Niemann, an attorney from Freehold, New Jersey, who spoke on the issue of family harmony at a recent will seminar, a child is often not the best fiduciary for several reasons:

• It is hard for a child to be completely objective.
• Children often disagree over many things, including how long the estate should take to complete, the selling of assets, and  the division of personal property.
• Children often don’t communicate with each other well.
• Unresolved lifetime rivalries.

An alternative is to hire a professional fiduciary or executor. A professional fiduciary can be a bank, investment firm with estate administration experience, a certified public accountant, or a trust company. A professional fiduciary will charge a fee, but the fee is established ahead of time. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under this person’s or institution’s guidance.

To ensure that your family remains partially involved and has some input, you can include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as fiduciary.

For further information and advice in any estate planning matter or by the use of a will, do not hesitate to contact me toll-free at (888) 800-7442, or e-mail me at fniemann@hnlawfirm.com.  We can meet to discuss your questions and issues.  For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/0/XfXdZF-5snk to learn more.

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Using IRA’s in your New Jersey Estate Planning

Friday, October 21st, 2011

By Fredrick P. Niemann, Esq., a New Jersey Estate Planning Attorney

An individual Retirement Account (IRA) is a well known and utilized investment for retirement, but needs to be understood when doing estate planning.  IRA’s can be used to provide for heirs either directly or through a trust.  Understanding to what extent your heirs will benefit from the IRA and avoiding unnecessary taxes depends on proper planning.

What is an IRA?  An IRA is a form of a personal saving plan that is designed to set aside money for your retirement in a tax deferred and tax savings manner.  The advantage of IRA’s is that you may be able to deduct some or all of your contributions to an IRA from your income taxes and also be eligible for a tax credit equal to a percentage of your contribution.  Earnings withdrawn from a traditional IRA generally are not taxed until distributed to you.  At age 70 ½ you have to start taking distributions from a traditional IRA.  Earnings in a Roth IRA are not taxed nor do you have to start taking distributions at any point, but contributions to a Roth IRA are not tax deductible.  Any amount remaining in your IRA upon your death can be paid to your beneficiary or beneficiaries.

Here is an important thing to remember:  With an IRA you must name a beneficiary.  While a spouse is usually the logical choice for a beneficiary, you should be sure to name contingent beneficiaries as well.  If you and your spouse died at the same time and there was no contingent beneficiary, then the IRA would go to your estate and be subject to probate (the legal process of administering the estate of a deceased person).  When a spouse inherits an IRA, he or she can roll it over into his or her own IRA.  When a non-spouse inherits an IRA, the heir will need to start taking distributions within a year after the IRA owner dies.  See my recent posts on the importance of beneficiary designations found.

Extending the timing and payout of your IRA if you don’t need the funds in your IRA for retirement and want to use them to provide for your beneficiaries instead, you may be interested in “stretching out” your IRA.  To do this, when you reach 70 ½, take only the required minimum distributions, leaving more assets in your IRA.  When you die, your beneficiary can also stretch distributions out over his or her lifetime and then designate a second-generation beneficiary.  It makes sense to name a young beneficiary because the younger the beneficiary, the smaller each distribution must be, which gives the funds in the IRA extra tax-deferred years to grow. 

Trusts as Beneficiaries – In some cases, it may make sense to name a trust as a beneficiary.  This is particularly true if you have minor children, children with special needs, or a beneficiary with poor spending habits.  But the trust must be properly drafted to avoid negative tax consequences.  If the trust is a “see-through” trust or “conduit” trust, then the distributions from the IRA to the trust after the participant’s death can be stretched out over the life expectancy of the oldest trust beneficiary.  If you are planning to leave your IRA to a trust, you must consult with your attorney to ensure that the trust is properly drafted and the beneficiary is properly named.
An IRA can be a valuable part of a New Jersey estate plan, but the rules can be complicated. 

If you have any questions regarding IRA’s in estate planning, please contact Fredrick P. Niemann, Esq. today. He can be reached toll free at 888-800-7442 or by email at fneimann@hnlawfirm.com. Mr. Niemann will be more than happy to meet with you to answer any questions you may have.

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Have you selected the Right Person as your Fiduciary Under your Power of Attorney?

Thursday, October 13th, 2011

By Fredrick P. Niemann, Esq., a NJ Power of Attorney Lawyer

When creating an estate plan and creating a power of attorney, an important decision you will have is who to name as your fiduciary. By fiduciary, I mean your  power of attorney. A fiduciary is a fancy legal term for the person who will take care of your assets if you are unable to do it yourself, such as an attorney-in-fact under a power of attorney. Your first reaction might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best option.

When naming a fiduciary, be confident you can trust the individual.  This is why people often name family members as fiduciaries. However problems can arise when a parent with two or more children names one child as a fiduciary. According to Fredrick P. Niemann, an attorney from Freehold, New Jersey, who spoke on the issue of family harmony at a recent estate planning seminar on powers of attorney, a child is often not the best fiduciary for several reasons:

• It is hard for a child to be completely objective.
• Children often disagree over many things.
• Children often don’t communicate with each other well.
• Unresolved lifetime rivalries.

An alternative is to hire a professional power of attorney. A professional fiduciary can be a bank, investment firm with trust administration, a certified public accountant, or a trust company. A professional fiduciary will charge a fee, but the fee is established ahead of time. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under this person’s or institution’s guidance.

To ensure that your family remains partially involved and has some input, you can include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as fiduciary.

For further information and advice with a power of attorney, do not hesitate to contact me toll-free at (888) 800-7442, or e-mail me at fniemann@hnlawfirm.com.  We can meet to discuss your questions and issues.

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Estate Administration by the Use of the New Federal Tax Portability Option

Thursday, October 13th, 2011

By:  Fredrick P. Niemann, Esq., a New Jersey Estate Planning Attorney

This is the 3rd part of a three part series on credit shelter trust and the new federal estate tax portability.

Blended Family Estates

Reliance on portability may also defeat, either intentionally or unintentionally, the testamentary plan of the pre-deceased spouse.  It is common today for one or both spouses to have children from prior marriages.  There is no assurance that a surviving spouse who inherits outright the estate of his or her pre-deceased spouse will leave that property to the pre-deceased spouse’s children.  It is equally common for a surviving spouse to remarry.  If such a remarriage ends in divorce, it is possible that some or all of the inherited assets may be subject to division by the family law court.  If the marriage is successful, it is equally possible that the surviving spouse will leave his or her new spouse some or all of the assets inherited from the pre-deceased spouse.

Tax Considerations

A credit trust is a potentially more tax efficient vehicle than reliance on portability.  A property drafted credit trust can be used to sprinkle taxable income to beneficiaries in lower tax brackets, which cannot occur when property is left outright to the surviving spouse without such distributions being treated as taxable gifts.  If portability is relied upon and the pre-deceased spouse leaves his or her surviving spouse to children during his lifetime will constitute taxable gifts to the extent they exceed the surviving spouse’s annual exclusion.

Lastly, planners should keep in mind that portability will sunset for people dying on or after January 1, 2013.  Planners relying on portability are limited to factual situations in which both spouses die prior to that date.  In most situations, it appears estate plans that use credit trusts are far more practical and far less dangerous than reliance on portability.

For more information on credit shelter trusts and the new federal estate tax portability, please contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or email him at fniemann@hnlawfirm.com.

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