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FAILURE TO CREATE A FUNERAL TRUST CAN HAVE UNFORTUNATE CONSEQUENCES

Friday, January 13th, 2012

By Fredrick P. Niemann, a NJ Trust Attorney

The typical person knows that trusts are a form of putting assets aside for loved ones to receive at a later date. What the typical person does not know is that a trust can also be used to indicate who shall take charge of your funeral and burial or disposition of your remains, as well as provide the funding upon your death. While this may seem like a mute point to some, the fact of the matter is that families sometimes cannot agree on what should happen to a family member’s body upon their death. Without a properly drafted funeral trust, a dispute may arise as to where the funeral will take place, how the body will be disposed, and where the funding shall come from. Unfortunately, this can often create controversy among family members at a time when they prefer to focus their attentions on mourning their loved one.

Funeral Trusts allow an individual to set aside funds to pay for the funeral, as well as indicate whether the individual wishes to be buried or cremated. This ensures the individual that their wishes will be honored upon their death and helps avoid fighting among family members. If such a trust is not established and the deceased has not left a will indicating someone to be in charge of the proceedings and burial/cremation, New Jersey state law will determine who gets to make the final call. As one can imagine, controversy can often arise when this takes place. The law states that if the decedent’s wishes are not set forth in a will or trust, the disposition of the body will be left to the person with the highest priority out of the following:

 1. A surviving spouse or partner in a domestic partnership or civil union with the deceased;
 2. A majority of surviving adult children;
 3. Surviving parent or parents;
 4. A majority of any siblings of the decedent;
 5. Other next of kin, with highest priority going to closest relatives;
 6. Any other person acting on behalf of decedent that is not a relative.

Funeral processions occur during one of the most difficult times of a family member’s life. Unfortunately, disputes can occur based on a number of factors including location, religion, multiple marriages, children from separate marriages, and cost. To ensure your final wishes are met, it is in your best interest to meet with an experienced NJ Trusts Attorney and discuss setting up a Funeral Trust. Not only can this trust assist your loved ones in paying for your funeral, it can also indicate where and how you wish to be honored upon your death.
 
Fredrick P. Niemann is a knowledgeable, New Jersey Trusts attorney who has experience in helping families create trusts for a number of years. If you have any questions regarding Funeral Trusts, please don’t hesitate to contact him today toll-free at 855-376-5291 or email him at fniemann@hnlawfirm.com. He would be more than happy to discuss this matter with you.

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Factors to consider when choosing the right Trustee for Your New Jersey Living Trust

Friday, October 28th, 2011

Fredrick P. Niemann, Esq., a NJ Trust Attorney

Your revocable living trust is much more than just a document that says who gets what percentage of your estate or which specific items that you leave behind when you die. A living trust details how and when heirs are to receive their inheritance, which is to take over any businesses in question, and many crucial issues of your estate. A living trust should be very specific in how your estate is to be administered. Therefore, the choice of a suitable is a very important decision that should be carefully considered in your estate planning process.

How Should You Choose the Trustee of your New Jersey Living Trusts: Choosing a Trusted Friend or Family Member
When selecting a person to be the trustee of your living trust, you need to answer an important question:

 Who can and will step into my place and confidently act as I would in carrying out my wishes?
 It is critically important to select a person that you have full faith and confidence in. You should feel at ease that he or she  would carry out your requests as they are written in your estate planning documents. Some typical choices include a:
 Close family friend
 Close family member
 Child
 Professional trustee
 A licensed professional such as a CPA or attorney

While you may feel completely secure in trusting this huge responsibility for carrying out your wishes to a family member, there are several situations when that is not wise or possible. In that case, your estate planning wishes can be addressed by a trusted outsider.

Living Trusts: Choosing an Outside Trustee

If you do not have a close friend or relative that you feel comfortable with, or if by selecting one of the heirs will cause conflict, then there are other options. You can hire an outside trustee like:

 Your bank
 A trust company
 Your lawyer
 A financial advisor
These professionals are generally experienced and knowledgeable in what is required to be a trustee and can often work more expediently and effectively, which saves the heirs money and time. While there are many benefits to not having a family member involved as the trustee of your living trust; there are also some drawbacks to using a bank, trust company or professional as your trustee.

 Higher fees and expenses
 Minimal estate value of around $700,000

No matter whom you select as your trustee, you want to be sure that you have full confidence in him or her to do exactly as you want, no matter what other people say. There may be heirs who are unhappy with the terms and conditions of the living trust and will try to sway your representative to do as they want. Knowing that you have a strong, trustworthy individual protecting your wishes will provide peace of mind.

If you have any questions about New Jersey Trusts or the role of a trustee in a New Jersey Trust, contact Fredrick P. Niemann, Esq. at 732-863-9900, or fniemann@hnlawfirm.com.  He is happy to meet with you to address your inquiries.  For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/0/RHnI7RoPYds to learn more.

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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 a Special Needs Trust to Protect A Personal Injury Settlement and Public Benefits

Friday, October 21st, 2011

By Fredrick P. Niemann, Esq., NJ Special Needs Trust Lawyer

Personal injury attorneys and their clients should avoid receiving payment from a defendant or the defendant’s insurer into the attorney’s trust account for any funds that are intended to be placed into a special needs trust.  Payment of funds to the plaintiff’s personal injury attorney constitutes “constructive receipt” by the person with a disability.  Therefore, checks from the defendant should be made payable directly to the trustee of the special needs trust.  Constructive receipt by the beneficiary can cause a loss of public benefits because the SSI income and resource rules have been violated.
 
When there is a lump sum settlement and the defendant insists on paying the plaintiff’s attorney quickly, the court may order that the monies be held in the attorney’s trust account subject to conditions, such as satisfaction of Medicare and Medicaid liens.  This should avoid a constructive receipt argument by SSA.  The trial attorney then makes the plaintiff’s check payable to the trustee of the special needs trust at such time as all of the conditions imposed by the court order are satisfied.
 
There are two unpleasant consequences that can flow from constructive receipt:

• Public benefits eligibility.  If you’re an SSI recipient and receive income during a month, it may result in an overpayment.  However, if the income is from a personal injury, inheritance or equitable distribution, then an argument can be made that the income is infrequent and irregular and should not be counted.  If the funds are still available on the first day of the following month, they become a resource.  Not all assets are resources.  A resource is defined as cash and any other personal property, that an individual owns; has a right, authority, or power to convert to cash (if not already cash); and is not legally restricted from using for his support and maintenance.  If settlement funds are held in a lawyer’s trust account, they are constructively received by the individual, but if there is a restriction on the use of those funds not related to the support and maintenance of the individual, they will not be counted as a resource.  Therefore, legal restrictions to making the funds available for the individual’s support and maintenance will not be considered a countable resource available to the SSI recipient.  Examples of what might constitute a legal restriction include the following:

• Allocation among claimants as yet to be determined.  

• Uncertainty of liens, their amounts and their priority.
• Uncertainty of attorneys’ fees and costs of the case to be paid.

• The need to have a guardian of the estate or a conservator appointed, by the Court.

• The settlement agreement is contingent upon court approval, which is typically the case where there is a minor or incompetent adult.

• Taxation.  From a tax standpoint, the concept of constructive receipt analyses the timing of taxable income and preventing taxpayers from manipulating which tax years they will report income.  Generally, gross income is included for the taxable year in which it is received by the taxpayer, unless under the method of accounting used in computing taxable income, such amount is to be properly accounted for as of a different period.”  Therefore, if a structured settlement is constructively received, the income generated on the entire value of the settlement will be currently taxed.  Constructive receipt is defined as “income, although not actually reduced to a taxpayer’s possession, is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year, if notice of intention to withdraw had been given.  However, income is not constructively received if the taxpayer’s control of its receipt is subject to substantial limitations or restrictions.”
 
What constitutes a substantial limitation is decided on a case-by-case basis.  Taxable receipt occurs when funds are received by the payee’s agent (i.e., plaintiff’s attorney). 
 
In another case it was held that funds held in escrow pending a court order are subject to substantial limitations.

If you have questions about protecting eligibility for government benefits when filing a personal injury lawsuit or near the end when settlement or verdict is a reality, contact Fredrick P. Niemann at 732-863-9900 or toll-free at 888-800-7442.  He’s happy to be of assistance.

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Have you selected the Right Person as your Trust: Caution: Your Decision Matters

Friday, October 7th, 2011

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

When creating an estate plan under your will, an important decision you will have is who to name as your fiduciary. By fiduciary, I mean your Executor under your Lat Will and Testament.  A 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 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 trust 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. A professional fiduciary can be a bank, investment firm with trust administration experience with trust powers, 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 estate planning with living ,revocable trust, 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/6/GxL71TQgsWw to learn more.

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The Story of a Real Life Disaster Caused by an Inadequately Written Last Will and Testament – Learn from This Mistake

Friday, October 7th, 2011

Fredrick P. Niemann, Esq., a NJ Wills Attorney

Several years past, a husband died leaving a last will and testament with assets, one of which was a 401k.  The marriage was a second marriage for her husband, who had two sons from his first marriage.  While he was single he had changed the beneficiaries of his life insurance and 401k plan to his sons and had redone his will.

After his second marriage, the husband and his new wife bought a home together.  They asked their real estate attorney, who handled the purchase for them, to draft a new will as well.  The husband listed the assets he wanted to pass to his sons and which assets to his wife.  The 401k he wanted to go to his wife.  Unfortunately, the attorney didn’t understand the difference between probate and non-probate assets.  So when she wrote a will that specifically left the 401k to the wife, she didn’t realize that the will would have no effect because the beneficiary designations on file with the custodian of the 401k plan listed the sons from the first marriage.

When her husband died, the wife received a big surprise when she was told that she had no interest in the $500,000 401(k).  Why?  Because a will doesn’t control the distribution of all your assets with beneficiary designation.  Property such as life insurance, annuities and retirement accounts pass in accordance with whom you have designated on your beneficiary forms completed and filed with the life insurance and annuity companies or retirement account custodians.  Other types of property pass by operation of law such as joint accounts with right of survivorship or real estate that is owned jointly by a husband and wife.  When the first owner dies, the property automatically passes to the surviving spouse.  It is irrelevant what the will says.

That is what happened here.  A 401k is contract property so it passes according to the beneficiary designation form on file, not by the terms of the will.  The wife tried unsuccessfully to get a court order directing the funds be paid to her.  She did however recover about half of the account balance in a litigation settlement, less fees and costs.

The purpose of the post is that although many people think drafting a will is simple and often undertake to do it themselves with a “will kit” with legal zoom or some other legal form or ask an attorney to do a “simple will”, they may miss important steps that must be taken that can save a lot of heartache and money.

To learn about these and other elder law issues, go to www.hnlawfirm.com or www.njwillsattorney.net or contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or by e-mail at fniemann@hnlawfirm.com.  For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/1/8be14yDEeJc to learn more.

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

Wednesday, September 21st, 2011

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

         
This is the first part of a three part series on credit shelter trusts and the new federal estate tax portability laws.

Does portability mean the end of the “Credit Shelter Trust”?

The answer is no!  The 2010 Tax Act has made it possible for the estate of a surviving spouse to make use of the unused estate tax exemption of his or her predeceased spouse. Some have suggested that portability makes it unnecessary to continue to draft estate plans that include credit shelter trusts.

Understanding portability involves understanding two new estate tax terms:  the basic exclusion amount and the deceased spousal unused exclusion amount (DSUEA).

The new $5million estate tax exclusion is available for people dying beginning January 1, 2011, and December 31, 2012.  Portability will exist only if both spouses die within the next 18 months.

A second issue may make use of his or her predeceased spouse’s exclusion, if the predeceased spouse’s estate files a timely estate tax return.  Advocates of using portability in lieu of credit trusts argue that portability reduces the cost of estate planning because plans relying on portability will be simpler documents to draft and the survivor will be faced with less post-death complexity because the number of trusts the survivor must contend with will be reduced.  Both assumptions are questionable.

In our next post we will discuss why.

For more information, please contact Fredrick P. Niemann, Esq. toll free at (888) 800-7442 or e-mail him at fniemann@hnlawfirm.com.

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Beware the Beneficiary Form

Wednesday, September 14th, 2011

By: Fredrick P. Niemann, Esq. an Estate Planning Attorney

This is the second post on the subject of beneficiary designations and their importance in New Jersey probate and estate planning.

Individuals, trusts, charities, other organizations, your estate, or no one at all can be named a beneficiary of your assets.  You might specify one or more people or name a specific group of individuals, such as “all my grandchildren who survive me.” This might include current and future grandkids and spare you from having to update forms as families change and grow.  However, it generally would not include step-grandchildren; they’d need to be designated specifically by name.

Avoid the tendency to choose a different beneficiary for each of your accounts.  One woman left her estate equally to her two daughters in her will, but named one daughter or the other as beneficiary of her various bank and brokerage accounts.  The result:  Just about all of her assets passed outside of her estate, and one daughter received much more than the other.

“That was very unpleasant for everybody.”  It would have been better, if the mother had named both daughters as beneficiaries of each of her accounts or not named anyone and allowed the assets to flow into her estate, where the assets would have been distributed according to her will.

Watch out, too, for beneficiary forms that don’t allow your assets to pass “per stripes,” or equally among the branches of a family.  Say you name your adult three children as beneficiaries of your IRA.  If one of them predeceases you, you might want that child’s share to go to his or her children.  However, many standard beneficiary forms provide that your two remaining adult children would share the proceeds to the exclusion of your deceased child.
For more information on naming beneficiaries on various institutional forms, please contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or email him at fniemann@hnlawfirm.com

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Sorry that You’re Dead but now the Lack of a Trust May Subject your Estate to an Unwanted Funeral

Wednesday, September 7th, 2011

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

If you are thinking about a trust, you may think of a document that provides who receives your property upon death. However, did you know that a trust can also direct who should be in charge of your funeral and the burial/disposition of your remains after your death? Most assume that those closest to them will honor their wishes of where and how they wish their body to be disposed, however this is not always the case.  Sometimes family members fight over if and where a body should be buried or whether it should be buried at all but instead be cremated. A well-written trust can avoid all of this and dictate who shall be in charge of your body after your death. If you do not instruct your wishes in a trust, New Jersey law divides who chooses where and how your body will be buried/cremated.

 In New Jersey our law states that if a person has not left a trust appointing a person to control the funeral and disposition of  the remains, the right to control the disposition of the body shall go to the person with the highest priority in the following  order:

1. The surviving spouse or partner in a domestic partnership or civil union;
2. A majority of the surviving adult children;
3. The surviving parents or parent;
4. A majority of the brothers and sisters of the decedent;
5. Other next of kin, with priority going to those who are closer relatives;
6. If no known living relatives, any other person acting on behalf of decedent.

Unpredictable disputes often arise pertaining to a decedent’s burial.  Difference of opinion between religions, location, second marriages, children of first marriages and other concerns often are caused by different family members. To ensure your wishes are met, you should meet with an experienced New Jersey trust attorney and clearly indicate in your trust who should be placed in charge of the disposition of your body after your death. This can help avoid family controversy and make sure you are buried/cremated according to your wishes.

If you have any questions relating to your trust or New Jersey law relating to the disposition of the deceased, please contact Fredrick P. Niemann, Esq., a knowledgeable New Jersey Trust Attorney immediately. He can be reached toll free at 888-800-7442 or by email at fniemann@hnlawfirm.com. He would be more than happy to meet with you and answer your questions.

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