Category: Elder Law

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A Will Protects Your Family and Heirs.

On By Jane Fearn-Zimmer, Esq.In Dementia, Estate PlanningLeave a comment

What happens when someone dies without a Will in New Jersey? Unless the individual signs a Will, he or she will have an intestate estate. That is, the individual’s future estate will not be governed by a Will. For the reasons discussed below, an intestacy (or an estate estate) often means confusion and problems.

A Will can actually save you money.

“When I pass away, I want my heirs to fight with each other and the tax authorities about my estate.” Said no one caring, ever. An intestate estate can be fraught with hidden risks. Here’s why that is, and what you can do to avoid leaving your heirs with a mess.

Compared to New York and the nearby City Philadelphia, New Jersey has “probate friendly” rules of court and readily accessible resources. Throughout New Jersey and especially in Burlington, Camden and Gloucester counties, the Surrogate’s Courts are well-run government offices. The Surrogates’ Courts are typically staffed by very helpful and knowledgeable employees. They can explain probate procedures. Their websites may contain helpful information and forms. A great example of this is my home county of Burlington’s website: https://co.burlington.nj.us/541/Forms-Documents. “

Intestate Estates are not “probate friendly.”

One would expect an intestate estate administration here in Marlton, New Jersey to be easy. However, the administration of a intestate estate is just as likely to be “probate friendly” as a “friendly divorce” is pleasant. You (or your parent or spouse) should not take intestate succession for $1.

A carefully designed estate plan brings peace of mind and can pay for itself.

Without a Will, there can be uncertainty and discord among relatives. If your adult children, Johnny and Jimmy, can’t get along at holiday dinners, how will they ever agree on how your estate is divided or who gets the family heirlooms? Even if there is family harmony, without a Will, your estate can be at risk, especially if there are minor children or creditors with large debt. For instance, if you pass away leaving a home subject to a mortgage, and your adult heirs do not apply to administer your estate, your mortgage company can. The mortgagor will have an interest in selling the home as quickly as possible to pay off the mortgage, while the heirs living in the home will want to remain in the home. Such a situation can occur if you have an extended illness, and miss several mortgage payments. Why would you want your heirs to face such a situation? To ensure stability for your heirs, it is better to appoint in your Will someone you can rely on to administer your estate.

Having a Will Frees Your Heirs from A Bond Requirement.

Another reason not to take intestate succession for $1 is that your personal representative will be stuck with the probate bonding requirement. Whoever is appointed in an intestate estate, (except for a spouse in a small estate), will probably have to post a bond. While there are some exceptions, such as for a spouse in a small estate, the exceptions are limited. A bond is like insurance. Like insurance, a probate bond has a premium. Without access to the decedent’s finances, the individual applying for appointment will have to pay the bond premium from his or her own personal funds and seek reimbursement from the estate later on. If the individual seeking appointment had a criminal conviction (even in the distant past), or poor credit, getting bonded can be a problem.

It may be possible to obtain a court order waiving the bond requirement, however, as with any court proceeding, there will be additional costs. Such costs can include probate and court filing fees, attorney’s fees, and mailing costs. If a court order is sought to waive the bond requirement in an intestate estate, delays will also result due to the period of notice that must be given to all other interested parties, which can include creditors, the other Will beneficiaries, and in the case of a charitable request, the New Jersey Attorney General’s office. With a valid Will in place, you can save time, money and agita, for your heirs. It is far more cost-efficient and quicker to avoid these hassles by having your Will prepared properly with a responsible personal designated as the Executor of your estate and a provision in your Will waiving the bond requirement.

Without a will, or with an inartfully drafted Will prepared by a layperson, there can be uncertainty and even litigation, over who will plan the funeral and how the decedent’s debts, expenses, and taxes (such as Inheritance taxes) will be paid and how money will be invested for a minor child. Without a Will establishing a minor’s trust, property left to a minor is required to be deposited with the Surrogate’s Court, in the Surrogate’s Intermingled Trust Fund (SIFT). In case you are not familiary with the SITF, here is some background information. Guardianship of Minors | Gloucester County, NJ (gloucestercountynj.gov).

A Will Can Protect Minor and Disabled Beneficiaries.

Funds left to minors through intestate estates or through beneficiary designations are invested at bank rate in the Surrogate’s Intermingled Trust Fund (SITF). Neither the minor nor the minor’s parents have any ability to select more productive investments. The funds will generally not be released without a court order until the minor claims the funds upon attaining the age of legal majority.  Allowing an inheritance by a minor to be held in the SITF does protect the funds for the child until child attains the age of majority. However, a testamentary trust or facility of distribution provision in your WIll can enable the funds to be invested at higher rates of return than bank rates and can facilitate distributions for the benefit of the minor for purposes such as health, education, maintenance and support, without the cost, delay and uncertainty inherent in applying for a court order.

A Will Can Help Manage Digital Assets.

A properly crafted Will and estate plan can also protect digital assets. These can include assets such as software, business and professional websites, blogs, spreadsheets, presentations, photographs, social media accounts, blockchain technology, online ledger accounts, Cryptocurrency (such as bitcoin, Ethereum, ETR, and Litecoin) and online stores. Many of these assets can be monetized and/or have quantifiable value. Without a Will with digital asset provisions, access to the decedent’s digital accounts and private keys can be denied or delayed absent appropriate documentation on behalf of the estate. This can leave the administrator in the difficult position of having to pay death taxes on assets that there is no or delayed access to, forcing the administrator to come up with another source of cash, or worse, having to deal with a death tax audit.  

A Will Can Help Prevent Probate Litigation.

When an individual or a family member drafts a Will without an attorney’s review, this can be an invitation for probate litigation. For an interesting article on what can happen when an estranged relative challenges a will, see Can estranged relatives contest your will after you die? | Legalzoom. The good news is that you can minimize the risk of probate litigation with a properly prepared estate plan prepared by a competent attorney.An experienced. knowledgeable and caring estate planning attorney can help you legally avoid, minimize or plan for death taxes, including the New Jersey Inheritance tax.

A tax savvy estate planning attorney can also help ensure that digital assets are properly planned for and that tax-efficient beneficiary designations are in place for your qualified retirement accounts. This is important to maximize income tax savings for the heirs.

These are just a few of the many reasons why estate planning is important to avoid the hidden perils of intestacy. For more information and solutions, For more information, visit the firm’s website at Fearn-Zimmer Elder Law (fearnzimmerelderlaw.com) or call to schedule an appointment at telephone number (856) 938-8578, or email Jane at fearnzimmer@gmail.com.

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Helping Someone With Dementia Sell the Home

On By Jane Fearn-Zimmer, Esq.In Dementia, Elder Law, Estate Planning, Guardianship, Long-term care, MedicaidLeave a comment

Selling the home through guadrianship

Sometimes, a home must be sold, but the homeowner is no longer able to sign a listing or sale agreement due to cognitive impairment, confusion, advanced dementia or severe and persistent addiction issues (i.e., Wernicke-Korsakoff syndrome), or new onset dementia after recovering from COVID-19.  covid-19-pneumonia-increases-risk-of-dementia-study-says  Others may be temporarily incapacitated due to cardiac issues, surgery, or severe illness.  These conditions can prevent an adult from being temporarily or permanently able to make important financial, medical or legal decisions.  Adults who can no longer make decisions may be incapacitated.  And in real estate bubble with many residential properties reaching their peak value, it’s critical to act fast to accept the best home sale offer.

Unfortunately, incapacitated adults are unable to enter into a binding contract, such as an agreement to list or sell the home. When this happens, one option may be to use a general durable power of attorney or a real estate power of attorney to sell the home.  But that can only be successful where there is already a valid general durable power of attorney or real estate power of attorney in place.  If there is a power of attorney, and the homeowner is able to make decisions, the home cannot be sold through a power of attorney without the homeowner’s consent to the sale.  Giving a power of attorney to a trusted adult child or friend is like giving them an extra set of keys to the car. You can always take back the keys when you wish.

More to the point, a power of attorney is an important legal document by which the principal (i.e., the person signing the power of attorney) gives authority to an agent to carry out the affairs of the principal.  The catch-22 is that in order to make a power of attorney, the principal must have legal capacity.  Unfortunately, there are many incapacitated persons who never bothered to obtain a power of attorney before they lost capacity.   Another risk is that there may be a valid power of attorney, but the agent named may be deceased, very ill, or no longer available to serve.  Once again, there is no one with legal authority to sign the home sale agreement and the house cannot be sold even if there is a buyer.

The solution is to seek a court order for authority to sell the home.  This involves filing a lawsuit in the Superior Court for a judgment of incapacitation and award of guardianship.  The guardianship process is not a simple one. There are several different types of guardianships and the correct type must be selected.  Various court rules, required information and forms must be complied with.

The guardianship process requires doctor’s reports and an investigation into the finances and health of the alleged incapacitated person. As part of the process, the Superior Court judge appoints an independent attorney to investigate these matters and to write a report.  This attorney is referred to as the court-appointed attorney.  Often, that attorney’s report carries great weight with the court.  Testimony by the doctors may be waived, or if the guardianship is disputed, there may be an adversarial hearing.  If the evidence, any testimony and the court-appointed attorney’s report indicates that the alleged incapacitated person cannot make any significant decisions as to his person or property, then a plenary guardianship may be awarded.

But this is only the first step in obtaining court-authority to sell the home of the incapacitated person, who may urgently need the anticipated net home sale proceeds to pay for long-term care.  The next step is to file a motion with the court to sell the home through the guardianship.  The court can potentially award the requested order.  Only when such an order is in place, can the home be legally sold.

Not surprisingly, this process requires additional legal work and documentation.  The guardian must show that the proposed sale is fair and reasonable and in the “best interests” of the incapacitated person. In deciding whether this standard is satisfied, the judge may consider whether the incapacitated person will ever be able to return to the home to live there independently or with the assistance of paid caregivers, provided there are sufficient funds.  The fair market value and the tax-assessed value of the home will also be considered, as will the outcome of any prior attempts to sell the property, the cost of continued homeownership, and whether the anticipated net house sale proceeds are needed to pay for long-term care. In many cases, the home must be sold as a condition of Medicaid eligibility for the former homeowner in a nursing home.

This process takes time.   In limited cases where the safety of the alleged incapacitated person is endangered, or a very good purchase offer may be lost without swift court approval, the guardianship process can be expedited in New Jersey.

The bottom line, is that when capacity is in issue, selling the home a general durable power of attorney or a real estate power of attorney is much more efficient than through a guardianship. However, selling the home through a guardianship can be done in the difficult cases where there is no legal authority in place to sell the home.

Questions, or if you need help clearing title to sell a home through a guardianship? Let Jane know.

New Elder Justice Resources

On By Jane Fearn-Zimmer, Esq.In Conservatorship, Dementia, Elder Financial Abuse, GuardianshipLeave a comment
black man covering face with hands
Photo by Nicola Barts on Pexes.com

Elder financial abuse involves the misuse of an elderly persons’s money, credit or property. Unfortunately, this is a growing and often unreported problem.

Fortunately, there are resources available to fight elder abuse. One is the statewide criminal referral hotline, found on the elder justice website of the New Jersey courts. Additional information and resources are available online at https://www.njcourts.gov/public/elder-justice.html.

Financial professionals, in particular, should remain alert for behavioral red flags of elder financial abuse. These can include:

  • new contact information for a financial account (address, email, or telephone)
  • unusual purchases or withdrawals on the account of someone who is cognitively impaired
  • an elderly person who seems withdrawn, anxious or afraid
  • an elderly person who cannot answer simple questions about her account activity
  • someone new taking great interest in the finances of an elderly person
  • repeated unsuccessful attempts to contact an elderly account holder
  • someone without proper identification trying to help an elderly person with bank or brokerage transactions

More information is contained in a government report to financial institutions found online at Advisory on Elder Financial Exploitation

What to Do if You Suspect Elder Abuse.

Your legal recourse may include criminal or civil prosecution, revoking a power of attorney, executing a new power of attorney and/or a guardianship or conservatorship. For strategies and solutions for your unique situation, contact Archer Brogan, LLP at https://archerbrogan.com

A Path to Financial Freedom

On By Jane Fearn-Zimmer, Esq.In Assisted Living, Elder Care Planning, Elder Law & COVID-19, Long-term care, Long-Term Care InsuranceLeave a comment
What if there was a simple way to finance your future long-term care?

How can you age in place at home without spending a fortune? Does that sound too good to be true? It’s not. If you are still insurable, advance planning with long-term care insurance can keep your options open.

Most of us will need a skilled nursing level of care, some for months or years. Medicare, Medigap and other health insurance plans do not pay for custodial care. These policies will only pay for limited sub-acute and skilled care for limited periods. Disability insurance is intended to replace your earned income from work if you become disabled.

What if you have a medical crisis and need 24/7 care? At a cost of over $5,000 per month at the private pay rate, even staying at home with paid care can be very expensive. https://www.genworth.com/aging-and-you/finances/cost-of-care.html.

The benefits of long-term care insurance. Long-term care insurance can help protect your family’s financial and emotional freedom and can facilitate asset protection planning.

How to you get and pay for long-term care insurance? Policies are typically purchased while the insured has attained the age of forty and before approximately age 66. With age, the risk of uninsurability increases.

Some federal and state government employers offer long-term care insurance. It may also be available through some private employers. Long-term care insurance can also be purchased through an insurance agent. Private banks also can help high net worth individuals obtain specially priced policies. Some individuals use their qualified retirement assets to pay for long-term care insurance premiums. Many policies are tax-qualified, meaning that the benefits paid under the policy may not be subject to income taxes. Some policies have special Medicaid protections. These are called “partnership policies.”

It is very important to understand what the policy will cover and how the elimination period will work. Make sure any long-term care insurance you purchase is a policy you can still afford if the premiums increase. Talk to your elder care attorney if you think you may want to lower the benefit amount or increase the waiting period before benefits are payable under the policy.

Individuals who want to plan for themselves can benefit from long-term care insurance. Dick and Jane are married and in their mid-sixties. Dick is a government employee with a long-term care insurance policy through his work. The policy pays four years of benefits after a 90-day elimination period. Dick has a serious fall and fractures requiring surgery. He goes into the hospital for surgery and contracts COVID-19 in the hospital. By the time he is ready for discharge from the hospital, he is generally deconditioned and just wants to go home.

Jane is a petite woman. She tells the hospital discharge planner that she is afraid she might hurt herself if she tries to lift Dick himself. Dick needs constant hands-on assistance to perform activities like walking, dressing, bathing, toileting, and transferring from a bed to a chair. At first, the social worker was recommending placement in a nursing home or rehabilitation for Dick, due to concern that Jane can’t care for Dick safely in the home. But after learning that there is a long-term care insurance policy, the hospital discharges Dick to the home. Once Dick satisfies the policy’s 90-day elimination period, the benefits are triggered and the benefit payments can pay for Dick’s care, relieving the financial burden on Jane. Dick and Jane do not need to spend down their assets to qualify for Medicaid, due to the long-term care insurance benefit. If they have substantial additional assets and Dick and Jane wish to do so, they can work with an elder care attorney to protect additional assets that may be at risk after the policy term is exhausted.

 Adult children who want to plan for their parent or parents can benefit from long-term care insurance. Sarah was a single mother in her early 60’s who raised four very successful adult children while working two jobs and living frugally. She is active and healthy and still working at Dunkin Donuts every day. When she retires, based on current projections, her income will limited to Social Security of about $1,500 per month, which is not enough to pay for a nice assisted living facility, if she should need some care. Her now very successful adult children purchase a policy insuring their mother, so that she can now enjoy her golden years in a comfortable community setting if she should need assisted living care. With her income and several years of long-term care insurance, if Sarah were to need a skilled level of care, she could potentially age in place in assisted living, in a very comfortable setting, and then transition to Medicaid after the facility’s private pay period is satisfied.

More information about long-term care insurance in New Jersey is available online click here .

Smooth Sailing In Your Golden Years

On By Jane Fearn-Zimmer, Esq.In Elder Law & COVID-19, Estate Planning, Long-term care, UncategorizedLeave a comment

Life is smooth sailing, until it’s not. Don’t jeopardize your independence and quality of life, or your loved ones’ freedom, by waiting for a crisis to plan your elder care and your estate.

The COVID-19 pandemic showed us the importance of being prepared. Failing to plan for death, taxes, long-term care and disability can create hardship and stress. Medicare only pays for a limited amount of long-term care under limited circumstances. Private pay long-term care can cost you and your spouse more than $13,000 per month at the private pay rate in New Jersey. At that rate, your life savings can be quickly dissipated without advance planning. Even the cost of part-time paid care at home can add up quickly. For an idea of the costs you may be facing, check out the Genworth long-term care study at https://www.genworth.com/aging-and-you/finances/cost-of-care.html.

Here are some tips that can help you remain at home as long as possible, avoid an elder care crisis and preserve a legacy for your heirs.

  • Your MVP team should include a tax and estates and elder law attorney, an accountant or enrolled agent, and a financial advisor. They can help you define your goals and the right plan to achieve them.   They can also vet others to help protect you from elder financial and other forms of abuse.
  • Execute a valid Will, a power of attorney and a health care proxy.   Work with your attorney to do this.
  • Discuss your completed estate plan with your attorney and your accountant or financial planner. Understand how your estate will be funded.   
  • Work with an elder care attorney to understand your options for long-term care.
  • Explain your wishes and preferences with your health care proxy and the person who will serve under your power of attorney.    
  • Trusts can protect your life savings, a special needs child or grandchild, and can leverage a charitable gift.  A trust can protect an inheritance from bankruptcy, divorce, disability, addiction and/or some taxes.
  • A revocable trust with a “pour over” will can provide privacy and ease of administration.
  • Periodically review your finances. Update your retirement account and insurance beneficiary designations.
  • Purchase long-term care insurance if you can qualify medically for a policy. Your financial planner can evaluate your disability, long-term care and life insurance needs.  Your elder care attorney can evaluate the policy provisions.
  • Periodically review your legal documents.  If they are outdated, or misplaced, how can they be useful?  
  • Don’t add payable on death or transfer on death designations to all your financial accounts without speaking to an attorney.   
  • Consider a prepaid burial.  Your loved ones and your funeral representative will be grateful that you did.

For questions, contact Jane at Archer Brogan – Elder Law Attorney – Trenton – Princeton – Somerville – Brick – Jamesburg.