Many assume that if they pass away leaving family behind, their family will take care of their affairs and they don’t need a Last Will and Testament. Generally speaking, failing to plan means planning to fail. While every case is unique, most people DO need a will. Here are some important considerations.
A Will establishes who will be responsible for your affairs and/or your funeral. If you don’t have a Will, there may be confusion about who will do this and how your estate will be distributed. A Will can also you to prevent your personal representative from have to post a bond to probate your estate.
A parent with a minor child needs a Will to appoint a guardian for the child if the other parent is unavailable. A Will enables the inheritance to be invested profitably. Without a Will, the funds will be deposited in the Surrogate’s Intermingled Trust Fund. The funds will be invested at bank rates until the child reaches majority, which could be years. During that period, the child’s parent or guardian cannot withdraw the funds without a court order.
Business owners need a Will, to wind up the business and to protect their family.
Your Will allows you to control what happens to your property after your lifetime. Unless you state otherwise through beneficiary designations and/or your trust or Will, the law of intestate succession will control who gets your estate.
If you wish to disinherit a close family member, having a valid Will in place is critical to accomplish your wishes. More information on what what you can do when estranged relatives may want to contest your will is available online in an insightful article by legal writer, Lorelei Laird, at https://www.legalzoom.com/articles/can-estranged-relatives-contest-your-will-after-you-pass-away.
But before taking Junior to college or to his first apartment, don’t forget legal matters. There are key financial and legal documents you need in place. These documents are a general durable power of attorney, health care proxy and living will for Junior. Once Junior attains the age of majority, his doctor, nurse, academic registrar, landlord or bank needs these documents to speak with you.
Having the documents in place can bring peace of mind. Busy Gen Z’s need time to learn how to “adult.” They feel overwhelmed by the financial side of “living their best life.”
If you insist that Junior sign his legal documents before leaving home, you have done him a favor.
With these documents, you can lead Junior by example in dealing responsibly with adult challenges. These could be “surprise medical bills,” health insurance reimbursements, credit card billing, income tax issues. Once you shown him how to manage such challenges, he will thrive. And you can relax and just be the proud parent!
Since Gen Z’s are the digital generation, make sure you have a well-crafted durable power of attorney with digital asset powers. If the unthinkable happens, you will want to be able to access Junior’s Instagram or other social media accounts in an emergency.
If Junior doesn’t execute a health care proxy, you will wish he did when he is in an urgent care facility located ten hours away!
Junior should also share a list of credit card and financial accounts with the customer service number for each account. That way, if he misplaces his credit card, it is easy to report. Also note his digital accounts numbers, usernames and passwords (i.e., student identification username and password, and the health insurance username and password).
For more practice tips on estate planning for your family, contact Jane.
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 ofthehome will also be considered, as will the outcome of any prior attempts to sell the property, the cost of continued homeownership, and whetherthe 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.
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.
The probate proceedings for the estate of the late musical artist, Prince Rogers Nelson, have been repeatedly profiled in the national news for a variety of reasons. Here are some digital age strategies for dealing with cutting-edge estate administration issues, including identifying heirs, working with digital assets and block chain technology, and administering estate assets in specialized industries.
Genetic testing can determine the rightful heirs. If parentage may become an issue, obtain an order authorizing DNA testing of the decedent’s blood sample as soon as possible after death. Obtain a court order for genetic testing of purported heirs early on in the proceedings.
Identify, catalogue, disclose and value digital assets. Digital assets include a wide variety of electronic files and works. Some examples are digital accounts (i.e., social media, e-mail and online commercial accounts such as Etsy and Amazon), video and audio files and electronically stored media (such as photographs, art, music, and original works and blogs), knowledge stored in electronic databases or formats (i.e., software and architectural plans). Cryptocurrencies (Bitcoin) and block-chain technologies are also digital assets. Some forms of digital assets are more easily monetized than others. Digital assets are regarded as personal property by the taxing authorities and as such, must be clearly identified and properly valued on death tax returns. See I.R.S. Notice 2014-21. In some cases, discounts for lack of marketability may be appropriate. Initial coin offerings (ICO’s) may be subject to registration requirements under the Securities Exchange Act of 1933.
Hire experts for specialized industries. Prince’s estate held a wide range of intellectual property. The personal representative faced unique business challenges, such as operating multiple entertainment businesses, overseeing a real estate portfolio and a museum, archiving a vast quantity of audio and video assets, and safeguarding personal property. The use of entertainment and other industry experts was needed to help monetize the estate’s assets.
File any confidential information disclosed to the court under seal. Consider whether to file sensitive information under seal. Sensitive matters could range from business and licensing negotiations and confidential litigation settlements to details relating to parentage.
Jane Fearn-Zimmer is an Elder and Disability Law, Taxation, and Trusts and Estates attorney. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.
Jane Fearn-Zimmer is an Elder and Disability Law, Taxation, and Trusts and Estates attorney. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.