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A Will Protects Your Family and Heirs.

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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Estate Planning for Gen Z’s and College Students

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Going away to school is exciting.

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. 

Changes to Social Security in 2020

social security 2.jpg

The year 2020 will bring important changes to the Social Security program, including a 1.6 percent Social Security benefit increase and an increased annual earnings cap for the Old Age, Survivors and Disability Insurance (OASDI) tax, which is a component of the Federal Insurance Contributions Act (FICA) tax.  Beginning in 2020, the maximum annual amount of earnings subject to the OASDI will increase to $137,700 from the current limit of $132,900 applicable in 2019.

Also beginning in 2020, the maximum retirement earnings test exempt amounts will be $18,240 annually (or approximately $1,520 monthly) for individuals under full retirement age.  That means that for every two dollars earned in excess of that limit, one dollar in Social Security benefits will be withheld.

In addition, starting in 2020, the SSI federal payment standard will increase to $783 monthly for an individual and to $1,175 per couple. Here is a helpful fact sheet summarizing these and other important 2020 Social Security numbers.

Questions? Let Jane know.

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.

Minimizing Elder Financial Abuse

Sad senior woman after quarrel

It seems like every month, there is a news broadcast of a new form of elder financial abuse.  Statistically, it is very prevalent, especially among individuals with dementia who are residing alone in the community.

Unfortunately, elder financial abuse comes in many forms. One version is where a trusted advisor, family member or caregiver with whom the senior has a relationship takes the senior to an attorney to execute a new Last Will and Testament, changing the existing estate plan in favor of the trusted individual.  These are difficult cases to enforce because by the time the fraud is discovered the victim is deceased.

Another variety of elder financial fraud is tech support fraud, where there is a pop up on the senior’s computer screen that routes the victim to a bogus website to input information. Someone calls the senior and asks the person to send in money for software that doesn’t exist. The perpetrator remotes into the computer and tells the senior to log into the bank account. Then the perpetrator minimizes the window and withdraws funds without permission from the senior’s account. Some con artists may pose as representatives of well-known industry giants such as Microsoft and Google.

There are romance scams where someone pretends to be in a relationship and convinces the senior to send money. There are lottery scams and prize scams where a senior is asked to pay money to get the winnings.  But the majority of elder financial abuse the SEC sees is theft.  These cases are hard to put together due to the challenges of gathering the evidence.

In many cases, the victims may not even realize they have been victimized, or they may have had a long term relationship with their trusted advisor or family member and just convincing the senior to speak with an investigator or another attorney is problematic.  It may be easier for seniors to talk about financial abuse by emphasizing that this also happens to younger people and to focus on protecting yourself. Reassure them that their fear of compromising their appearance of competency and independence if they complain will likely not materialize.  Do not hesitate to report the incidents to the authorities. This is an area of enforcement which the Securities Exchange Commission and other federal agencies are currently focusing on and there are a lot of resources at both the state and local levels.

Questions? Let Jane know.

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.

Estate Administration in the Digital Era: Digital Assets, Cryptocurrency and More

Digital Assets and Cryptocurrency

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.

  1. 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.
  1. 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.
  1. 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.
  2. 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.

Questions? Contact Jane.

Jane Fearn ZimmerJane 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.