New Jersey Estate Planning & Elder Law Blog : New Jersey Estate Planning Lawyer & Attorney : Deirdre Wheatley-Liss : Fein Such Kahn & Shepard Law Firm : Elder Law, Tax Planning

I received a call yesterday similar to many others I have received over the years.  Essentially, Dad died and the client just found out that shortly before his death he named one child beneficiary of lots of accounts, leaving essentially nothing passing under the Will, which had divided everything equally between 3 children.

Lou Ann Anderson, the Bell County Legal News Examiner has an article today about celebrity cases of undue influence.  The stories are similar - shortly before death a new Will is executed or other property transfers done that undo a lifetime of the decedent's intent. These cases include Brooke Astor (her son and attorney were sent to jail for trying to defraud hundreds of millions from charity), Melvin Simon of Simon Shopping Malls fame (his Will months before he died was changed to leave all to his wife, and take out $150 million in bequests to charities), John "Buck" Jones, owner of the Carolina Panthers (his Will was changed a month before his death to leave control of Company to his wife instead of 3 employees as had been his long standing plan).

While these celebrity cases are titillating because of the names and dollar amounts involved, the same situation involves New Jersey families all the time.

There are competing concerns.  First, a person is free to leave their money to whomever they please (other than 1/3 to a spouse) - children do not have a right of inheritance.  Second, a person is not required to leave money equally among a group - many times one child gets more in the Will than others because the parent perceives that child's need or reward to be greater.  

However, it is the person making the gift who is allowed to make these decisions - not the person getting the gift.  The problem of undue influence arises when somebody essentially takes advantage of a person's reduced physical or mental state, or a situation of fear or dependency, and influences them to make an action they would not have otherwise takes.

The issue for a person who is claiming undue influence cases is one of proof.  How do you prove a person was influenced to make a change to their estate plan and it was not an independent decision?  There need to be witnesses and documents.  Do you have to prove the undue influence, or does the person who got the money have to defend the gift?  Kenneth A. Vercammen, Esq. has an excellent summary of the issues in Undue Influence As Defense To Will Or Power Of Attorney (New Jersey).

Generally, the person claiming undue influence (ie, the person getting less) has the burden of proof to show a court there was undue influence.  See Conners v. Murphy, 134 A. 681, 682 (N.J.Err. & App. 1926); Pascale v. Pascale, 549 A.2d 782, 786 (N.J.1988). However, if the the person who benefited from a gift is in a confidential relationship with the person who made the gift (an attorney in fact under a POA, a person who the person who made the gift is dependent upon), then the burden of proof shifts to the person who got the gift to prove that the person making the gift had independent counsel in making the gift.  See Haynes v. First National State Bank of New Jersey, 432 A.2d 890 (N.J. 1981); Pascale v. Pascale.

The presumption of undue influence is easier to raise with lifetime transfer then with transfers in a Will.   Some lessons from this are that  if you think that you were harmed by undue influence, gathering facts and acting quickly is key.  If you plan to disproportionately benefit your heirs, you should seek legal counsel to act to protect that gift from a claim of undue influence.

Image: Simon Howden / FreeDigitalPhotos.net

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A great answer to a frequently asked question when handling a loved ones estate was recently posted by taxgirl.com.

Here is the situation - Grandma wanted to give $10,000 to the ASPCA.  She told everyone in the family, but didn't put it in her Will. Can the deduction for a charitable contribution still be made?

Like all good questions - the answer is yes and no (isn't the law great?).  Taxgirl summarizes the issues nicely:

Here’s the unhappy rule: if a charitable donation is not specifically authorized in a will or trust, the estate may not properly take a deduction for the donation. <snip>

However, there is some light at the end of the tunnel. Individuals may properly donate items which pass to them from an estate and claim a charitable deduction on their personal return. 

So what to do.  Well, you could take $10,000 from your share of the estate and donate it to charity. Grandma's wishes would be honored, and you would be able to take the deduction on your personal tax return. If there are 4 beneficiaries, each could donate $2500 in her honor.

What if the item to be donated isn't cash, but stuff?  For example, donating all of Grandma's furniture and household items to charity? In that case the best idea is to value the property (have a personal property appraiser come in), distribute the property to the beneficiaries, and then the beneficiaries can take the charitable deduction on their tax returns.  Note that there is not a requirement that the beneficiaries physically take ownership of the property - the property could be transferred to the beneficiaries via an assignment and then all the personal property picked up by the charity at the house.

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In Morris County right now we have an election race for the Morris County Surrogate.  The Surrogate is an office that I deal with frequently, but many people do not know much about.  

I must first say that Surrogate John Pecoraro does a wonderful job.  My clients interact with his office usually due to the death of a family member and his office and staff are warm, caring and efficient so that the executor can leave their office feeling empowered rather than scared and confused (disclaimer - this endorsement is not upon request or even knowledge of his office, but because I feel Surrogate Pecoraro has excelled in the position).

The Surrogate is an elected judicial role.  The Surrogate has jurisdiction in limited areas:

1. When a person dies, the Surrogate reviews the will and if all is in order, formally empowers the Executor to act on behalf of the estate
2. When a person dies without a Will, the Surrogate formally empowers the Administrator (who is named to act based on relationship to the decedent) to act on behalf of the estate, as well as ensure that the estate administrate is completed
3. If a person is incompetent (due to mental disability or being a minor) the Surrogate is involved with the process of the naming of the Guardian.
4. The Surrogate facilitates adoptions.
5. The Surrogate managed funds paid to minors (inheritances left to a person under age 18, or personal injury awards).  The Minors' Intermingled Trust Fund for Morris County minors manages approximately $25 million.

As an aside, you can now search for probated estates online to see if a will was probated or an estate administration opened in Morris County.  

The Surrogate's role is quiet, but important.  They facilitate moving families through times of grief and joy.  Having dealt with many other Surrogates, it is pleasure to represent cases in Morris County.

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Death is part of life - but for the surviving family it is a time of stress, both emotional coping with loss and knowing what to do to handle the paperwork and the practicalities of what happens when a family member dies.

For the emotional question many psychologists offer services to help you address grief.  Look to your health insurance plan for coverage questions.

For the practical questions, CBS Money Watch has created a very useful guide "Death in the Family: 12 Things to Do Now".  It can be printed out and kept with important family papers.  I have outlined the 12 steps below with some thoughts and comments.

General To-Do List

1 - Call a funeral director - These professional will help with the choices to be made.  Many people have a prepaid funeral or have created burial instructions - look for these to help celebrate the life of your loved one.  IN setting the date, keep in mind travel arrangements that close family may need to make.

2 - Contact close friends and family - Speak to key people who can contact others.  You may want to change your voice mail or set an email with answers to questions about the details of the memorial services, where a donation in lieu of flowers could be made.

3 - Make burial arrangements - The funeral director can help you with these, but note that you will want to again check to see if prior arrangements had been made by the person during their life (and if you have a plan for your memorial, write it down, don't leave it to guess work).

4 - Write an obituary - You should consider where it should be placed - local paper, papers where the person once lived, alumni publications, etc.

5 - Plan a reception - If you are having a gathering to celebrate a life, delegate to a friend or family member - they want to help you, and this are some details somebody else can run with.

6 - Find the original will - Our practice is to retain the original and give the client copies. Look at the copy and call the law firm on it.  Note only about 30% of the population has written a will - there may not be one to find, in which case the law of the state the person lived in when they died will determine who gets what property.

7 - Make like an accountant - You will need to gather all financial information.  First starting place - the mail and monthly statements - put each in a separate file so you are aware of the assets.  Next place, review the tax return - are the assets listed on there you don't get monthly statements for. Third - keep a record of all bills being paid.  At the very beginning you won't have access to the decedents funds, so one or more people may be making loans to the estate by paying expenses - these should be repaid as soon as the Executor of Administrator has access to the funds.

8 - Contact the person’s employer - Contact the employers human resources office to see if there are employer provided benefits.  If the person has retired and gets pension benefits, a former employer should be contacted as well.

9 - Watch the mail - After the initial monthly statements, other asset information may eventually arrive by mail.  For assets that only report once a year (life insurance for example), many give statements in early February for income tax return preparation, so you may find additional information then.

10 - Pay the bills - You can call and advise don't have access to the funds if bills will be delayed.  This will also usually get any interest charges waived.  Keep good copies of all bills paid as these will be reflected on the tax returns.

11 - File tax returns - At a minimum, a final income tax return (Form 1040) will need to be filed with the IRS and State.  Depending on the state you live in, the size of the estate, and who the beneficiaries are, you may also have to file one or more of a Federal Estate Tax Return (estate is in excess of $3.5 million), a State Estate Tax Return (estates over $675,000 in New Jersey, and varies by other states), and/or and Inheritance Tax Return (for beneficiaries other than spouse, parent, child, grandchild in New Jersey)>

12 - Consult an attorney - This is likely the first estate you have ever handled.  Estate attorneys are professionals in working through an estate.  Being an Executor is a temporary job - with all the responsibilities of a real job, but one for which you may have no training. When we partner with our clients we map out the estate administration process for them and assign responsibilities among us, as the estate attorney, an the Executor, as the Representative of the estate. The Executor can choose what actions they feel comfortable handling, and understand those we as professionals will address. This keeps costs down while allowing the Executor to be as involved as their schedule permits, while moving the estate along to conclusion.  The author of the CNN Money article puts the use of an attorney into good perspective

If you’re not comfortable handling an estate, you may want to bring in an estate attorney. At the very least, check in with one after you’ve completed what you can. (Financial planner Jonathan Pond, of Newton, Mass., also has published an excellent, exhaustive checklist for executors.) “I’d recommend just saying ‘Hey, this is what I’ve done, here’s where I’m at, am I missing anything?’” says Diane Park, a financial planner in Minneapolis. “That might take just an hour or two of an attorney’s time.”

This will always be a challenging time - it helps to remember you are not alone and that there are family, friends and professionals you can rely on.

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Category: Elder Law, Estate Planning, Estate and Inheritance Tax, Business Law and Planning, Tax Law and Planning, Probate and Estate Administration, Financial Planning, Miscellaneous Musings

I am excited to be speaking at the Garden State Women Magazine 6th Annual Financial Conference & Networking Event on May 12 at the Park Avenue Club in Florham Park. This is an exciting day where New Jersey's top insurance, real estate, legal and financial professionals will provide women with the information and guidance needed to take charge of their financial future. Click here for more details.

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Category: Estate Planning, Probate and Estate Administration

While wholeheartedly agreeing with Joel Schoenmeyer's initial comments below, I too find Anna Nicole Smith's Last Will and Testament fascinating, for all the wrong reason.

Problems with Anna Nicole Smith's Will :: Death and Taxes Blog: "I've stayed away from blogging about the Anna Nicole Smith situation so far, as I'm not particularly interested in the tabloid aspects of Ms. Smith's life. However, another estate planning attorney e-mailed me a copy of Ms. Smith's Will (here as a pdf), and I had to take a look. I found it fascinating for reasons other than the fact that Ms. Smith lived a very messy life."

Joel goes on to look at a mess of contradictions in the Will about who is to inherit. You would think that a person who had legal representation up to snuff enough to take her husband's probate issue before the United States Supreme Court on a question to true legal merit, would be more careful about her own will. Not that I have a crystal ball, but I predict this one will be tied up in court for just as long.

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Category: Probate and Estate Administration

In the wake of the travesty that is the Anna Nicole Smith saga, I am beginning a series of posts on what you can do to avoid some of the problems her lack of planning have caused. Now, most people's death would never come close to being the global circus of Anna Nicole's, but within your own family circle, a failure to plan can have potentially devastating consequences. So - Don't be Anna.

A basic tenent of estate planning is that it has to be clear, because, by definition, you won't be here to describe your intent.

One area that you have the right to direct are your burial wishes. In New Jersey, NJSA 45:27-22 grants you the right to control your funeral wishes by a written statement in your will. If you have no statement, various people, in descending order, have the right to make the decision for you. But give your family members a gift - tell them what you want in your Will, instead of leaving them to make guesses, or worse, disagree.

22. a. If a decedent, in a will as defined in N.J.S.3B:1-2, appoints a person to control the funeral and disposition of the human remains, the funeral and disposition shall be in accordance with the instructions of the person so appointed. A person so appointed shall not have to be executor of the will. The funeral and disposition may occur prior to probate of the will, in accordance with section 40 of P.L.2003, c.261 (C.3B:10-21.1). If the decedent has not left a will appointing a person to control the funeral and disposition of the remains, the right to control the funeral and disposition of the human remains shall be in the following order, unless other directions have been given by a court of competent jurisdiction:
(1) The surviving spouse of the decedent.
(2) A majority of the surviving adult children of the decedent.
(3) The surviving parent or parents of the decedent.
(4) A majority of the brothers and sisters of the decedent.
(5) Other next of kin of the decedent according to the degree of consanguinity.
(6) If there are no known living relatives, a cemetery may rely on the written authorization of any other person acting on behalf of the decedent.

For some more in depth thoughts on this problem, look at Will Your Family Honor Your Funeral Instructions?

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Category: Estate Planning, Probate and Estate Administration

A spot-on examination of the requirement for a surety bond in an estate administration from Joel Schoenmeyer, Esq. at Death and Taxes Blog.

On the Subject of Surety Bonds: "Surety bonds are like an insurance policy for an estate and its beneficiaries. What are you insuring? That the executor or administrator isn't going to run off to Tahiti with the estate's assets."

I also use Tahiti as an example of where the nefarious fiduciaries are going with you money.

Surety bonds can be expensive and fall into the category of "things to be avoided". How to avoid the expense to your estate - create as will. As Joel points out in his posting: "The executor doesn't have to obtain one if the decedent's Will waives the surety bond requirement. If the Will DOESN'T contain such a waiver, or if the decedent died without a Will, the executor will have to make surety arrangements."

Also, if you have a Will, but don't have a named Executor or Successor Executor, you will also need a surety bond in NJ. This means that if your Will from 15 years ago names your spouse and then your father, who has since died, a codicil is in order at a minimum to name appropriate successor executors to avoid the bonding requirement.

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Category: Estate Planning, Probate and Estate Administration

As part of every Estate Planning consultation these days, I ask not only "Where do you keep your assets" (ie: what institutions do you use for banks, brokerage accounts) but "How do you access your assets?" The point of the second question is to find out if the client takes advantage of electronic account access, and if so, who else shares access to those accounts.

I was reminded for the importance of this from the article: wcco.com - When Passwords And User Names Die With The User: "Security experts warn us to keep our passwords and user names under lock and key. But what happens after a loved one dies? How do survivors get access to information and documents kept squirreled away in safe deposit boxes and hard drives for years?"

The questions is even more prevalent when there is no hard data. Many people don't receive paper account statements and only access bank and brokerage accounts online. Or there are direct deposit or direct withdrawals set up only online. In this case, an executor may not even know about the assets until a tax statement comes in January, or by running an escheated asset search (escheated assets are assets that are turned over to that state if the institution can't find the owner).

First, the motivation for taking the steps below is avoiding the alternative - going to court for an order to get access to the accounts (if your executor even knows where the accounts are).

The best way to address concerns raised by assets in the electronic age from an estate planning and estate administration perspective is to employ some practical advice:

• Each spouse keeps a spreadsheet of Institution Name, Website, Account Number, User Name, Password
• The spreadsheet is updated WHENEVER a change is made
• Save the spreadsheet to a removable media format (CD, DVD-R, USB Flash-Drive, etc).
• Save the removable media format in a safe location that your spouse, power of attorney, key adult child(ren) and attorney are aware of (safe deposit box, fireproof vault, drawer in the house where the important stuff is)
• If you password protect the file, you need to make sure that your spouse, power of attorney, key adult child(ren) and attorney are aware of

If putting all this in a safe place and telling key people of it concerns you because the key people have access to your accounts, you need to rethink the key people.

MOST IMPORTANT - If you make any changes to the information on the spreadsheet, update the spreadsheet and put in back in the safe (but well communicated) location.

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