Estate planning pointers for unmarried couples

Are you in a long-term relationship, or even engaged to be married? Is that wedding postponed indefinitely due to the current pandemic? Do you have children who would need a guardian if you pass away? Do you have children from a previous relationship? Do you want to make sure that your partner is the one who will inherit your estate, or will be the one who’s allowed to handle your financial affairs and your medical decisions if you become critically ill?

The “laws of intestacy” specify that the estate of an unmarried person who has no Will would pass in equal shares to the children equally and if a child was deceased, then his/her share would pass to his/her descendants if any. If the deceased has no children, the estate passes to his/her surviving parent or parents, and if none, then to the descendants of the parents (i.e., the deceased’s siblings or nieces and nephews). If a single individual dies and has no surviving parents, children, siblings or nieces/nephews, the estate will pass to further remote relatives such as cousins. Ultimately, the estate can escheat to the State of New Jersey when there are no kin who can be located.

The only way to be sure that your estate will pass to your partner is to structure things properly in writing. There will be NJ inheritance tax due if it passes to your partner who isn’t your spouse, so that needs to be factored into the planning. The passage of the estate can be managed through a Last Will and Testament or a Living Trust, (or both) as well as certain beneficiary designations, depending on your specific situation.  Each case needs individual attention.

With a Will or Trust  you can make specific arrangements to protect the well-being of your own children, whether that’s by designating a Guardian (for minors) or structuring the way their inheritance would be managed.

As for decisions to be made during your lifetime if you become incapacitated, there is a preference in the statutes for next of kin as decision-makers. If you want your partner to be the primary Agent on your behalf, you would need to sign legal documents to that effect — power of attorney, health care power of attorney. You can also sign an Appointment of Funeral Agent. All of this documentation goes a long way to prevent disputes over who has authority, who inherits, and who should make decisions for you.

You may be wondering if you can just wait until after the wedding. Of course you can. Should you? That’s a different issue. Careful planning can prevent a crisis.

Call us to prepare or update your estate plan …….. 732-382-6070

Estate Administration When there is no Will

What do you do if a person passes away without a Last Will and Testament?

A Last Will and Testament designates an Executor who has legal authority to handle the estate assets. The Will also specifies who receives what, and in what way. The estate of someone who dies without a Will is called “intestacy” or “an intestate estate,” which is Latin for “without a Will.” If a person owns assets that are not jointly owned or assets that don’t have a named beneficiary, they are “in limbo” upon death and cannot be handled until the County Surrogate appoints an Administrator.

The process begins with an application to the County Surrogate where the deceased was living at time of death (this is written on the death certificate). Call the Surrogate or look on their website to find out the exact procedures. It will be necessary to submit an original death certificate and the names and addresses of the next of kin, as well as an estimate of the estate assets (if known). State law gives priority to the next of kin to be appointed as Administrator, but notice has to be given to similarly-situated kin (such as siblings of the person who is applying) so that they can renounce their right to be appointed to this job. Generally the Administrator has to obtain an insurance bond to protect the assets. If the estate is large, this can require a significant cash outlay — yet another reason to sign a Will, in which you appoint an Executor who can serve without bond. Once the Administrator is appointed, s/he has legal authority to handle he estate assets. There will still be many procedures to take care of before the estate can, finally, be given out to the heirs.

The next steps involve obtaining an EIN# from the IRS (because an estate is an independent entity); setting up an Estate checking account; collecting the bills; dealing with personal property; identifying all of the assets and determining whether any of them have a named beneficiary or co-owner; making decisions about liquidations of assets; and dealing with real estate (to name a few). There will often be a need to file the final income tax returns as well.

Many unusual issues pop up in estates, and getting early legal advice can help the Administrator avoid some of the pitfalls and quicksand that create greater problems later.

Call us for advice about estate administration ……  732-382-6070

Questions the Executor should ask the Estate’s Accountant

The house is sold, the estate’s debts and bills have all been paid, the accounting has been presented to the beneficiaries, they have signed off on the Release & Refunding Bonds, and now it’s time for the estate’s Executor or Administrator to distribute the estate to the beneficiaries according to the Will or according to the requirements of the law. The estate may have acquired dividends or interest or rents on which income tax must be paid. An income tax return has to be filed for the Estate if more than $600 in gross income was received, and in fulfilling his/her fiduciary duty, the Executor/ Administrator wants to be sure to investigate all available income-tax saving opportunities.

Here are a few of the questions to ask when you call the estate’s accountant: :

  1. What is the estate’s expected marginal tax bracket?
  2. Is it beneficial to pass the estate’s income and losses (if there is a loss on sale of assets such as stock or real property) through to the beneficiaries?
  3. Can income or loss be passed through in a year that the property isn’t actually distributed?
  4. If assets have to be distributed out in order to pass thru the tax liability, which plan saves the most taxes — distributing or holding?
  5. Is there any limit on the amount of losses that can be passed through to the beneficiaries?

Serving as Executor or Administrator is a job with many responsibilities. It’s vital that the fiduciary get advice on all of the steps required so that the interests of the beneficiaries are protected, and so that the fiduciary can be protected as well.

Call us for complete advice “A to Z” about the estate administration for decedents’ estates … 732-382-6070