Designating your representative can prevent a fight over your remains

I have been saying for years that taking the time to put things in order in proper legal documents can save a lot of headache and money in the long run. “Careful planning can prevent a crisis” has been one of my professional mottos for many years now. New Jersey has a statute that allows a person to sign a document that designates a Funeral and Disposition Representative who has authority to make the decisions about final disposition of the body at death. A person can write these instructions in a Last Will and Testament or can sign a separate document and provide it to whoever might need to know. A new court decision called In the Matter of Estate of John Travers Jr. Travers App Div tackles the thorny problem of who is entitled to make those decisions for a person who died without a Will and without any written designation.

John Travers, Jr.,  died without any written instructions concerning his remains. He had no Will. He was single and had no children. His parents survived him, but they were divorced  They disagreed over what should happen — the father believed that his son should be buried, but the mother believed that his remains should be cremated. . The court noted that under the statute, the priority would be given to (1) spouse if any; (2) majority of the adult children if any, and then (3) the surviving parents. However, the statute said nothing about what to do when there is a dispute between the parents, who are the equally-situated next-of-kin.

The Appellate Division decided that the Legislature would want the decision to be as much in accordance with the individual’s preferences as a court could discern . Here, he had failed to make his wishes known, but there was evidence that he had a closer relationship with his father at the time of his death. The Court decided that the father was therefore in a better position to determine what his son’s wishes would be. Another factor that impressed the Court was that the father was likely to be appointed administrator of the estate and would also likely pay for all disposition arrangements himself since his son had few assets.

Family planning is full lifetime planning. Call us for individualized assistance and solutions ……. 732-382-6070

Don’t be the Executor if you can’t do the Job

When you create an estate plan, you are selecting people whom you trust to perform various jobs for you and your beneficiaries. You may be selecting an agent to act as your Power of Attorney. You may select a medical decision-maker in case you become mentally incapacitated. You may have a Trust and select the Trustee who will manage the money for the beneficiaries. And you may be selecting an Executor who will handle your estate after you pass away

People often feel that being named as Executor is a big honor. Disputes have erupted within families when one child rather than another was named as Executor. Sometimes the person who was named as Executor wants the power and control that come along with the title of Executor, but ignores the responsibilities that come with it. Other times, the Executor has financial troubles of their own, starts “borrowing” funds from the estate, and just lets the estate lie around for years without paying the bills, paying the inheritance taxes or selling the property.

The Executor is a fiduciary — entrusted by law to handle “other people’s money” — and has duties to the funeral home, the tax authorities, the estate’s creditors, and ultimately, to the beneficiaries. Although an Executor is not obligated to reveal every step and every action to the beneficiaries, at some point, the beneficiaries will want to see an accounting so that they know that the amount of their distribution is correct. Reconstructing an accounting after several haphazard years of erratic management of estate assets can be a nightmare that leads to lawsuits brought by beneficiaries.

Managing an estate can be very time consuming. Dealing with third parties to obtain date-of-death values and payoff amounts for debts, tracking down missing assets, and selling real estate can turn into big chores. But the Executor has those duties and obligations.

Ideally, every Will has a list of successors written into it in case the Executor refuses to accept the appointment or decides to resign. But turning over an estate to a successor can create problems of its own, and a process must be initiated through the Surrogate or Court to be discharged as Executor.. Better to think carefully before stepping up to the plate and taking on the responsibility in the first place if you have any doubt of your ability to complete the task.

Call us for advice and assistance with estate administration, and ask about the fiduciary services we provide .. 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

Distributing an Estate? Watch out for child support judgment liens

The Executor of an Estate (named under the Last Will and Testament) or Administrator of an Estate (appointed by the Court because there was no Will or the Executor couldn’t serve) has an obligation to take care of all of the bona fide creditors of the estate before distributing the rest and remainder to the beneficiaries or heirs according to what the Will specifies or the law requires.  However, they also have a duty to pay a beneficiary’s share to probation if the beneficiary owes child support.

During the first six months or so after the beginning of the estate administration process, the bills are arriving and the Executor/Administrator is gathering the assets, selling property, and figuring how what is due. The process sometimes takes longer. But then there comes the point when it is apparent that all assets have been identified and accessed, all taxes have been paid, all outstanding debts of the deceased person have been paid, and the Executor/Administrator is ready to make the distribution that the beneficiaries are waiting for.

Since 2000, New Jersey law has required the Executor/Administrator to do a child support judgment search on every single person before distributing  their inheritance. NJSA 2A:17-56.23b. The search can be limited to judgments and liens against the person that were entered in the State of New Jersey. See Strickland v. 212 Corp. of N.J.. Even if the Executor/Administrator is planning to do a partial distribution mid-stream, the search must be run.

The Executor/Administrator asks each beneficiary to certify their social security number, date of birth, complete name, and mailing address. The search is then ordered through an independent search firm. If there is a child support judgment, a call should be placed to the relevant agency to get a written statement of the amount of the lien. Then the Executor/Administrator must transmit the appropriate amount of dollars from the debtor/beneficiary’s share of the estate to the Probate Division of Superior Court, with  notice to the beneficiary. If the payment fully satisfies the judgment, a Warrant of Satisfaction will be sent to the Executor/Administrator. After that, any remaining dollars can be distributed to the estate beneficiary.

The statute doesn’t specify that searches have to be done again after there has been a partial distribution. But if the final distribution is being made more than 30 days later (see Strickland, above), prudent practice dictates that another search be run.

This procedure is very important, because an Executor/Administrator can be held personally liable if they distribute an inheritance without making a search for the lien.

For legal advice and assistance on probate and estate administration, call us at 732-382-6070

Tell your Executor where you’re keeping your Will

Recently I got a call from the child of a client of mine who had just recently passed away. The child was panicky because they could not locate Mom’s Last Will and Testament. Mind you, this particular Mom was a very organized person. Bills were always paid on time; the house was meticulous; papers were looked at, dealt with, and either filed, scanned  or discarded. The Mom had reviewed and updated her estate plan just two years ago, and had informed the children just what the plan was. But they couldn’t find the original document.

I’ve gotten plenty of calls like that over the years. The problem is that only the original Will can be brought to the Surrogate for probate. Until the Last Will and Testament is probated at the county Surrogate, the probate Estate — which is all the assets owned by the deceased person that aren’t co-owned, and have no beneficiary — is in limbo. The person named as executor cannot act. A house can’t be listed for sale, bank accounts can’t be touched, stocks can’t be sold. The probate process is a quick and easy process in New Jersey,  but without an original Will, the plan so carefully crafted can’t be implemented without a court proceeding. Most legal problems have a remedy, and there are some interesting published cases concerning Wills that were lost, such as the Estate of Erlich. But these cases can consume a lot of time, and all the heirs have to be given notice. That means that if there is dissension in the family,  the situation invites a fight.

This same principle applies to other estate plan papers — we had a case once where the Deed said the property was titled in the name of a Trust, but no one could find any trust documents! We couldn’t even tell from the deed whether it was a revocable or irrevocable trust.

So pick a safe and sensible place to store your original Will, and make sure your Executor knows where to look for it when the time comes.

Call us to review or update your estate plan, and for trust and elder care planning … 732-382-6070