2019 Estate Planning & Probate Newsletter
By Kenneth Vercammen, Esq. Edison, NJ
Index
1. NJ Estate Tax eliminated in 2018 and changes to Federal Taxes
2. Problemsif You Have No Will or a cheap online form not valid
3. NJ Inheritance Tax must still usually be paid if assets are going to persons other than spouse or children.2019 tax rates
4. Power of Attorney- Do not use a form purchased online.
5. Set up a Testamentary Trust in your Will for Protection for a second spouse to protect assets for children and grandchildren
6. Federal Health Privacy Law (HIPAA)- Have a new Living Will prepared
7. Always have proper Self- Proving Wills since witnesses often move or pass away, don’t rely on cheap online forms
[Photos page 1, 2, 3, 4]
1. The NJ Estate Tax was eliminated in 2018 although there is still an Inheritance Tax for money that is not going to spouse, children, grandchildren, etc.
Federal Estate Tax for rich people
Generally, a decedent dying between Jan. 1 and Dec. 31, 2019, may be subject to an estate tax, with an applicable exclusion amount of $11,400,000 (increased from $11,180,000 in 2018) and up from $5.49 million in 2017. In 2019, the annual Federal gift tax exclusion is $15,000.
2. Problems ifYou Have No Will or a cheap online form not valid
If you leave no Will or your Will is declared invalid because it was improperly prepared or is not admissible to probate:
1. The procedure to distribute assets becomes more complicated. It will require all of the children to select someone to be the Administrator, then all the children to sign a Renunciation Affidavit in front of a notary. If all the children do not sign the Renunciation Affidavit if front of notaries, then a Complaint and Order with have to be filed in the Superior Court. Cost over $3,000. The preparation of a Will for under $400 eliminates these costs.
2. Additional expenses will be incurred and extra work will be required to qualify an administrator-Surety Bond, additional costs often over $1,000 and extra legal fees
3. State law determines who gets assets, not you. People who dislike you or don’t care about you can get your assets
4. If you have no spouse or close relatives the State may take your property. Most people who rather have charities or friends get their money.
5. It often causes fights and stress within your family and sometimes lawsuits
6. If there are minor children a Judge determines who gets custody of grand children
7. You lose the opportunity to reduce State inheritance taxes and Federal estate taxes without improper planning
When loved ones are grieving and dealing with death, they shouldn’t be overwhelmed with Financial concerns and estate problems if there is no Will or not prepared or signed properly.
Who don’t you want to receive your assets?
Who is not the best choice to raise your children, or safeguard your children's money for college? Do you want children, or grandchildren, to get money when they turn 18? Will they invest money wisely, or go to Seaside and play games?
Beware of online documents not prepared by an attorney. Never use a form on line. No one tries to do their own electrical work on their home anymore or change their own oil. Have a professional do it right.
Make sure it is a Self-proving Will and says no bond required.
THE FOLLOWING IS A SAMPLE OF A VARIETY OF CLAUSES AND ITEMS WHICH SHOULD BE INCLUDED IN A WILL:
1ST: DEBTS AND TAXES
2ND: SPECIFIC BEQUESTS
3RD: DISPOSITION TO SPOUSE
4TH: DISPOSITION OF REMAINDER OF ESTATE
5TH: CREATION OF TRUSTS FOR SPOUSE
6TH: CREATION OF TRUST FOR CHILDREN
7TH: OTHER BENEFICIARIES UNDER 21
8TH: EXECUTORS
9TH: TRUSTEES
10TH: GUARDIANS
11TH: SURETY OR BOND
12TH: POWERS
13TH: AFTERBORN CHILDREN
A will must not only be prepared within the legal requirements of the New Jersey Statutes but should also be prepared so it leaves no questions regarding your intentions.
WHY PERIODIC REVIEW IS ESSENTIAL
Even if you have an existing Will, there are many events that occur which may necessitate changes in your Will. Some of these are:
* Marriage, death, birth, divorce or separation affecting either you or anyone named in your Will
* Significant changes in the value of your total assets or in any particular assets, which you own
* A change in your domicile
* Death or incapacity of a beneficiary, or death, incapacity or change in residence of a named executor, trustee or guardian of infants, or of one of the witnesses to the execution of the Will
* Annual changes in tax law
* Changes in who you like and who care about you
MAY I CHANGE MY WILL?
Yes. A Will may be modified, added to, or entirely changed at any time before your death provided you are mentally and physically competent and desire to change your Will. You should consider revising your Will whenever there are changes in the size of your estate. For example, when your children are young, you may think it best to have a trust for them so they do not come into absolute ownership of property until they are mature. Beware; if you draw lines through items, erase or write over, or add notations to the original Will, it can be destroyed as a legal document. Either a new Will should be legally prepared or a codicil signed to legally change portions of the Will.
3. NJ Inheritance Tax must still usually be paid if assets are going to persons other than spouse or children.
Separate from the Estate Tax, New Jersey imposes an Inheritance Tax on the estates of limited resident and nonresident decedents. The elimination of Estate Tax in NJ made no changes to the New Jersey Inheritance Tax.
Even if no inheritance tax due, a Tax Waiver on a house must still be obtained and filed if the house was not co-owned by the spouse. Your attorney will assist you by filing the mandatory Tax forms.
2019 INHERITANCE TAX RATES
Class C: brothers, sisters
First $25,000.......................No tax is due
Next $1,075,000................ 11%
Next $300,000..................... 13%
Next $300,000..................... 14%
Over $1,700,000................... 16%
Class D[other people]
First $700,000......................... 15%*
Over $700,000......................... 16%
Class E- charities, non profits: No tax is due
4. Power of Attorney- Do not use a form purchased online.
A Power of Attorney should contain reference to the NJ statute requiring banks to honor the Power of Attorney. Section 2 of P.L. 1991, c. 95 (c. 46:2B-11). A NJ bank does not have honor a Power of Attorney without the NJ language. Also, if you or your representative move it is a good idea to have a new POA prepared since a bank may give your selected person a hard time if the address on their ID is different than the address on the POA.
5. Set up a Testamentary Trust in your Will for Protection for a second spouse to protect assets for children and grandchildren
The Credit Shelter Trust (sometimes referred to as a “Bypass Trust” or an “A/B Trust”) was a popular estate planning technique used by married couples with combined assets to avoid the NJ Estate Tax. A Testamentary Trust (sometimes referred to as a Will trust or trust under will) is a trust, which arises upon the death of the testator [person who signed the Will]. A Credit Shelter Trust is a type of Testamentary Trust.
The purpose of the Credit Shelter Trust was to avoid the wasting of federal and state exemptions on the death of the first spouse. Instead of leaving all assets to the surviving spouse and thereby exposing the surviving spouse’s estate to more tax, Nursing Home & Medicaid issues, plus elective share by a future spouse, both spouse’s Wills are drafted to establish a Credit Shelter Trust to come into existence and be funded on the first spouse’s death.
Even though NJ has eliminated the NJ Estate Tax, a Testamentary Trust within the Will is still a useful device to help ensure children and grandchildren with receive money down the road. Otherwise, the surviving spouse can spend all the money in Atlantic City. The surviving spouse could also get remarried and do a new Will leaving all assets to the new spouse. Also, if your spouse gets remarried and their new spouse has to go into a nursing home, your spouse may have to use some of your hard earned money to pay for the new spouse’s expensive nursing home. Many families want to protect at least some of the money from wasteful spending or a new spouse.
In a typical Will Testamentary Trust, the surviving spouse is entitled to receive all of the income from the Trust for his or her lifetime, and has the right to demand principal distributions for his or her health, education, support and maintenance in his or her accustomed manner of living. Distributions in excess of that standard require the cooperation of a Co-Trustee – often an adult child of the surviving spouse or another trusted family member or friend.
If the Will Testamentary Trust technique is implemented as part of a Client’s Estate Plan, you can hire the attorneys for a separate fee to assist the Client in re-titling his or her assets so that assets are available to fund the Credit Shelter Trust. Re-titling is necessary because most Clients tend to hold assets jointly with right of survivorship and assets must be titled individually in a person’s name in order to be eligible to fund a Testamentary Trust. We work with a tax attorney to help our clients. Protect your money if you pass away and your spouse gets re-married or has to go into a nursing home.
Some persons even hire an attorney to set up a personal residence trust or irrevocable trust and have the assets taken out of your name and put into a trust or given to children and grandchildren in the trust. Minimum fees for trust are $3,000. This is not something a non-attorney can do on their own. It is also illegal for a non-attorney to provide legal advice or prepare most legal documents.
Beware of the “Elective share” rights of a new spouse. Have a Prenuptial Agreement if entering into a 2ndmarriage
Currently, the new spouse who is not given money in a Will can challenge the terms of the Will. This is called "Electing against the Will by a spouse". A spouse could receive up to 1/3 of the estate, even if only married for 2 weeks. The spouse must file a Caveat or lawsuit in Superior Court. We suggest a formal prenuptial agreement in 2ndmarriage situations. If there is no Will, the new spouse receives 50% of the estate even if only married three days.
6. Federal Health Privacy Law (HIPAA)- Have a new Living Will prepared
The federal regulation known as the Health Insurance Portability and Accountability Act (HIPAA) was adopted regarding disclosure of individually identifiable health information. This necessitated the addition of a special release and consent authority to all healthcare providers before medical information will be released to agents and interested persons of the patients.
Any old Powers of Attorney, Living Wills, Revocable Living Trusts, and certainly all Medical Directives now require HIPAA amendments. After you sign the Living Will in your attorney’s office, provide a copy to your doctor and family.
Powers of attorneys and Living Wills should be updated to reference this Federal reg. More information on the HIPAA law at http://www.njlaws.com/hipaa.html
7. Always have proper Self- Proving Wills since witnesses often move or pass away, don’t rely on cheap online forms
An old New Jersey Probate law required one of the two witnesses to a Will to travel and appear in the Surrogate’s office and sign an affidavit to certify they were a witness. This often created problems when the witness was deceased, moved away, or simply could not be located. Some witnesses would require a $500 fee to simply sign a surrogate paper. My Grandmother’s Will was not self- proving, and the witness to Will extorted a $500 fee.
The New Jersey Legislature later passed a law to create a type of Will called a “Self-Proving Will.” In such a Will, the person for whom the Will is made must sign. Then two witnesses sign. Then the attorney or notary must sign; with certain statutory language to indicate the Will is self-proving. Beware of online documents not prepared by an attorney. Never use a cheap form on line. No one tries to do their own electrical work on their home anymore or change their own oil. Have a professional do it right.
When done properly, the executor does not have to locate any witnesses. This usually saves time and money. If your Will is not “self-proving” or if you are unsure, schedule an appointment with an estate planning attorney. Some law offices ignore the revised law, and fail to prepare self proving Wills. Do not use a law office that follows old methods and does not do a self-proving Will. Also make sure your Will includes a formal “no bond required” clause so the executor/ personal representative does not have to spend thousands of dollars being bonded.
Call the Law Office of Kenneth Vercammen at 732-572-0500 to schedule an in-office consultation.
Kenneth Vercammen & Associates
Attorney at Law
2053 Woodbridge Ave
Edison, NJ 08817
If you or anyone you know needs an updated Will, Power of Attorney or Living Will, please have them fill out our confidential interview from and schedule a consult.
8. "CONFIDENTIAL WILL QUESTIONNAIRE"
Please fill out completely and fax or mail back. This form is extremely important. Your accuracy and completeness in responding will help me best represent you. All sections and information must be filled out prior to sitting down with the attorney.
Please be sure to check all appropriate boxes. If "NONE", please state "NONE".
If "NOT APPLICABLE", please state "N/A" or none.
PLEASE PRINT CLEARLY
1.Your Full Name:_______________________________
2. IF MARRIED OR SEPARATED, complete (a) and (b) below:
(a) Spouse's Full Name:___________________
3. Your Street Address: _________________________
City ________________ State ____ Zip Code ______________
4. Telephone Numbers:
Cell: _____________________ ___________________
5. E-mail address: _________________________
6. Referred By: ___________________________
If referred by a person, is this a client or attorney? If you heard about the law office on the Internet, what search terms did you use?
We recommend a Durable Power of Attorney in the event of your physicalor mental disability to help you with financial affairs?
Yes ________ No ________
We recommend a Living Will telling hospitals and doctors not to prolong your life by artificial means, i.e. Terri Schiavo; Karen Quinlan? Yes ________ No ________
How can we help you? What are your questions/other important information?
_______________________________________
[It is required that all pages be filled out in person's own handwriting prior to seeing the attorney]
8. Your Marital Status:
Single [ ] Married [ ] Separated [ ] Divorced [ ] Widowed [ ] Domestic Partner __
9. Your Day/Month of birth: ___________________
10. Spouse Day/Month of birth: _________________
11. If you are the parent or legal guardian of a minor child or minor children, please check here. [ ]
2. ESTATE EXECUTOR
The person charged with administering/Probating your estate, paying taxes and/or other debts, preserving, managing, and distributing estate assets and property is called an Executor. This person should be one in whom you have trust and confidence. Your SPOUSE is usually named as primary Executor, followed by the child who lives closest to your home.
Please provide the following information about the person you wish to name to serve in this capacity.
1. PRIMARY Choice of Executor/Personal Representative in Power of Attorney:
Name: _________________ _______________________
First Last
Relationship: _______________ Address: ________________
2. SECOND Choice of Executor/Personal Representative in Power of Attorney:This individual will serve in the event that the primary executor/personal representative is not alive at the time of your death, or is unable to serve.
Name: _____________________ _____________________
First Last
Relationship: _______________ Address: ________________
The two proposed Executors must be filled out prior to meeting the attorney. We do not recommend Joint Executors, which often cause conflicts and additional work for the Estate. It is best to select one primary person, then a secondary person. There is a reason why the car only has one steering wheel.
Asset Information- Must Be Completed- If none, write “none”
House/Real Estate Address __________________________
Estimate Total Real Estate Value: ________ Approx mortgage _____
Bank Accounts, Stocks, CDs and Assets: __________________
Approximate Amount ____________________________
Direct Beneficiaries of Accounts - If none write "none" ________
Other Major Assets - If none, write "none" _______________
Approximate Life Insurance: ___________ Beneficiary _______
In the Will- Who do you want to get your assets:
Beneficiary (1) __________________ Relationship _________
Beneficiary (2) _______________ Relationship ____________
Beneficiary (3) ___________ Relationship _______________
It is required that assets and beneficiaries be filled out prior to seeing the attorney
Any Specific Bequests of Money and Property:
_______________________________________
[ ] A. MARRIED PERSONS WITH CHILD(REN) OR GRANDCHILD(REN).
Generally most married people provide that, upon their death, property will be distributed as follows:
1. Your estate (all property and assets not owned jointly with another person) will be distributed to your surviving spouse.
2. If your spouse predeceases you, then your estate will be divided in equal shares among all of your living children, If any child shall predecease you, then that child's share to their children (grandchildren).
Names of Children: ________________________
LIST THE NAMES AND AGES OF ALL CHILDREN EVEN IF THEY ARE OLDER THAN EIGHTEEN. IF NO CHILDREN, WRITE NONE. If no minor children, skip page 5.
III. GUARDIAN(S) OF MINOR CHILD(REN) or Trustees of Trust
[Skip this section if you have NO minor children and DO NOT want a trust. There are substantial additional fees for preparation of a Formal Trust, minimum $2,500 for stand alone trusts]
The surviving parent of a minor child is ordinarily entitled to be the GUARDIAN of that child. In the case of simultaneous death of you and your spouse, or if you are a single parent, you should appoint a Guardian for your minor child. It is advisable, prior to the completion of this Questionnaire, to make sure that your proposed Guardian(s) is (are) willing to serve as Guardian(s). In addition, the Guardian will also hold the monies for the minor children UNLESS you direct us otherwise. In your Will you can have any adult serve as Trustee of monies for minor children.
Provide the following information about the person(s) you select to be Guardian(s)/Trustee(s). In the event my spouse predeceases me, I name as GUARDIAN(S)/ TRUSTEE(S):
1. PRIMARY Choice of GUARDIAN / TRUSTEE:
Full Name: _____________________________________
Relationship: ___________________________________
2. SECOND Choice of GUARDIAN / TRUSTEE:
Full Name: _____________________________________
Relationship: __________________________________
[ ] B. MARRIED PERSONS WITH NO CHILD(REN) OR GRANDCHILD(REN).
Generally most married people with no child(ren) or grandchild(ren) provide that upon their death their property will be distributed as follows:
1. Your estate (all property and assets not owned jointly with another person) will be distributed to your surviving spouse, but
2. If your spouse predeceases you, then your estate will be distributed to your living parent, or equally to your living parents.
3. But should both of your parents predecease you, then your estate will distributed equally to your brothers and sisters or equally to the children of a predeceased brother or sister.
Please check B above only if you wish your property distributed precisely and exactly as indicated in section B, 1 through 3, above.
[ ] C. DIVORCED OR WIDOWED PERSONS WITH CHILD(REN) OR GRANDCHILD(REN). Generally, most divorced or widowed persons with child(ren) or grandchild(ren) provide that upon their death property will be distributed as follows: 1. Your estate (all property and assets not owned jointly with another person) will be distributed in equal shares to all of your living child(ren).
2. But if one or more of your children predeceases you, that deceased child's share will be distributed to his or her child(ren), your grandchild(ren) in equal shares
[ ] D. ALTERNATE PLAN OF DISTRIBUTION - You may list specific gifts to individuals and/or divide your estate among several individuals by listing percentages to each, making sure that the percentages total 100%. You may add additional sheets if necessary or use the back of this form. There are additional Will preparation fees if there are gifts, called specific bequests.
Are there any beneficiaries with special needs, or receiving SSI or SDD? Please answer in detail_______________________
Are you or any of your Beneficiaries are not United States citizens? _______
If not US citizen, extra taxes apply.
Do you have any religious wishes on burial? ___
PLEASE WRITE DOWN ANY QUESTIONS YOU HAVE HERE or anything else important that we should be aware. Use back of this page for additional important information:
__________________________________________
ESTATE PLANNING
If your assets exceed $5,000,000 and you desire estate planning to avoid or reduce your estate tax or require a Trust to protect a spouse or children, please advise Mr. Vercammen. A Standard Will is not designed to address estate tax issues. We do not do Medicaid Nursing Home Planning. The law office building has four steps in the front so please advise us if you need assistance.
WILLS:
T 1- Parents with minor children and trust for children ________
T 2- Parents no spouse ____________
T 3- Unmarried ____________
T 4- Parents without trust ________
T 5- Spouse Trust if assets over $5 million or hold $ for spouse in Trust ? _____
PAYMENT WILL BE MADE BY: (Please circle one)
Check, Credit Card (Visa, Mastercard, American Express) or Cash
Checks are payable to Vercammen PC
Payment is required for Will, Power of Attorney and other document preparation at the first consult and prior to any documents being drafted. Minimum fee for Last Will and Testament preparation is $300 each. We charge a $150.00 consultation fee, which is credited to the preparation of the Will or other document. This $150.00 fee is non-refundable even if the documents are not prepared. If there are any changes to a draft Will, Power of Attorney, or other document, there will be a minimum charge of $75.00 per revision. The Will needs to be signed within 21 days of initial consult or an additional fee of $100.00 will be charged. Due to complexity and need to re-title assets, Fees for Trusts are minimum $3,000.
Copyright 2019 Vercammen Law
