What if I Can’t Find the Original Will? Part 2
In my post last week I began discussing the options to probate when an original will can’t be located. Probate in New Jersey tends to be relatively inexpensive in comparison to many other states because appearances before a judge aren’t normally necessary and a bond isn’t usually required unless you can’t find the will. Letters of administration can be applied for if no will is located by making an application to the Surrogate. An administrator serves in the same role as does an executor. New Jersey statute establishes who has the right to apply first, which is determined by closeness of relationship to the person who died (the decedent). If, for example, the decedent had 6 children who all have equal right to serve but only one applies for the appointment, the others must sign a document declining to serve – known as a renunciation. If any of them refuse to sign or cannot be located then the application must be made to a judge on notice to all parties who have an equal or greater right to serve. Any party can oppose the application or request instead to be appointed and that’s where it can get quite messy and expensive. The administrator must post a bond. If the proposed administrator cannot qualify for
What If I Can’t Find the Original Will – Part 1
We all know the statistics. 110,000 deaths attributed to Covid-19 and climbing. Our office has received more calls in the last 3 months regarding the need for estate administration than at any time that I can recall in the past 25 years. In many instances the decedent (the person who died) had no will or at least none could be located. In other cases, a copy has been found but not the original. As I have written in the past, New Jersey has an easy probate process when the original will exists. An application for probate is presented by the proposed executor with the original will to the county Surrogate without the need to appear before a judge. This is called common probate. Without the original will, however, estate administration involves an application by a proposed administrator and usually a bond is needed. A surety company will issue the bond to protect the heirs and creditors should the administrator fail to carry out his/her duties. Depending on the size of the estate, this bond can be several thousand to tens of thousands of dollars. If a copy of the will has been found but not the original, and there is no belief or
2020 Medicaid Penalty Divisor
Many of my articles concern Medicaid and avoiding or trying to minimize a Medicaid penalty. That penalty, which is a waiting period for benefits is a result of a mathematical calculation. The amount of any transfers for less than fair value is divided by the Medicaid divisor to get the resulting penalty. The divisor is what the State of New Jersey sets as the average cost of a semi private room in a nursing home. It is a state wide average and is supposed to be adjusted every year. The rate for 2020 was just announced last month and there is a slight increase from the 2019 rate. The rate per day is now $357.67 up from $351.84 last year. On a monthly basis the 2020 rate comes to $10,879 per month. Let’s look at an example of how this would work. If I apply for Medicaid and during the course of the application process it is determined that I transferred $50,000 for which I did not receive equal fair market value back in product or service, the resulting penalty would be 140 days or about 4 and ½ months. During that period of time I would need to continue to pay for my care at whatever the private pay rate is. Medicaid will only begin to
Do It Yourself Estate Plan – Part 2
In last week’s post I was telling you about Mary and John’s do it yourself wills. For less than $100 they purchased a software program that helped them assemble their wills. When John died only then did Mary learn of the mistakes they made. I already told you about the IRA which John intended to go to Mary but instead will go to the child from his first marriage. There is, however, a bigger mistake. The residuary clause stated that the rest of the husband’s property is to be distributed to the husband and if he does not survive then to his children from his second marriage. If I prepare my will and leave everything to me, that is obviously a mistake. My guess is that John prepared Mary’s will first and then took her will and changed the names when preparing his own. He overlooked this very important clause. Mary was quick to point out what he intended and I didn’t disagree with her assessment that he meant to leave everything to her. The problem, however, is that we can’t substitute our own belief as to what he intended. So, what options does Mary have? I told her that once we probate the will we would need to apply to the court for an advisory
A Do It Yourself Will Gone Bad – Part 1
I recent call I received from Mary illustrates the risks of do it yourself estate planning. In this case Mary and john, her husband prepared their wills using Quicken’s Willmaker software which can be purchased online for less than $100. It couldn’t be easier, right? Hiring an estate planning attorney could cost several hundred to a few thousand dollars, depending on the particular plan and what it includes, so just comparing the two costs it would appear that the smart and less expensive move would be to go with the software program. As I always point out, however, this way of viewing a will – as a fill in the blanks document – is dangerous. A last will and testament is a legal document the product of proper legal advice, which requires understanding the laws of wills and trusts and then tailoring that knowledge to the particular client’s needs and desires. Mary called me because John had recently died and she needed to probate his will. When I examined it, however, I found a number of troubling mistakes. First, the will contained a paragraph specifically referencing IRAs and 401ks and the wish that those assets be left to Mary. I explained that for tax purposes these accounts typically have beneficiary designations upon death which override any instructions contained in a will. Mary
Stimulus Checks Issued to Deceased People
A few weeks ago I wrote about Stimulus checks, the part of the CARES Act that gives one time payments of $1200 to every American whose adjusted gross income is $75,000 or less (and a smaller amount for those with income between $75,000 and $99,000). Since then, some people have received the payments direct deposited into their bank accounts while others have received checks in the mail. Because of the scope of the program and the speed with which it has been implemented, problems were to be expected. We have been contacted by family members and legal representatives of clients who have died and received payments. In some cases checks have been issued to people recently deceased and in other cases stimulus payments have been sent to people who died well before the COVID-19 crisis – in some cases 2 years before. I was interviewed for a CBS News story about this issue (https://newyork.cbslocal.com/2020/05/07/coronavirus-stimulus-check-for-deceased/?fbclid=IwAR0A2OHwjhQwgQBDLCRiBLYsdmkibonNQ8S9VNvQFvyXoNQoQigppFFB5hc#.XrSJd-d2wLQ.facebook) and stated that guidance would need to be provided regarding who is entitled to keep the payments and who must return them. That same day the IRS finally clarified the issue on its website. Payments made to someone who died before receipt of the payment must be returned (including people alive when the law passed but died before receiving the payment). In the case