What is the Meaning of Per Stirpes? Part 1
Whenever I review drafts of a will we have prepared for a client there are certain terms and clauses that I can almost always guarantee will trigger questions. One of those is the term “per stirpes”. Per stirpes is actually a Latin term meaning “by branch”. It is used to describe how assets are distributed when someone dies. Let’s say I leave a bequest in my will to person A. What happens if A dies before me? The next question is “who then inherits what would have been A’s share? I have several options. I could decide that A’s share should go to another specifically named person. Let’s call him B. I could also decide that l want A’s share to lapse so that A’s share is to be distributed to the persons named to receive the residuary (ie. the balance) of my estate. I could also,however, choose to pass on A’s share to A’s descendants. That is done with a per stirpes designation. If A has 2 children, C and D, a per stirpes designation means C and D step into A’s shoes and split A’s share. Finally, I could choose a designation of “per capita”. I’ll explain more next week.
In Terrorem Clauses – Enforceable or Not? Part 2
In my post last week, I explained the concept of an in terrorem clause. These clauses are designed to discourage will challenges, however they do have limitations. They work by providing that if someone challenges the will they would receive nothing. This acts as a disincentive to challenging the will if the person loses whatever they were going to receive. There is a common misunderstanding, however, about the scope of this clause. It does not act as a complete bar to a will challenge. In fact, New Jersey law specifically provides that “a provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting the proceeding”. What this means is that if probable cause exists, the right to contest the will still exists. For example, if the testator signed the will under duress or undue influence or lacked the mental capacity to execute a will, then a challenge can still be made. It’s just that the in terrorem clause raises the stakes, so to speak. If the applicant is unsuccessful and probable cause to file the action did not exist then the applicant would lose the case but the loss doesn’t
In Terrorem Clauses – Enforceable or Not? (Part 1)
In this week’s post I discuss in terrorem clauses, more commonly known as no contest clauses which can be found in a last will and testament. In terrorem is a Latin term meaning “in fear”. The purpose of such a clause is to discourage will challenges. The clause states that if an heir files a legal proceeding challenging the will, he or she will not receive any interest in the estate. These clauses are generally allowable because they support the idea that a person’s wishes with respect to the distribution of his or her estate should be honored, however, that is a very general statement. There is more to it than that. For example, when one of our clients disinherits a family member, they typically will ask for a no contest clause to be inserted in the will. But, if an heir isn’t receiving anything in the will anyway, adding an in terrorem clause doesn’t really act as a disincentive. The issues surrounding no contest clauses are a bit more involved. It is important to understand that the clause doesn’t provide absolute protection against will challenges no matter what. I’ll explain more next week.
2025 Social Security Cost of Living Adjustment
When we get to the end of the year, it’s time to look ahead to what numbers may change in 2025 for the government programs from which our clients receive benefits. It starts with the Social Security Administration, which announces its cost of living adjustment (COLA). Other government programs then adjust their numbers, often using the same COLA as Social Security. Since inflation hit a 40 year high in 2022, the rate has dropped. After a COLA of 8.7% in 2023, the adjustment dropped to 3.2% for 2024. Inflation, has continued to decline this year and consequently so has the COLA. For 2025 Social Security payments will increase by 2.5%. This bump up will be first be seen in January, 2025 monthly payments. Medicare numbers will also change next year, although not tied to the same adjustment. Similar to last year, the standard Medicare Part B premium that most people pay will increase. While that number has not yet been finalized, it is anticipated to increase by almost 6% to $185 per month.. Certain Medicare deductibles and copays will increase next year. The Part A hospitalization deductible is expected to increase by $52 to $1684 and the copay for days 61 through 90 is expected to increase from $408 to $421 per
What Qualifies as a Last Will and Testament? Part 3
In my last 2 blog posts I have explained the elements of a last will and testament. New Jersey law clearly sets out the requirements which, if followed, make the probate process much easier than when the law is not followed. While I am always an advocate for consulting with an experienced estate planning attorney because “you don’t know what you don’t know”, there is still the temptation to print a form off the internet or just write one up yourself since it doesn’t cost anything. That might be true if we only consider the upfront cost to prepare the document. After the person dies, however, is when the real cost can be seen. When it comes to the execution of a will, I have seen too many instances in which even the simplest elements of execution are not followed. As I laid out last week, the will must be signed by the testator before two witnesses. A self proving affidavit should also be signed. In our office we have had numerous cases in which these elements were not all present. For example, one will had the testator’s signature in one place but in a second location it was blank. In another instance, the self executing affidavit did not have
What Qualifies as a Last Will and Testament? Part 2
In my blog post last week, I explained the elements of a validly executed will. When someone dies with a will, it must first be admitted to probate before the executor named in the document can begin to do what is required to administer the decedent’s assets. In New Jersey, if the required elements are followed and the will is a “self proving” one, the process is very simple and does not need to involve a judge. The will can be submitted to the Surrogate, who examines it to be certain all the elements are there before accepting it and issuing Letters Testamentary. It is these letters that allow the executor to act on behalf of the estate. If the elements are not present, then an application needs to be made before a judge who must determine whether to permit the written document to be probated as the last will or not. So, what makes a will “self proving”? As I explained last week, a will must be signed by two people who either witnessed the signing or the testator’s acknowledgement of the signature. A self proving will contains an affidavit stating that the witness observed the testator sign it willingly (or someone else sign it at the