New York Long Term Care Trust Act – Part 1
A bill introduced in the New York Senate may be something to pay attention to here in New Jersey. The law is titled the “New York Long Term Care Trust Act” and is modeled after a similar law passed in the State of Washington last year, although attempting to avoid that law’s negative aspects. The law in Washington provides limited long term care coverage to its residents funded by a mandatory payroll tax. Many, however, considered that law to have some serious flaws. For one thing, it contained an exemption from the payroll deduction as long as residents had a long term care insurance policy in place by November 1, 2021. This deadline threw the insurance industry into a bit of a crisis, causing such a high demand in requests for policies that some insurance companies stopped selling new policies. Secondly, the law did not specifically provide that any private policy purchased must be kept in force to maintain the exemption, a pretty big gap that Washington legislators failed to see. New York is considering passing a similar law, but with an effort to improve on Washington’s flaws. While the proposed New York law would obviously only apply to New York residents it is worth paying attention because
A Mysterious Disappearance – Part 2
In last week’s post I told you about Joe’s call concerning the disappearance of his brother Jim while on a trip to South America. The fishing boat he was on came back without him but his body has not been recovered. While the loss and uncertainty obviously is causing much pain for the family the financial impact is why Joe called us. He said that at this point the family has accepted the fact that Jim is deceased but without a body no death certificate can be issued. I explained to Joe that New Jersey does have a statute that lays out the process by which someone can be declared dead. A court action can be filed seeking an order directing that a death certificate be issued, however, there is a waiting period of 5 years before that action can be entertained. “But does that mean the date of death will be 5 years from now”, Joe asked. He was concerned about Jim’s life insurance policy and being able to put in a claim. I told him that while the waiting period to file is 5 years, the family can ask to have the date of death declared earlier than that. In this case he would look for
A Mysterious Disappearance – Part 1
We recently received a call from Joe. He said his brother, Jim, who lives in New Jersey with his family, went to South America on a fishing trip. When the boat returned to shore Jim was nowhere to be found and the crew had no answers as to what happened to him. It was now 60 days since Jim had disappeared Joe told me that Jim has assets and life insurance. He called to ask how those assets could be accessed to help Jim’s wife and children pay the bills. Joe said he believes there was foul play and that Jim is dead, however, a death certificate has not been issued since no body has been recovered. I explained that without a death certificate Jim’s will can’t be probated and the life insurance company won’t pay out the death benefit under his life insurance policy. Joe said that a local investigation is being conducted to determine whether any civil or criminal charges will be filed concerning Jim’s disappearance. I told Joe that at the conclusion of that investigation he should request that a death certificate be issued. He can then proceed with accessing Jim’s assets. “But I have no idea how long that will take”, Joe told me. He asked
Why and When a Surety Bond is Necessary – Part 3
In this third post of three I once again discuss surety bonds. Last week I explained the types of situations where a court would require one. The cost of a bond is the premium - an annual fee that must be paid each year the bond remains in place. How long is that exactly? Basically until the fiduciary’s job is done. If, for example, we are talking about an administrator of an estate, the bond must remain in place until the estate administration process is complete. The administrator must gather the assets, pay the debts and taxes if any, and then disburse the remaining net estate to the rightful heirs. Before disbursement the administrator must provide an accounting to all heirs showing what was spent and how the administrator arrived at the amount to be distributed. This is called an accounting. It can be done informally or formally. An informal accounting does not require court participation. It is less time consuming and expensive. The accounting is submitted to all the heirs for their approval before final distribution. A formal accounting is one in which the accounting is submitted to the court for its approval. Court rules and procedures must be followed with notice given to all interested parties. A judge reviews the accounting and then
Why and When a Surety Bond is Necessary – Part 2
Why and When a Surety Bond is Necessary In last week’s blog post I explained what a surety bond is and why, in a general sense, it is required by courts. This week I will cover situations in which a court would or might require one. Typically, when someone dies leaving a will and names an executor in that will to handle the adminstration of the estate, it is a family member or close friend. They usually do not require the executor to post a bond because they do not wish their estate to incur that cost. It means less money to the heirs. If there are no executors able or willing to serve, however, the will is admitted to probate and an “Administrator C.T.A with the Will Annexed” is appointed. This might be a child or children of the decedent who were perhaps too young to serve if the will is a very old one. Courts will generally insist on a bond being posted even if the administrators are also the heirs. That’s because the creditors must be protected. Now, clients might tell me that there are no creditors or they have been paid or the amount owed is very small. Nevertheless, the safest thing for a judge to
Why and When a Surety Bond is Necessary – Part 1
In a number of estate administration and guardianship matters in our office the need for a bond becomes an issue. Clients often don’t understand the purpose of a bond and are upset that they need to go through the process of qualifying for one and that there is a cost, which can be several thousand dollars, dependent on the size of the estate. A surety bond is used in many different industries, including the court system when a fiduciary is involved. There are three main parties to the surety bond. The principal is the person to be bonded. That would be the executor, administrator or guardian in the case of court bonds. The obligee is the person or entity requiring the bond. In our case that would be the court, which typically issues a court order detailing the requirements. The surety company is the third party. If the principal does not administer the estate correctly, the party that suffers a loss can file a claim which the surety company will pay. This could be an heir or a creditor of the estate. The surety company charges a fee or premium for the bond. The bigger the estate the higher the premium, which renews each year. Because the surety company could potentially pay