2013 update Wills and Estate Planning
Seminar materials
by Kenneth Vercammen Co-Chair of
Elder Law Committee ABA , plus tax portion by the Greenbaum Rowe Law Office Alert
- An Overview of Key Provisions of the American Taxpayer Relief Act of 2012. We
thank the Greenbaum
Rowe office for permitting us to share their valuable information.
1. Federal Estate Tax exemption
now permanently increased so no tax for Estates under $5,250,000, and will be
adjusted annually for inflation. However, New Jersey taxes estates over
$675,000.
2. Gifts permitted without Federal
Estate & Gift tax was increased to $14,000 per person.
3. Non-formal writings could be Wills under the New Probate Law
4. We recommend Self- Proving
Wills since witnesses often move or pass away
5. Revised statute
requires Palimony agreements to be in writing.
6. Recent case can void Will
signed under suspicious circumstances
7. NJ Inheritance tax
8. Power of Attorney
9. Federal Health Privacy Law
(HIPAA)
10. Competency required to sign
a Will or Power of Attorney
1. Federal Estate Tax exemption is now permanently increased
so no tax for Estates under $5,250,000, and will be adjusted annually for
inflation. However, New Jersey taxes estates over $675,000.
New Jersey has an Estate Tax on amounts over
$675,000. So, even if no Federal
Estate Tax due, the estate must still file a Federal Estate Tax Return, plus NJ
Estate Tax Return.
So, for an unmarried or widowed person with assets of
$1,000,000, there is No Federal Estate Taxes, but
the Estimated State Estate
Tax: $33,200.00
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For an unmarried or widowed
person with assets of $1,500,000, estimated NJ Estate Tax is over $60,000.
The Federal Tax
rate on estates over $5,250,000 has been increased from 35% to 40%.
How to avoid NJ
Estate Tax- 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 probably not something a non attorney can do on
their own. It is illegal for a non attorney to provide legal advice or
prepare most legal documents.
2. Gifts
permitted without Federal Estate & Gift tax was increased to $14,000 per
person.
However, the amount
permitted for Medicaid transfers is zero.
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3. NJ SENATE Law No. 708 made a
number of substantial changes to the NJ Probate Law.
Non formal writings could be
Wills under the Revised provisions governing the administration of estates and
trusts in New Jersey. So make sure
you have a Formal Will drafted by an estate attorney.
The
law expanded situations where writings that are intended as Wills would be
allowed, but requires that the burden of proof on the proponent would be by
clear and convincing evidence. Possibly a Christmas card with handwritten notes
could be presented as a Will or Codicil.
To
present a non-formal Will or writing requires an expensive Complaint and Order
to Show Cause to be filed in the Superior Court, and a hearing in front of a Superior
Court Judge.
Be
careful; have a Will done properly by an experienced attorney.
Beware of the “Elective share” rights of a new spouse.
Have a Prenuptial Agreement if entering into a 2nd marriage
The
elective share provisions of the present Code has still not been changed
yet. 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 2nd
marriage situations.
A Testator now means both
male and female individuals, removing the term “Testatrix”. Will forms that say
executrix should not be used.
The law provides a
statute of limitations with respect to creditor claims against a decedent's
estate. There is no longer a need to publish a Notice Limiting Creditors.
4. We recommend Self- Proving
Wills since witnesses often move or pass away
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.
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 elder law 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.
4. Revised statute
requires Palimony agreements to be in writing.
This
law is intended to overturn recent "palimony" decisions by New Jersey
courts. An agreement to provide support or any such contract must be in writing
and signed by the person making the promise. More specifically, the law
provides that a promise by one party to a non-marital personal relationship to
provide support or other consideration for the other party, either during the
course of such relationship or after its termination, is not binding unless it
is in writing and signed. The law provides that no such written promise
is binding unless it was made with the independent advice of counsel for both
parties.
This
law eliminates the holdings of two
cases New Jersey Supreme
Courts which unwisely upheld
palimony agreements between two unmarried cohabitants.
The new palimony law almost totally eliminates palimony in NJ.
6. NJ Supreme Court held a Will
could be void if signed under suspicious circumstances
When there is a confidential
relationship coupled with suspicious circumstances, undue influence is presumed
and the burden of proof shifts to the Will proponent to overcome the
presumption.
If there
is undue influence in making of Will and transfer by Deed of a house by persons
in Confidential relationship, this could subject those persons to punitive
damages in some instances, plus voiding of the Will. In the Matter of the
Estate of Madeleine Stockdale, Deceased 196 NJ 275 (2008)
Wills should be prepared without undue
influence. No one other than the person who is signing the Will should be in
the room. We usually request the person who wants the Will to fill out the
interview form themselves.
7. NJ Inheritance tax
The NJ Inheritance Tax Return instructions and
NJ Estate Tax Forms were revised in 2011. Throw out old forms. 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.
8. Power of Attorney
Do not use a form purchased online,
unless it contains 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).
9. Federal Health Privacy Law
(HIPAA)
A
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.
The effects of HIPAA are far
reaching, and can render previously executed estate planning documents useless,
without properly executed amendments, specifically addressing these issues.
Any previously executed
Powers of Attorney, Living Wills, Revocable Living Trusts, and certainly all
Medical Directives now require HIPAA amendments.
Powers
of attorneys and Living Wills should be updated to reference this new law. More
information on the HIPAA law at http://www.njlaws.com/hipaa.htm
After you sign the Living Will in
your attorney’s office, provide a copy to your doctor and family.
10. Competency required to sign
a Will or Power of Attorney
My law office
cannot prepare a Power of Attorney, Will or any other legal document unless a
person is mentally competent. If someone is unable to come into our office, we
require the client or client’s family to have the treating Doctor sign the “Doctor
Certification of Patient Capacity to Sign Legal Documents” It is the client or client’s family’s responsibility to
contact the doctor, obtain the signed Certification at the clients’ expense,
and then provide the law office with the original signed Certification. The law
office cannot accept phone calls stating someone is competent. Therefore, it is
wise do have your documents drafted while you can drive and are healthy.
More information on Wills and
Probate at
KENNETH VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
(Phone) 732-572-0500
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