One of the major cases dealing with undue influence was Haynes v. First National State Bank of New Jersey, 87 N.J. 163, 75-76 (1981). Here the Supreme Court held that the burden of proof establishing undue influence shifts to the proponent when a will benefits a person who stood in a confidential relationship to the decedent and there are suspicious circumstances which need explanation. The suspicious circumstances need only be slight. Id. at 176. Moreover, when the evidence is almost entirely in the possession of one party and the evidence points to the proponent as asserting undue influence, a clear and convincing standard may be applied rather than the normal burden of proof of preponderance of the evidence. Id. at 183.
Furthermore, the Haynes analysis was extended to situations in which there is a transfer of property where the beneficiary of the property and an attorney is on one side and the donor on the other. See Oachs v. Stanton, 280 N.J. Super. 478, 483 (App. Div. 1995).
The court in Oachs determined that under circumstances such as these the donee bears the burden of proof to establish the validity of the gift, even in situations in which the donee did not dominate the decedent’s will. Id. at 485. This rule was established to protect a donor from making a decision induced by a confidential relationship the donee possesses with the donor. Id. Again, the burden is a clear and convincing standard. Id.
The Supreme Court in Pascale v. Pascale, 113 N.J. 20, 31 (1998), stated that when a donor makes a gift to a donee that he/she is dependent upon, a presumption arises that the donor did not understand the consequences of his/her act. In these situations the donee must demonstrate that the donor had disinterested and competent counsel. Id. Likewise, undue influence is conclusive, when a mentally or physically weakened donor makes a gift without advice or a means of support, to a donee upon whom he/she depends. Id.
A confidential relationship can be found to exist when one is certain that the parties dealt on unequal terms. In re Stroming’s Will, 12 N.J. Super. 217, 224 (1951). The appropriate inquiry is if a confidential relationship existed, did the parties deal on terms and conditions of equality? Blake v. Brennan, 1 N.J. Super. 446, 453 (1948).Suspicious circumstances are not required to create a presumption of undue influence with regard to inter vivos gifts and the presumption of undue influence is more easily raised in an inter vivos transfer. See Pascale, supra, 113 N.J. at 31; Bronson v. Bronson, 218 N.J. Super. 389, 394 (App. Div. 1987).
Generally, an adult is presumed to be competent to make an inter vivos gift. See Conners v. Murphy, 100 N.J. Eq. 280, 282 (E. & A. 1926); Pascale v. Pascale, 113 N.J. 20, 29 (1988). However, when a party alleges undue influence with regard to an inter vivos gift, the contesting party must prove undue influence existed or that a presumption of undue influence should arise. Pascale, supra, 113 N.J. at 30.A presumption of undue influence arises when a confidential relationship exists between the donor and donee or where the contestant proves the donee dominated the Will of the donor. Id.; see also Seylaz v. Bennett, 5 N.J. 168, 172 (1950); In re Dodge, 50 N.J. 192, 227 (1967); Mott v. Mott, 49 N.J. Eq. 192, 198 (Ch. 1891); Oachs v. Stanton, 280 N.J. Super. 478 (App. Div. 1995) (holding that where a confidential relationship existed and that the donor did not rely upon the donee, a shifting of the burden was still appropriate); In re Neuman’s Estate, 133 N.J. Eq. 532, 534-35 (E. & A. 1943) (stating in a will context “Such burden does not shift merely because of the existence of a confidential relationship, without more, as in the matter of gifts inter vivos.”)The In re Dodge court explained why a presumption of undue influence arises in a confidential relationship and stated: “In the application of this rule it is not necessary that the donee occupy such a dominant position toward the donor as to create an inference that the donor was unable to assert his will in opposition to that of the donee.” In Re Dodge, 50 N.J. 192 (1967). The court referenced a much earlier case in explaining the rule’s application:"Its purpose is not so much to afford protection to the donor against the consequences of undue influence exercised over him by the donee, as it is to afford him protection against the consequences voluntary action on his part induced by the existence of the relationship between them, the effect of which upon his own interests he may only partially understand or appreciate." In re Dodge, supra, 50 N.J. at 228 citing Slack v. Rees, 66 N.J. Eq. 447, 449 (E. & A. 1904).In sum, once it is proven that a confidential relationship exists the burden shifts to the donee to show by clear and convincing evidence that no undue influence was used. Although the case law indicates suspicious circumstances need not be shown the donee must show all was fair, open and voluntary, no deception was practiced and that the transaction was well understood. Pascale, supra, 113 N.J. at 31; see also In re Dodge, supra, 50 N.J. at 227; Seylaz, supra, 5 N.J. at 173. Furthermore, confidential relationships arise in all types of relationships “whether legal, natural or conventional in their origin, in which confidence is naturally inspired, or, in fact, reasonably exists.” In re Fulper’s Estate, 99 N.J. Eq. 292, 314 (Prerog. Ct. 1926); see Pascale, supra, 113 N.J. at 34. It appears confidential relationships exist in all cases in which:"The relations between the [contracting] parties appear to be of such a character as to render it certain that they do not deal on terms of equality, but that either on the one side from superior knowledge of the matter derived from a fiduciary relation, or from over-mastering influence; or on the other from weakness, dependence or trust justifiably reposed, unfair advantage is rendered probable." Pascale, supra, 113 N.J. at 34, quoting In re Fulper, supra, 99 N.J. Eq. at 314; see also In re Dodge, supra, 50 N.J. at 228.
In determining whether the Defendant was the dominant person in the relationship there is no clear cut rule and instead the court must look to the particular circumstances of the matter. In re Fulper, supra, 99 N.J. Eq. at 315; Giacobbi v. Anselmi, 18 N.J. Super. 600, 616 (Ch. Div. 1952). In Fulper the court determined that a confidential relationship existed in a father-son relationship in which the father was advanced in age, weak and physically depended upon the son. Moreover, since the father sought the son’s assistance on business matters, lived with the son during the winter months and gave the son joint and several power over his checking account an actual repose of trust and confidence in the son was demonstrated. In re Fulper, supra, 99 N.J. Eq. at 318.
In the Giacobbi case, supra, a confidential relationship was determined to exist between a mother and daughter, even though the mother did not suffer from mental or physical infirmity. There the mother was found to be alert, active, and somewhat independent. However, she turned to the daughter for small issues and problems when they occurred. Giacobbi, supra, 18 N.J. Super. at 617.
Therefore, the burden can shift to Defendant to prove by clear and convincing evidence the transaction was not unduly influenced. Furthermore, where a donor makes an “improvident” gift to the donee upon whom she depends that strips the donor of all or virtually all their assets, as here, a presumption arises that the donor did not understand the consequences of their act. Pascale, supra, 113 N.J. at 31, citing Vanderbach v. Vollinger, 1 N.J. 481, 489 (1949). Under those circumstances the donee must establish that the donor had the advice of competent and disinterested counsel. Id. citing Vanderback, supra, 1 N.J .at 488-89.Similarly, when a mentally or physically weakened donor makes a gift to a donee whom the donor is dependent upon, without advice, and the gift leaves the donee without adequate means of support, a conclusive presumption of undue influence arises. Id. citing Seylaz, supra, 5 N.J. at 173. However, when a donor is not dependent upon the donee “independent advice is not a prerequisite to the validity of an improvident gift even though the relationship between the parties is one of trust and confidence.” Id. citing Seylaz, supra, 5 N.J. at 173.
Although suspicious circumstances are not required to be established in an inter vivos transfer for a presumption of undue influence to exist, thereby shifting the burden of proof, Plaintiff has raised the issue. Pascale, supra, 113 N.J. at 30.
KENNETH VERCAMMEN & ASSOCIATES, PCATTORNEY AT LAW2053 Woodbridge Ave.Edison, NJ 08817(Phone) 732-572-0500(Fax) 732-572-0030
TRIAL AND LITIGATION EXPERIENCEIn his private practice, he has devoted a substantial portion of his professional time to the preparation and trial of litigated matters. He appears in Courts throughout New Jersey several times each week on many personal injury matters, Criminal and Municipal/traffic Court trials, Probate hearings, and contested administrative law hearings.
Mr. Vercammen served as the Prosecutor for the Township of Cranbury, Middlesex County and was involved in trials on a weekly basis. He also argued all pre-trial motions and post-trial applications on behalf of the State of New Jersey.
He has also served as a Special Acting Prosecutor in Woodbridge, Perth Amboy, Hightstown, Carteret, East Brunswick, Jamesburg, South Brunswick, South River and South Plainfield for conflict cases. Since 1989, he has personally handled hundreds of criminal and motor vehicle matters as a Prosecutor and now as defense counsel and has had substantial success.
Previously, Mr. Vercammen was Public Defender for the Township of Edison and Borough of Metuchen and a Designated Counsel for the Middlesex County Public Defender's Office. He represented indigent individuals facing consequences of magnitude. He was in Court trying cases and making motions in difficult criminal and DWI matters. Every case he personally handled and prepared.
His resume sets forth the numerous bar associations and activities which demonstrate his commitment to the legal profession and providing quality representation to clients.
Since 1985, his primary concentration has been on litigation matters. Mr. Vercammen gained other legal experiences as the Confidential Law Clerk to the Court of Appeals of Maryland (Supreme Court) with the Delaware County, PA District Attorney Office handling Probable Cause Hearings, Middlesex County Probation Department as a Probation Officer, and an Executive Assistant to Scranton District Magistrate, Thomas Hart, in Scranton, PA.
Wednesday, November 5, 2008
Undue Influence as Defense to Will or Power of Attorney
One of the major cases dealing with undue influence was Haynes v. First National State Bank of New Jersey, 87 N.J. 163, 75-76 (1981). Here the Supreme Court held that the burden of proof establishing undue influence shifts to the proponent when a will benefits a person who stood in a confidential relationship to the decedent and there are suspicious circumstances which need explanation. The suspicious circumstances need only be slight. Id. at 176. Moreover, when the evidence is almost entirely in the possession of one party and the evidence points to the proponent as asserting undue influence, a clear and convincing standard may be applied rather than the normal burden of proof of preponderance of the evidence. Id. at 183.
Furthermore, the Haynes analysis was extended to situations in which there is a transfer of property where the beneficiary of the property and an attorney is on one side and the donor on the other. See Oachs v. Stanton, 280 N.J. Super. 478, 483 (App. Div. 1995).
The court in Oachs determined that under circumstances such as these the donee bears the burden of proof to establish the validity of the gift, even in situations in which the donee did not dominate the decedent¹s will. Id. at 485. This rule was established to protect a donor from making a decision induced by a confidential relationship the donee possesses with the donor. Id. Again, the burden is a clear and convincing standard. Id.
The Supreme Court in Pascale v. Pascale, 113 N.J. 20, 31 (1998), stated that when a donor makes a gift to a donee that he/she is dependent upon, a presumption arises that the donor did not understand the consequences of his/her act. In these situations the donee must demonstrate that the donor had disinterested and competent counsel. Id. Likewise, undue influence is conclusive, when a mentally or physically weakened donor makes a gift without advice or a means of support, to a donee upon whom he/she depends. Id.
A confidential relationship can be found to exist when one is certain that the parties dealt on unequal terms. In re Stroming¹s Will, 12 N.J. Super. 217, 224 (1951). The appropriate inquiry is if a confidential relationship existed, did the parties deal on terms and conditions of equality? Blake v. Brennan, 1 N.J. Super. 446, 453 (1948). Suspicious circumstances are not required to create a presumption of undue influence with regard to inter vivos gifts and the presumption of undue influence is more easily raised in an inter vivos transfer. See Pascale, supra, 113 N.J. at 31; Bronson v. Bronson, 218 N.J. Super. 389, 394 (App. Div. 1987).
Generally, an adult is presumed to be competent to make an inter vivos gift. See Conners v. Murphy, 100 N.J. Eq. 280, 282 (E. & A. 1926); Pascale v. Pascale, 113 N.J. 20, 29 (1988). However, when a party alleges undue influence with regard to an inter vivos gift, the contesting party must prove undue influence existed or that a presumption of undue influence should arise. Pascale, supra, 113 N.J. at 30. A presumption of undue influence arises when a confidential relationship exists between the donor and donee or where the contestant proves the donee dominated the Will of the donor. Id.; see also Seylaz v. Bennett, 5 N.J. 168, 172 (1950); In re Dodge, 50 N.J. 192, 227 (1967); Mott v. Mott, 49 N.J. Eq. 192, 198 (Ch. 1891); Oachs v. Stanton, 280 N.J. Super. 478 (App. Div. 1995) (holding that where a confidential relationship existed and that the donor did not rely upon the donee, a shifting of the burden was still appropriate); In re Neuman¹s Estate, 133 N.J. Eq. 532, 534-35 (E. & A. 1943) (stating in a will context ³Such burden does not shift merely because of the existence of a confidential relationship, without more, as in the matter of gifts inter vivos.²) The In re Dodge court explained why a presumption of undue influence arises in a confidential relationship and stated: ³In the application of this rule it is not necessary that the donee occupy such a dominant position toward the donor as to create an inference that the donor was unable to assert his will in opposition to that of the donee.² In Re Dodge, 50 N.J. 192 (1967). The court referenced a much earlier case in explaining the rule¹s application: "Its purpose is not so much to afford protection to the donor against the consequences of undue influence exercised over him by the donee, as it is to afford him protection against the consequences voluntary action on his part induced by the existence of the relationship between them, the effect of which upon his own interests he may only partially understand or appreciate." In re Dodge, supra, 50 N.J. at 228 citing Slack v. Rees, 66 N.J. Eq. 447, 449 (E. & A. 1904). In sum, once it is proven that a confidential relationship exists the burden shifts to the donee to show by clear and convincing evidence that no undue influence was used. Although the case law indicates suspicious circumstances need not be shown the donee must show all was fair, open and voluntary, no deception was practiced and that the transaction was well understood. Pascale, supra, 113 N.J. at 31; see also In re Dodge, supra, 50 N.J. at 227; Seylaz, supra, 5 N.J. at 173. Furthermore, confidential relationships arise in all types of relationships ³whether legal, natural or conventional in their origin, in which confidence is naturally inspired, or, in fact, reasonably exists.² In re Fulper¹s Estate, 99 N.J. Eq. 292, 314 (Prerog. Ct. 1926); see Pascale, supra, 113 N.J. at 34. It appears confidential relationships exist in all cases in which: "The relations between the [contracting] parties appear to be of such a character as to render it certain that they do not deal on terms of equality, but that either on the one side from superior knowledge of the matter derived from a fiduciary relation, or from over-mastering influence; or on the other from weakness, dependence or trust justifiably reposed, unfair advantage is rendered probable." Pascale, supra, 113 N.J. at 34, quoting In re Fulper, supra, 99 N.J. Eq. at 314; see also In re Dodge, supra, 50 N.J. at 228.
In determining whether the Defendant was the dominant person in the relationship there is no clear cut rule and instead the court must look to the particular circumstances of the matter. In re Fulper, supra, 99 N.J. Eq. at 315; Giacobbi v. Anselmi, 18 N.J. Super. 600, 616 (Ch. Div. 1952). In Fulper the court determined that a confidential relationship existed in a father-son relationship in which the father was advanced in age, weak and physically depended upon the son. Moreover, since the father sought the son¹s assistance on business matters, lived with the son during the winter months and gave the son joint and several power over his checking account an actual repose of trust and confidence in the son was demonstrated. In re Fulper, supra, 99 N.J. Eq. at 318.
In the Giacobbi case, supra, a confidential relationship was determined to exist between a mother and daughter, even though the mother did not suffer from mental or physical infirmity. There the mother was found to be alert, active, and somewhat independent. However, she turned to the daughter for small issues and problems when they occurred. Giacobbi, supra, 18 N.J. Super. at 617.
Therefore, the burden can shift to Defendant to prove by clear and convincing evidence the transaction was not unduly influenced. Furthermore, where a donor makes an ³improvident² gift to the donee upon whom she depends that strips the donor of all or virtually all their assets, as here, a presumption arises that the donor did not understand the consequences of their act. Pascale, supra, 113 N.J. at 31, citing Vanderbach v. Vollinger, 1 N.J. 481, 489 (1949). Under those circumstances the donee must establish that the donor had the advice of competent and disinterested counsel. Id. citing Vanderback, supra, 1 N.J .at 488-89. Similarly, when a mentally or physically weakened donor makes a gift to a donee whom the donor is dependent upon, without advice, and the gift leaves the donee without adequate means of support, a conclusive presumption of undue influence arises. Id. citing Seylaz, supra, 5 N.J. at 173. However, when a donor is not dependent upon the donee ³independent advice is not a prerequisite to the validity of an improvident gift even though the relationship between the parties is one of trust and confidence.² Id. citing Seylaz, supra, 5 N.J. at 173.
Although suspicious circumstances are not required to be established in an inter vivos transfer for a presumption of undue influence to exist, thereby shifting the burden of proof, Plaintiff has raised the issue. Pascale, supra, 113 N.J. at 30
Furthermore, the Haynes analysis was extended to situations in which there is a transfer of property where the beneficiary of the property and an attorney is on one side and the donor on the other. See Oachs v. Stanton, 280 N.J. Super. 478, 483 (App. Div. 1995).
The court in Oachs determined that under circumstances such as these the donee bears the burden of proof to establish the validity of the gift, even in situations in which the donee did not dominate the decedent¹s will. Id. at 485. This rule was established to protect a donor from making a decision induced by a confidential relationship the donee possesses with the donor. Id. Again, the burden is a clear and convincing standard. Id.
The Supreme Court in Pascale v. Pascale, 113 N.J. 20, 31 (1998), stated that when a donor makes a gift to a donee that he/she is dependent upon, a presumption arises that the donor did not understand the consequences of his/her act. In these situations the donee must demonstrate that the donor had disinterested and competent counsel. Id. Likewise, undue influence is conclusive, when a mentally or physically weakened donor makes a gift without advice or a means of support, to a donee upon whom he/she depends. Id.
A confidential relationship can be found to exist when one is certain that the parties dealt on unequal terms. In re Stroming¹s Will, 12 N.J. Super. 217, 224 (1951). The appropriate inquiry is if a confidential relationship existed, did the parties deal on terms and conditions of equality? Blake v. Brennan, 1 N.J. Super. 446, 453 (1948). Suspicious circumstances are not required to create a presumption of undue influence with regard to inter vivos gifts and the presumption of undue influence is more easily raised in an inter vivos transfer. See Pascale, supra, 113 N.J. at 31; Bronson v. Bronson, 218 N.J. Super. 389, 394 (App. Div. 1987).
Generally, an adult is presumed to be competent to make an inter vivos gift. See Conners v. Murphy, 100 N.J. Eq. 280, 282 (E. & A. 1926); Pascale v. Pascale, 113 N.J. 20, 29 (1988). However, when a party alleges undue influence with regard to an inter vivos gift, the contesting party must prove undue influence existed or that a presumption of undue influence should arise. Pascale, supra, 113 N.J. at 30. A presumption of undue influence arises when a confidential relationship exists between the donor and donee or where the contestant proves the donee dominated the Will of the donor. Id.; see also Seylaz v. Bennett, 5 N.J. 168, 172 (1950); In re Dodge, 50 N.J. 192, 227 (1967); Mott v. Mott, 49 N.J. Eq. 192, 198 (Ch. 1891); Oachs v. Stanton, 280 N.J. Super. 478 (App. Div. 1995) (holding that where a confidential relationship existed and that the donor did not rely upon the donee, a shifting of the burden was still appropriate); In re Neuman¹s Estate, 133 N.J. Eq. 532, 534-35 (E. & A. 1943) (stating in a will context ³Such burden does not shift merely because of the existence of a confidential relationship, without more, as in the matter of gifts inter vivos.²) The In re Dodge court explained why a presumption of undue influence arises in a confidential relationship and stated: ³In the application of this rule it is not necessary that the donee occupy such a dominant position toward the donor as to create an inference that the donor was unable to assert his will in opposition to that of the donee.² In Re Dodge, 50 N.J. 192 (1967). The court referenced a much earlier case in explaining the rule¹s application: "Its purpose is not so much to afford protection to the donor against the consequences of undue influence exercised over him by the donee, as it is to afford him protection against the consequences voluntary action on his part induced by the existence of the relationship between them, the effect of which upon his own interests he may only partially understand or appreciate." In re Dodge, supra, 50 N.J. at 228 citing Slack v. Rees, 66 N.J. Eq. 447, 449 (E. & A. 1904). In sum, once it is proven that a confidential relationship exists the burden shifts to the donee to show by clear and convincing evidence that no undue influence was used. Although the case law indicates suspicious circumstances need not be shown the donee must show all was fair, open and voluntary, no deception was practiced and that the transaction was well understood. Pascale, supra, 113 N.J. at 31; see also In re Dodge, supra, 50 N.J. at 227; Seylaz, supra, 5 N.J. at 173. Furthermore, confidential relationships arise in all types of relationships ³whether legal, natural or conventional in their origin, in which confidence is naturally inspired, or, in fact, reasonably exists.² In re Fulper¹s Estate, 99 N.J. Eq. 292, 314 (Prerog. Ct. 1926); see Pascale, supra, 113 N.J. at 34. It appears confidential relationships exist in all cases in which: "The relations between the [contracting] parties appear to be of such a character as to render it certain that they do not deal on terms of equality, but that either on the one side from superior knowledge of the matter derived from a fiduciary relation, or from over-mastering influence; or on the other from weakness, dependence or trust justifiably reposed, unfair advantage is rendered probable." Pascale, supra, 113 N.J. at 34, quoting In re Fulper, supra, 99 N.J. Eq. at 314; see also In re Dodge, supra, 50 N.J. at 228.
In determining whether the Defendant was the dominant person in the relationship there is no clear cut rule and instead the court must look to the particular circumstances of the matter. In re Fulper, supra, 99 N.J. Eq. at 315; Giacobbi v. Anselmi, 18 N.J. Super. 600, 616 (Ch. Div. 1952). In Fulper the court determined that a confidential relationship existed in a father-son relationship in which the father was advanced in age, weak and physically depended upon the son. Moreover, since the father sought the son¹s assistance on business matters, lived with the son during the winter months and gave the son joint and several power over his checking account an actual repose of trust and confidence in the son was demonstrated. In re Fulper, supra, 99 N.J. Eq. at 318.
In the Giacobbi case, supra, a confidential relationship was determined to exist between a mother and daughter, even though the mother did not suffer from mental or physical infirmity. There the mother was found to be alert, active, and somewhat independent. However, she turned to the daughter for small issues and problems when they occurred. Giacobbi, supra, 18 N.J. Super. at 617.
Therefore, the burden can shift to Defendant to prove by clear and convincing evidence the transaction was not unduly influenced. Furthermore, where a donor makes an ³improvident² gift to the donee upon whom she depends that strips the donor of all or virtually all their assets, as here, a presumption arises that the donor did not understand the consequences of their act. Pascale, supra, 113 N.J. at 31, citing Vanderbach v. Vollinger, 1 N.J. 481, 489 (1949). Under those circumstances the donee must establish that the donor had the advice of competent and disinterested counsel. Id. citing Vanderback, supra, 1 N.J .at 488-89. Similarly, when a mentally or physically weakened donor makes a gift to a donee whom the donor is dependent upon, without advice, and the gift leaves the donee without adequate means of support, a conclusive presumption of undue influence arises. Id. citing Seylaz, supra, 5 N.J. at 173. However, when a donor is not dependent upon the donee ³independent advice is not a prerequisite to the validity of an improvident gift even though the relationship between the parties is one of trust and confidence.² Id. citing Seylaz, supra, 5 N.J. at 173.
Although suspicious circumstances are not required to be established in an inter vivos transfer for a presumption of undue influence to exist, thereby shifting the burden of proof, Plaintiff has raised the issue. Pascale, supra, 113 N.J. at 30
Turning Property Over to Children
4 Benefits:
(1) Avoid nursing home/ Medicaid getting the house if you have to go into nursing home within 3 years.
(2) Gives responsibility/ up keep to children.
(3) Transfers property to avoid probate.
(4) Children responsible for taxes. _________________
4 Problems:
(1) Children/ new owners can kick you out and sell the house.
(2) If children donít pay taxes or sewer charges, town can foreclose. If there is lawsuit against children, lose house or lien. If child dies, who gets the house?
(3) Lose senior citizen and/or veterans benefits, life line, homestead rebate.
(4) If child does not live in house, possible high capital gains tax.
Legal fees and County Clerk costs for attorney to prepare Deed, Affidavit of Title, 1099 substitute tax form, Affidavit of Transfer Tax exemption and filing with County Clerk $300 when Deed is signed in our office.
(1) Avoid nursing home/ Medicaid getting the house if you have to go into nursing home within 3 years.
(2) Gives responsibility/ up keep to children.
(3) Transfers property to avoid probate.
(4) Children responsible for taxes. _________________
4 Problems:
(1) Children/ new owners can kick you out and sell the house.
(2) If children donít pay taxes or sewer charges, town can foreclose. If there is lawsuit against children, lose house or lien. If child dies, who gets the house?
(3) Lose senior citizen and/or veterans benefits, life line, homestead rebate.
(4) If child does not live in house, possible high capital gains tax.
Legal fees and County Clerk costs for attorney to prepare Deed, Affidavit of Title, 1099 substitute tax form, Affidavit of Transfer Tax exemption and filing with County Clerk $300 when Deed is signed in our office.
Signing House To Children
TURNING HOUSE OVER TO CHILDREN? Read this first
4 Benefits:
(1) Avoid nursing home/ Medicaid getting the house if you have to go into nursing home within 3 years.
(2) Gives responsibility/ up keep to children.
(3) Transfers property to avoid probate.
(4) Children responsible for taxes. _________________
4 Problems:
(1) Children/ new owners can kick you out and sell the house.
(2) If children donít pay taxes or sewer charges, town can foreclose. If there is lawsuit against children, lose house or lien. If child dies, who gets the house?
(3) Lose senior citizen and/or veterans benefits, life line, homestead rebate.
(4) If child does not live in house, possible high capital gains tax.
Legal fees and County Clerk costs for attorney to prepare Deed, Affidavit of Title, 1099 substitute tax form, Affidavit of Transfer Tax exemption and filing with County Clerk $300 when Deed is signed in our office.
4 Benefits:
(1) Avoid nursing home/ Medicaid getting the house if you have to go into nursing home within 3 years.
(2) Gives responsibility/ up keep to children.
(3) Transfers property to avoid probate.
(4) Children responsible for taxes. _________________
4 Problems:
(1) Children/ new owners can kick you out and sell the house.
(2) If children donít pay taxes or sewer charges, town can foreclose. If there is lawsuit against children, lose house or lien. If child dies, who gets the house?
(3) Lose senior citizen and/or veterans benefits, life line, homestead rebate.
(4) If child does not live in house, possible high capital gains tax.
Legal fees and County Clerk costs for attorney to prepare Deed, Affidavit of Title, 1099 substitute tax form, Affidavit of Transfer Tax exemption and filing with County Clerk $300 when Deed is signed in our office.
Trusts and Wills
Probate is defined as the procedure by which an Executor proceeds to admit a Will to the jurisdiction of the Surrogate Court, which is proved to be valid or invalid. The term generally includes all matters relating to the administration of estates.
There are instances where Surrogate Court monitoring of the estate is desirable. Much has been written about the disadvantages of probate.
Following are just a few of the problems associated with probate.
Lack Of Privacy
Documents filed with the Surrogate Court are public information. They are available for inspection to anyone who asks. In large estates which require an accounting, your probate file will contain a complete list of all assets devised by your Will including business assets. This lack of privacy may lead to problems among family members who now know the plan of distribution and may then contest any provisions with which they disagree. Disinherited relatives and creditors are notified and given time by the Court to contest the Will distribution.
Time Consuming
The probate of an estate may take several months to several years to complete. During that time family members may have to apply to the Surrogate Court for an allowance.
Fragmentation - Real Estate
If you own real property in more than one state, probate rules must be followed in each state in which real property is located. The cost and time may be increased. REVOCABLE LIVING TRUST
A Revocable Living Trust is a legal device that allows you to maintain complete control over your assets and AVOIDS PROBATE. Because there is no probate of a Living Trust, your private financial matters remain private, there are no probate costs, no long delays and loss of control, and no fragmentation of the estate.
You Maintain Complete Control Over Your Property In Trust
The principle behind a Revocable Living Trust is simple. When you establish a Living Trust, you transfer all your property into the Trust, and then name yourself as trustee, or you can name you and your spouse as co-trustees of the Trust.
The trustees maintain complete control over the property, the same control you had before your property was placed in trust You can buy, sell, borrow, pledge, or collateralize the trust property. You can even discontinue the Trust if you choose. That is why it is called a "Revocable" Living Trust. We will explain the "Irrevocable Trust" at the end of the article.
Transferring Property Into The Trust
The transfer of title to property into the Trust is a relatively simple matter. Anywhere you have assets, you will get help in transferring your property into the Trust. Your attorney, securities investor, etc., will provide you with assistance needed to transfer your property into your Revocable Living Trust. Your attorney will provide all the information and assistance you need to properly fund your Trust.
Complete Privacy
Probate records are public, your Revocable Trust documents are private. A Revocable Living Trust will safeguard the privacy of your family and your private financial matters.
Naming A Trustee
Most people name themselves and their spouse as the initial Trustees of their Trust. This is usually true unless one spouse is incapacitated to the point that he or she is not able to manage your assets in the same way you do now.
Gifts To Religious And Charitable Organizations
Many people wish to give a portion or sometimes all of their assets to a religious or charitable organization in order to carry on the work of those organizations that have given them comfort or peace of mind during their lifetimes. This is easily accomplished with a Revocable Living Trust.
Marital Tax Deductions
Federal estate taxes must be paid on any estate worth more than $600,000 beginning at a tax rate of 37%. Your estate includes not only the current value of your real estate, but also the face value of any life insurance policies, pension or retirement benefits, IRA accounts, bank accounts, stocks and bonds, etc. When you add these all together, and subtract your debts, your might have imagined.
Current tax laws allow you to leave an unlimited amount to a spouse, tax-free. When your spouse dies, the estate is entitled to a $600,000 tax exemption. The first $600,000 goes to your beneficiaries free of estate tax. What is not generally known, is that you and your spouse are each entitled to a $600,000 tax exemption. If the exemption is not preserved through the use of a Revocable Trust, it may be lost.
A Revocable Living Trust can easily be structured to automatically create separate Trusts upon the death of either your spouse. Here's how it works. If the wife dies first, the husband has total control of his Trust. Also, for the remainder of his life, he receives all income from her Trust and has the use of the assets whenever needed for living expenses. When he dies, each Trust will claim its $600,000 tax exemption, and as much as $1.2 million will go tax-free to their children, or any other beneficiary they designate, without having to go through probate.
There are instances where Surrogate Court monitoring of the estate is desirable. Much has been written about the disadvantages of probate.
Following are just a few of the problems associated with probate.
Lack Of Privacy
Documents filed with the Surrogate Court are public information. They are available for inspection to anyone who asks. In large estates which require an accounting, your probate file will contain a complete list of all assets devised by your Will including business assets. This lack of privacy may lead to problems among family members who now know the plan of distribution and may then contest any provisions with which they disagree. Disinherited relatives and creditors are notified and given time by the Court to contest the Will distribution.
Time Consuming
The probate of an estate may take several months to several years to complete. During that time family members may have to apply to the Surrogate Court for an allowance.
Fragmentation - Real Estate
If you own real property in more than one state, probate rules must be followed in each state in which real property is located. The cost and time may be increased. REVOCABLE LIVING TRUST
A Revocable Living Trust is a legal device that allows you to maintain complete control over your assets and AVOIDS PROBATE. Because there is no probate of a Living Trust, your private financial matters remain private, there are no probate costs, no long delays and loss of control, and no fragmentation of the estate.
You Maintain Complete Control Over Your Property In Trust
The principle behind a Revocable Living Trust is simple. When you establish a Living Trust, you transfer all your property into the Trust, and then name yourself as trustee, or you can name you and your spouse as co-trustees of the Trust.
The trustees maintain complete control over the property, the same control you had before your property was placed in trust You can buy, sell, borrow, pledge, or collateralize the trust property. You can even discontinue the Trust if you choose. That is why it is called a "Revocable" Living Trust. We will explain the "Irrevocable Trust" at the end of the article.
Transferring Property Into The Trust
The transfer of title to property into the Trust is a relatively simple matter. Anywhere you have assets, you will get help in transferring your property into the Trust. Your attorney, securities investor, etc., will provide you with assistance needed to transfer your property into your Revocable Living Trust. Your attorney will provide all the information and assistance you need to properly fund your Trust.
Complete Privacy
Probate records are public, your Revocable Trust documents are private. A Revocable Living Trust will safeguard the privacy of your family and your private financial matters.
Naming A Trustee
Most people name themselves and their spouse as the initial Trustees of their Trust. This is usually true unless one spouse is incapacitated to the point that he or she is not able to manage your assets in the same way you do now.
Gifts To Religious And Charitable Organizations
Many people wish to give a portion or sometimes all of their assets to a religious or charitable organization in order to carry on the work of those organizations that have given them comfort or peace of mind during their lifetimes. This is easily accomplished with a Revocable Living Trust.
Marital Tax Deductions
Federal estate taxes must be paid on any estate worth more than $600,000 beginning at a tax rate of 37%. Your estate includes not only the current value of your real estate, but also the face value of any life insurance policies, pension or retirement benefits, IRA accounts, bank accounts, stocks and bonds, etc. When you add these all together, and subtract your debts, your might have imagined.
Current tax laws allow you to leave an unlimited amount to a spouse, tax-free. When your spouse dies, the estate is entitled to a $600,000 tax exemption. The first $600,000 goes to your beneficiaries free of estate tax. What is not generally known, is that you and your spouse are each entitled to a $600,000 tax exemption. If the exemption is not preserved through the use of a Revocable Trust, it may be lost.
A Revocable Living Trust can easily be structured to automatically create separate Trusts upon the death of either your spouse. Here's how it works. If the wife dies first, the husband has total control of his Trust. Also, for the remainder of his life, he receives all income from her Trust and has the use of the assets whenever needed for living expenses. When he dies, each Trust will claim its $600,000 tax exemption, and as much as $1.2 million will go tax-free to their children, or any other beneficiary they designate, without having to go through probate.
RECENT CHANGES IN TAX LAW PROVIDE TAX BREAKS
CAPITAL GAINS: Retroactive to May 7, 1997, the capital-gains rates will drop to a maximum 20 percent from the current 28 percent and, for the lowest income bracket, drop to 10 percent from the current 15 percent. The minimum holding period to qualify for the 20 percent and 10 percent rates is one year for assets sold from May 7 through July 28, and 18 months for assets sold after July 28.
HOME SALES: For home sales from May 7, 1997 the first $500,000 in gain from the sale of a principal residence is excluded from taxation for married couples and $250,000 for singles, but this benefit can be used only once every two years.
INDIVIDUAL RETIREMENT ACCOUNTS: A new type of IRA, known as "Roth IRA's", will allow investment of up to $2,000 a year; these contributions will not result in tax deductions but withdrawals will be tax-free. The new IRAs will begin in 1998. Eligibility starts to phase out for individuals earning $95,000 and couples earning $150,000. A person can qualify for the new IRA even if their spouse does not.
Income restrictions on old-style IRAs - contributions are deductible within limits but withdrawals are taxed - will double over time, beginning in 1998. The phase out now starts at $25,000 for individuals and $40,000 for couples. That will go up by $10,000 next year for couples and $5,000 for singles.
For both old and new types of IRAs, penalty-free withdrawals will be permitted for education and first-time home purchases
Estate and Gift Tax Rates and Unified Credit Exemption Amounts
Calendar Year Estate and GST Tax Transfer Exemption Highest Estate& Gift Tax Rates
2002 $1,000,000* 50% 2003 $1,000,000* 49% 2004 $1,500,000 48% 2005 $1,500,000 47% 2006 $ 2,000,000 46% 2007 $ 2,000,000 45% 2008 $ 2,000,000 45% 2009 $ 3,500,000 45% 2010 No tax if you die r- this year only 35% (gift taxes only) 2011 $1,000,000 55%
*For 2002 and 2003, the GST tax exemption will be indexed for inflation. For 2001, the GST exemption is $1,060,000.
HOME SALES: For home sales from May 7, 1997 the first $500,000 in gain from the sale of a principal residence is excluded from taxation for married couples and $250,000 for singles, but this benefit can be used only once every two years.
INDIVIDUAL RETIREMENT ACCOUNTS: A new type of IRA, known as "Roth IRA's", will allow investment of up to $2,000 a year; these contributions will not result in tax deductions but withdrawals will be tax-free. The new IRAs will begin in 1998. Eligibility starts to phase out for individuals earning $95,000 and couples earning $150,000. A person can qualify for the new IRA even if their spouse does not.
Income restrictions on old-style IRAs - contributions are deductible within limits but withdrawals are taxed - will double over time, beginning in 1998. The phase out now starts at $25,000 for individuals and $40,000 for couples. That will go up by $10,000 next year for couples and $5,000 for singles.
For both old and new types of IRAs, penalty-free withdrawals will be permitted for education and first-time home purchases
Estate and Gift Tax Rates and Unified Credit Exemption Amounts
Calendar Year Estate and GST Tax Transfer Exemption Highest Estate& Gift Tax Rates
2002 $1,000,000* 50% 2003 $1,000,000* 49% 2004 $1,500,000 48% 2005 $1,500,000 47% 2006 $ 2,000,000 46% 2007 $ 2,000,000 45% 2008 $ 2,000,000 45% 2009 $ 3,500,000 45% 2010 No tax if you die r- this year only 35% (gift taxes only) 2011 $1,000,000 55%
*For 2002 and 2003, the GST tax exemption will be indexed for inflation. For 2001, the GST exemption is $1,060,000.
RECENT CHANGES IN TAX LAW PROVIDE TAX BREAKS
CAPITAL GAINS: Retroactive to May 7, 1997, the capital-gains rates will drop to a maximum 20 percent from the current 28 percent and, for the lowest income bracket, drop to 10 percent from the current 15 percent. The minimum holding period to qualify for the 20 percent and 10 percent rates is one year for assets sold from May 7 through July 28, and 18 months for assets sold after July 28.
HOME SALES: For home sales from May 7, 1997 the first $500,000 in gain from the sale of a principal residence is excluded from taxation for married couples and $250,000 for singles, but this benefit can be used only once every two years.
INDIVIDUAL RETIREMENT ACCOUNTS: A new type of IRA, known as "Roth IRA's", will allow investment of up to $2,000 a year; these contributions will not result in tax deductions but withdrawals will be tax-free. The new IRAs will begin in 1998. Eligibility starts to phase out for individuals earning $95,000 and couples earning $150,000. A person can qualify for the new IRA even if their spouse does not.
Income restrictions on old-style IRAs - contributions are deductible within limits but withdrawals are taxed - will double over time, beginning in 1998. The phase out now starts at $25,000 for individuals and $40,000 for couples. That will go up by $10,000 next year for couples and $5,000 for singles.
For both old and new types of IRAs, penalty-free withdrawals will be permitted for education and first-time home purchases
Estate and Gift Tax Rates and Unified Credit Exemption Amounts
Calendar Year Estate and GST Tax Transfer Exemption Highest Estate& Gift Tax Rates
2002 $1,000,000* 50% 2003 $1,000,000* 49% 2004 $1,500,000 48% 2005 $1,500,000 47% 2006 $ 2,000,000 46% 2007 $ 2,000,000 45% 2008 $ 2,000,000 45% 2009 $ 3,500,000 45% 2010 No tax if you die r- this year only 35% (gift taxes only) 2011 $1,000,000 55%
*For 2002 and 2003, the GST tax exemption will be indexed for inflation. For 2001, the GST exemption is $1,060,000.
HOME SALES: For home sales from May 7, 1997 the first $500,000 in gain from the sale of a principal residence is excluded from taxation for married couples and $250,000 for singles, but this benefit can be used only once every two years.
INDIVIDUAL RETIREMENT ACCOUNTS: A new type of IRA, known as "Roth IRA's", will allow investment of up to $2,000 a year; these contributions will not result in tax deductions but withdrawals will be tax-free. The new IRAs will begin in 1998. Eligibility starts to phase out for individuals earning $95,000 and couples earning $150,000. A person can qualify for the new IRA even if their spouse does not.
Income restrictions on old-style IRAs - contributions are deductible within limits but withdrawals are taxed - will double over time, beginning in 1998. The phase out now starts at $25,000 for individuals and $40,000 for couples. That will go up by $10,000 next year for couples and $5,000 for singles.
For both old and new types of IRAs, penalty-free withdrawals will be permitted for education and first-time home purchases
Estate and Gift Tax Rates and Unified Credit Exemption Amounts
Calendar Year Estate and GST Tax Transfer Exemption Highest Estate& Gift Tax Rates
2002 $1,000,000* 50% 2003 $1,000,000* 49% 2004 $1,500,000 48% 2005 $1,500,000 47% 2006 $ 2,000,000 46% 2007 $ 2,000,000 45% 2008 $ 2,000,000 45% 2009 $ 3,500,000 45% 2010 No tax if you die r- this year only 35% (gift taxes only) 2011 $1,000,000 55%
*For 2002 and 2003, the GST tax exemption will be indexed for inflation. For 2001, the GST exemption is $1,060,000.
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