Hanlon Niemann Blog | A Freehold, New Jersey Law Firm

By Fredrick P. Niemann, Esq., a New Jersey Probate Attorney

Recently a New Jersey intestate estate (death without a will or trust) passed under New Jersey law to the surviving spouse.  The decedent owned several joint bank accounts with his wife. The decedent had quite a few debts, including credit card and medical bills.  The question raised is whether non-probate assets are subject to creditor claims or if the estate can be deemed insolvent. 

The answer may surprise you.  Non probate assets are not immune from creditors against an estate of a deceased party to pay debts, taxes, and expenses of administration, if other assets of the estate are insufficient.  A surviving party, P.O.D. payee, or beneficiary who receives payment from a joint-party account after the death of a deceased party shall be responsible to the extent necessary to discharge the claims and debts unpaid by the decedent’s estate.  A proceeding in the Chancery Division of the New Jersey Supreme Court to assert this liability must be commenced no later than 2 years following the death of the decedent.  Sums recovered by the estate representative are to be administered as part of the decedent’s estate. 

If you have any questions regarding New Jersey Probate Law, please contact Fredrick P. Niemann, Esq. today. He can be reached at toll free 732-863-9900 or by email at fneimann@hnlawfirm.com. Mr. Niemann would be more than happy to answer any questions you may have.

Part 3 of 4
By: Fredrick P. Niemann, Esq.
         
This is the third post of a four part series on estate planning by use of a beneficiary designation form.

Avoid leaving assets to minors outright. Also avoid disabled people, and in certain cases, your estate or spouse.  If you do, a court will appoint someone to look after the funds, a cumbersome and often expensive process.  Also think about what can happen when the money reverts to the child at age 18 or 21, depending on the state.

I’ve seen 18-year olds receive proceeds from life insurance policies.  While one of them still has her money, “the other two bought and wrecked brand new cars, splurged on clothes, and champagne, lent money to friends and generally went from $150,000.00 to actually owing money in just one year.”  The problems could have been avoided if the parents had set up trusts for the kids payable at, say age 30, and named the trusts as beneficiaries of the life-insurance policies.

Disabled children and adults-require “special or supplemental needs trusts” that preserve their ability to receive government benefits, as even a small outright inheritance can prevent them or disqualify them from getting public aid and assistance.

For retirement plans, the biggest mistake is to name your estate as beneficiary, because that means when you die, the full amount of the plan must be paid out and taxed within five years. Individual beneficiaries, by contrast, could stretch out the distributions and the taxes for decades.  Because many people have a large portion of their assets in retirement accounts, they also should be sure that the combination of the distribution arrangements on those accounts and their wills provide for family members as they wish, particularly in complex situations such as a second marriage when there are children from the first union.

Beneficiary designations are crucial to estates in New Jersey.  For more information please contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or email him at fniemann@hnlawfirm.com.  For further information, please go to http://www.youtube.com/user/NJElderLawCenter#p/search/0/XpuVawQtBnQ to learn more.

Fredrick P. Niemann, Esq., NJ Elder Law Attorney
 
Often times when I meet with new clients, the first appointment is not with the parent(s) but with the children.  Commonly, they come to us after or during a crisis, such as a parent’s hospital or nursing home stay.  Just as often they have little or no information about what is going on with the parent, medically and financially, and cannot provide much of the information we need to assist them.

Communication between parent and child before a crisis is so important and can provide peace of mind and reduce stress for both.  The following are some of the questions that families should discuss, which will often begin a dialogue about the type of preplanning parents can do before a crisis occurs.

1. Children should know roughly how much and where their parents’ assets are.  Do they have enough to sustain the healthy spouse should one spouse become ill and need extended hospitalization and/or nursing home care?

2. What does the income picture look like?  If one spouse dies, how much income will the surviving spouse be left with?  Will there be a significant drop in income?  Often time’s steps can be taken before that spouse passes to help boost the surviving spouse’s income.

3. Is financial support anticipated?  People are living longer than ever.  Many people are at risk of outliving their money.   Answering this question means not simply looking at current expenses vs. income but looking at the next step in the elder care journey and the next step after that and asking “Do I have enough to pay for long term care and if so, for how long?  And if not, what is my plan then?

4. What types of insurance are there (ie., health, long term care, life)?  Is coverage adequate? If not, can coverage be increased?  You certainly want to do that before you become uninsurable.

5. Are there a power of attorney and a health care directive and where are they?  Are they up to date or stale?  If these documents are not in place then the only alternative is a costly and time-consuming process called guardianship.  The court will be involved in your family’s affairs and you may not get the result you want.

6. Is there an up to date will?  A clear, thought out estate plan can avoid family squabbles after the parent passes away. Even people with small estates should have a will.  Also, make sure the original will can be located. Probating a copy is difficult and expensive.

For further information and advice in any elder law or estate planning matter, do not hesitate to contact me at 732-863-9900 Ext. 101 or 105, toll-free at 888-800-7442, or fniemann@hnlawfirm.com.