Hanlon Niemann Blog | A Freehold, New Jersey Law Firm

By Fredrick P. Niemann, Esq. a NJ Estate Planning and Trust Attorney

Irrevocable trusts are beneficial for estate planning tax purposes. They allow you to place your assets into trust and therefore avoid the estate tax involved when it is time to pass on your estate, along with other tax benefits. However, these tax benefits are not without a price. When you place your assets into an irrevocable trust, you are generally not allowed to modify the terms of the trust anymore. You no longer own the assets. The trustee of the trust will manage the assets and terms of the trust until the beneficiaries receive the assets. Unfortunately for us, circumstances often change in our lives. This can lead to an adjustment in our desires as to the terms of the trust we created. Irrevocable trusts leave us in a bind however, as they are much more difficult to change the terms of. Without getting the Courts involved, the best method to adjust the terms of your irrevocable trust is by decanting it.

For estate planning objectives, decanting a trust essentially involves the trustee of the irrevocable trust taking the assets and placing them in a new trust with different terms. This is arguably the most flexibility one will receive when placing assets in an irrevocable trust.  Unlike other states, New Jersey law does not have a statute that specifically addresses decanting. However, the NJ Courts have allowed decanting in situations in which the transfer of assets to a new trust was for the benefit of the beneficiary and in which the trustee completed the transfer voluntarily, not under any directions or stipulations. Courts have allowed this based on a clause that is placed in the majority of irrevocable trusts, which states that distributions may be made “to or for the benefit of a beneficiary”. Therefore, if the distribution to the new trust is for the benefit of the beneficiary, it will likely be allowed assuming certain specific requirements are followed.

Decanting a trust is a very complicated process. There are numerous New Jersey requirements that must be followed. It is important you see an experienced estate planning attorney to assure that your decanting is successful and does not fail due to a simple requirement that you are unfamiliar with. Please call Fredrick P. Niemann, Esq. today toll-free at 855-376-5291 or email him at fniemann@hnlawfirm.com. Mr. Niemann is an experienced, knowledgeable trust and estate planning attorney and would be more than happy to discuss any trust or estate planning matter you may have.

By Fredrick P. Niemann, Esq., a NJ Wills Attorney

When many people think of a will, they think of a document that indicates who shall receive their property when they die. However, did you know that a will can also indicate who should be in charge of your funeral and burial/disposition of your remains after your death? Many people assume that those closest to them will honor their wishes of where and how they wish their body to be disposed, however this is not always the case. Sometimes family members feud over where a body should be buried or whether it should be buried or cremated. A well-drafted will can avoid all of this and indicate who shall be in charge of your body after your death. If you do not indicate your wishes in a will, state law will determine who chooses where and how your body will be buried/cremated.

New Jersey law states that if a decedent has not left a will appointing a person to control the funeral and disposition of the remains, the right to control the disposition of the body shall go to the person with the highest priority in the following order:

1. The surviving spouse or partner in a domestic partnership or civil union;
2. A majority of the surviving adult children;
3. The surviving parents or parent;
4. A majority of the brothers and sisters of the decedent;
5. Other next of kin, with priority going to those who are closer relatives;
6. If no known living relatives, any other person acting on behalf of decedent.

Unpredictable disputes often arise pertaining to a decedent’s burial, with religion, location, second marriages, children of first marriages and other concerns often arising from different family members. To ensure your wishes are met, you should meet with an experienced New Jersey attorney and clearly indicate in your will or trust who should be placed in charge with the disposition of your body after your death. This can help avoid family controversy and make sure you are buried/cremated according to your wishes.
If you have any questions relating to your will or New Jersey law relating to the disposition of the deceased, please contact Fredrick P. Niemann, Esq., a knowledgeable New Jersey Will Attorney immediately. He can be reached toll free at 888-800-7442 or by email at fniemann@hnlawfirm.com. He would be more than happy to answer your questions.

By Fredrick P. Niemann, a NJ Estate Planning Attorney

Did you know that there are three different types of taxes associated with death and the passing on of an estate in New Jersey? Both the federal government and the state of New Jersey will tax you upon your death, making it expensive and sometimes difficult for your family to receive your assets. While a properly written irrevocable trust can help minimize some of these taxes, it is important to understand the different types of taxes and the exemptions for each.

THE FEDERAL ESTATE TAX IS IMPOSED BY THE FEDERAL GOVERNMENT. This is one of the largest taxes you and your family will ever have to pay. For 2011 and 2012, the federal estate tax rate is 35%. Fortunately, the federal government currently offers an exclusion of $5 million for 2011 and 2012, meaning you will only be taxed on the amount of your estate that exceeds $5 million. However, in 2013, that exemption amount is expected to shrink to $1 million, possibly with an increased top rate of 55% taxation depending on how much the estate is worth.  Another reason you should think about who you’ll vote for in 2012.

THE STATE OF NEW JERSEY WILL ALSO TAX YOU WHEN YOUR ESTATE PASSES. New Jersey has both an inheritance tax and an estate tax. Both taxes depend on the value of the estate being passed, with higher taxation rates being imposed the more valuable your estate is. The NJ Inheritance tax applies to all property that has a total value of $500 or more and passes from a decedent to a beneficiary, while the NJ Estate Tax allows for a $675,000 exemption, meaning the tax would only apply to the value of the assets over that amount. New Jersey does not anticipate any changes in the near future to its taxation laws.

Both the federal government and the state of New Jersey exempts all transfers of assets between a husband and wife, meaning there will be no tax whenever the first spouse dies. Proper estate planning, such as placing your assets in an irrevocable life insurance trust, may also allow certain individuals to avoid or minimize some of the taxation. For example, proper estate planning may allow a married couple to double the $675,000 exclusion in New Jersey, while preserving the availability of these assets throughout their lives.

Estate taxation can be a complicated and burdensome area of the law. Proper estate planning can help you and your family minimize the effects that taxation will have on your estate. Please call Fredrick P. Niemann, Esq., an experienced New Jersey Estate Planning attorney today toll-free at 888-800-7442 or email him at fniemann@hnlawfirm.com. He will be happy to meet and discuss estate planning and answer any questions you may have about taxation of your estate.  For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/0/iysxOtkAByo to learn more.

By Fredrick P. Niemann, Esq., a NJ Will Attorney
The question of who receives a copy of the will after a death is a common one. Despite what most people think, there is no requirement that a copy of the will be read aloud to all family members gathered in a room. Instead, the original will is supposed to be given to the lawyer for the estate. The attorney then distributes a copy of the will to the people who have an interest in it.

So who exactly should receive a copy of the will? Are you entitled to receive a copy? Who should you give the will of a recently deceased person to? Obviously the first person that must receive the original will is the estate’s attorney. If you have the original copy of the will of a family member that has recently passed away, you should give it to your attorney immediately. They will then read the will and determine who has an interest in it, sending copies to all those interested. The executor or personal representative of the estate is entitled to a copy of the will for obvious reasons. They represent the estate in all probate matters.

Anyone who is named as a beneficiary should also receive a copy of the will. This includes the guardians of any minors who are named as beneficiaries in the will. If it is expected or even possible that the validity of the will may be challenged, the attorney should send a copy to those who aren’t included in the will and are contemplating challenging it. This begins the clock on the time allowed for them to challenge the will.

If the will funds a trust, the trustee and successor trustee are entitled to a copy of the will. The estate’s accountant is usually entitled to a copy of the will as well, as is the IRS if the estate is taxable. It is also important to note that once a will goes through the probate process it becomes court record. Since court records are open to the public, the will therefore becomes available for anyone to see after the probate process is complete.

If you are a beneficiary of a will, or associated with the will in any of the matters listed above, you are entitled to a copy of the document. If you have any further questions please contact Fredrick P. Niemann, Esq., a knowledgeable New Jersey Will and Estate Planning Attorney today. He can be reached by telephone toll-free at 888-800-7442 or by email at fniemann@hnlawfirm.com. You’ll be glad to know that he is very approachable and experienced in Wills and Trusts.

By Fredrick P. Niemann, a NJ Trust Attorney

The death of a family member can be one of the most stressful times of anyone’s life. Adding to this stress can be drawn-out proceedings under New Jersey probate, the process in which the court oversees the division of the decedent’s estate. Many times, dividing the estate of a loved one is the last thing you want to think about at such an emotional time. Luckily, there are ways to minimize the stress and sometimes avoid the probate process.

During the probate proceedings, the Court will not only oversee the division of the decedent’s assets, but will also resolve claims of creditors and debts and hear any claims of interest that heirs to the estate may have. Pertaining to the assets of the deceased, the Court will follow the division that the decedent set forth in their will, if the deceased has one. If they do not have a will, the Court will divide the assets according to law, increasing the likelihood that your assets will not go to the people you specifically intended them to.

The Court will appoint someone, called an executor, to become the overseer of the entire estate. Their job is to then write checks, sign over deeds, and handle any other affairs the estate may have. It is the executor’s responsibility to settle all debts and claims against the deceased. Often the executor will hire an experienced probate attorney experienced in New Jersey Estate Administration to assist with most matters, particularly in larger estates with a multitude of complex issues.

As you can imagine, the probate process can be long and drawn-out. Most families desire to avoid such a process. Creating a living trust allows you to ensure that your family will not have to suffer through the probate process during such an emotional time. When you create a living trust, you place your assets that are going to be distributed in trust and name a trustee to distribute them upon your death. The Court will not be involved in the distribution, nor will a court-appointed executor. The trustee acts as the administrator of your estate upon your death. Not only is the trustee someone trustworthy that you choose, but they are obligated by law to follow your wishes indicated in the trust. The living trust thus effectively ensures that your estate will be administrated to your heirs as you wish, while avoiding the stressful death probate process for your family. 

The probate process can take quite a while, depending on how complex your estate is. It is often desirable to avoid this process, especially since it is during a difficult, emotional time for any family. Creating a living trust allows your family to avoid the process, while assuring you that your estate will be distributed as you desire.  If you have questions about New Jersey probate or the benefits of creating a living trust, please call Fredrick P. Niemann, Esq., an experienced New Jersey Trust & Estate attorney today.  He can be reached toll-free at 888-800-7442 or by email at fniemann@hnlawfirm.com. He would happy to meet with you on any estate planning matter you may have.  For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/3/I5rmD8r1Qjg to learn more.

By Fredrick P. Niemann, Esq., a NJ Special Needs Attorney
Any parent of a disabled child is well aware of the daily challenges they are presented with. Caring for a child with special needs involves many unique considerations. Estate planning is arguably the most important of these considerations. Parents want to help pay for as much as they can to assure their children live a happy life and are properly cared for, but want to make sure their children still qualify for the public benefit programs that are available to them. This can be a difficult task, as government assistance programs are based on the amount of assets your disabled child has at their disposal. Therefore, how you decide to pass your assets onto your child can determine whether or not he or she receives assistance from government programs such as Supplemental Security Income (SSI), Social Security Disability Income (SSDI), Medicare, and Medicaid. Estate Planning is thus a crucial area for parents of disabled children.

There are four main options that parents of disabled children are presented with. First, you may disinherit the child. This may be the best option for families with modest income and a child with significantly expensive needs. By disinheriting your child, you ensure they qualify for public benefits programs since they have no means income or assets, but this forbids you from financially assisting them. Second, you may gift assets to the child directly. This is likely to disqualify them from the government programs however, and may even cause the state to back-charge the child for care and treatment already received. This option is only recommended for parents who are extremely wealthy and have a child who although disabled, is capable of managing the funds given to them.

The third option is distributing your assets to another one of your children who will then care for the disabled child. This can be a risky option for a few reasons. By distributing the assets to the sibling of the disabled child, you expose the assets to creditors or the sibling as well a potential claim in a divorce proceeding. There is also the risk or mismanagement or even abuse of the funds by the sibling.

The final option and often the most recommended are placing the assets in a Special Needs Trust. This allows you to supplement your child’s life with some private funds while at the same time preserving their qualification for government assistance programs. As a parent, you also ensure the proper management of the funds by choosing a qualified trustee to handle your assets rather than the disabled child themselves, but limiting the discretion of the trustee. You therefore have a situation where you can provide for your child but still allow them to receive help from public benefit programs.

A Special Needs Trust is extremely complicated and specific. There are numerous considerations that go into each trust and must be tailored to your situation specifically. It is important that you seek an experienced Trusts and Estate Planning attorney to help you create such a trust and make decisions as to whether the trust is testamentary or inter vivos, revocable or irrevocable, and decisions on other critical tax considerations.

Fredrick P. Niemann, Esq. is a knowledgeable Estate Planning and Trusts attorney who has assisted families in setting up all types of trusts over the years. Please call him today at 888-800-7442 or email him at fniemann@hnlawfirm.com. He will be glad to meet with you to discuss your special needs.

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

 Knowing the basic difference between trusts can make all the difference in paying for your long-term healthcare. In New Jersey, only irrevocable trusts can protect your assets from the cost of long-term care, meaning that if your trust is revocable, it may prevent you from qualifying from certain government assistance programs such as Medicaid and Medicare.

 A revocable trust is one that may be amended or terminated by its creator throughout their life. An irrevocable trust is therefore one that cannot be amended by the person who creates it. Today, all trusts in New Jersey are presumed to be revocable. It is therefore important that you explicitly state that your trust is irrevocable, as Courts may find it to be revocable if it doesn’t say differently, even if that was not your intention and even if you have not touched the trust. An irrevocable trust essentially makes money and assets no longer touchable, meaning that Medicaid will no longer consider those assets in determining your ability to pay your long-term healthcare bills. 

 Many people today choose to set up health, education, maintenance, and support standard (HEMS) trusts. While these may be advantageous for tax purposes, they tend to make the trust available to pay for healthcare. Therefore, if you are creating your trust to protect your assets from the cost of long-term health care, you should NOT use an HEMS trust.

 If you have any questions regarding a revocable or irrevocable trust or how to protect your assets from the cost of long-term healthcare, please contact Fredrick P. Niemann, Esq. today. He can be reached at 855-376-5291 or by email at fniemann@hnlawfirm.com. He looks forward to hearing from you.  For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/6/GxL71TQgsWw to learn more.

The death of an aged family member is often an unfortunate, emotional time for all family members. Unfortunately, when the will is produced, sometimes family members are blindsided by its terms. This can undoubtedly add to your stress level, as disbelief overcomes you. Why would your loved one give such orders in their will? Unfortunately our elders are often vulnerable in their later years and some individuals may take advantage of this. Fortunately for you, New Jersey law allows you to contest the validity of a will and the Courts may overturn it and look back to a previous will if you can show one of two things.

The first reason a New Jersey Court will overturn a will is if your loved one created the will while they lacked the requisite capacity to do so. Sometimes when our elders become old, they may lose their memory or even get Alzheimer’s or some other disease that affects their thinking. This may cause them to create a will which they do not truly intend. If this is the case, the Court will invalidate the will and look toward the previous will as the valid dictation of the elder’s wishes. Unfortunately, challenging the requisite capacity of an elder is a daunting task for any plaintiff, as they will generally have to show is that the elder was either not aware they possessed the assets or did not intend to transfer them. This may involve seizing medical records or showing other evidence that shows they lacked the capacity to create the will on the date it was executed.

The second reason a New Jersey Court will invalidate a will is if the will was procured under undue influence. This means that your will does not reflect your elder’s true intentions and instead reflects the intentions of someone else who influenced your elder. A will must be the true intentions of its creator, therefore if someone else influences them to gift their assets in a different manner than the creator wished, the Court will invalidate the will. To show undue influence, a plaintiff must first show that a confidential relationship existed between the elder who created the will and another party, likely the defendant. A confidential relationship is one where the individuals trust each other closely. Next, a plaintiff must show evidence of suspicious circumstances surrounding the creation of the will. If this is shown, the Court may then force the defendant to show why the will is valid.

Challenging a will can be a difficult and daunting process. An experienced New Jersey Wills Attorney can make all the difference when challenging a will to help make sure you get what your elder truly wished. Call Fredrick P. Niemann, a knowledgeable New Jersey wills attorney today. He can be reached at 855-376-5291 or by email at fniemann@hnlawfirm.com. He welcomes your inquiries.

Passing assets to family members is something elders often do in order to access public benefits and keep their assets away from creditors. Sometimes, attorneys may recommend to their clients that they gift the assets to their children. This advice is often given when a family member is aging and likely to pass away soon. This is referred to as “crisis planning”. Crisis planning can result in unintended and unfavorable outcomes for both you and your beneficiaries. It is therefore important to plan for the future when dealing with your estate and your long-term care.

Many individuals and families today have elected to plan ahead, rather than engage in crisis planning once a family member enters a nursing home. A proper estate and long-term care plan can help secure payment for a nursing home or treatment for an illness if necessary while providing the best possible avenue of transferring your estate to your children or other beneficiaries. This shift from crisis planning to future planning has occurred for two main reasons:

1) With the passage of many new laws, most notably the Deficit Reduction Act of 2005, New Jersey has forced people to plan ahead due to more complex and intense regulation. Without planning for the future, people may be leaving their spouse and families at risk for financial insecurity.

2) With people living longer and longer, more people witness a loved one’s admission to a nursing home. A first hand experience with a loved one entering a nursing home often sparks future planning from their family members. Once you see a spouse, parent, or grandparent enter a health care facility and the cost that ensues, pre-planning immediately makes sense.

Pre-planning involves sophisticated legal advice. Creating a proper trust involves many specifics that an experienced trust and estate planning attorney can assist you with. Establishing a trust is more beneficial than simply gifting the assets for many reasons, but mainly because it avoids changes resulting from the four D’s – debt, divorce, death, and disability. When you gift an asset outright, the person receiving the gift risks creditors collecting from it. Even if the person is financially stable at the time he/she receives the gift, unforeseen events may occur which could put the asset at the mercy of creditors, such as a car accident. Similarly, the gift receiver may get divorced, which risks equitable distribution of the asset. Gifting to a beneficiary is also risky due to the risk of death of the beneficiary. In the unlikely event that the beneficiary dies, the assets will automatically pass through the beneficiary’s estate, sometimes an unwanted outcome. The final risk of the four D’s is disability. If a beneficiary develops a disability, the government will look at the assets given to them as included in their overall financial picture. This may disqualify them from Medicare, Medicaid or other public benefits. The best way to avoid all the risks associated with the four D’s is to plan for the future by placing your assets in a trust.

Risks beyond the four D’s are also present, including the possibility of the beneficiary having a fight with the trust creator or simply a change or heart and deciding not to use the assets for the creator’s benefit. Another risk is always the beneficiary spending all of the gifted money, leaving none to pay for the creator’s long-term health care if they do not qualify for Medicaid.

Planning for your future is extremely important, especially today with stricter New Jersey laws. In order to avoid “crisis planning” and the risks associated with an outright gift, one should plan for their future by placing their assets in a trust. The use of a well-constructed trust is key to estate and long-term care planning.

Please contact Fredrick P. Niemann, Esq., an experienced NJ Trust attorney, today to speak with him about setting up a trust and estate planning for your future. He can be reached at 888-800-7442 or by email at fniemann@hnlawfirm.com. He looks forward to hearing from you.

New Jersey has one of the largest populations of elderly residents in the entire country. Many of these people do not have a trust or will in place. Others may have one, but are unaware of the tax consequences of it. Some are open to the idea, but are wondering, “Should I or should I not have a will or trust in place?” An experienced New Jersey Wills and Trusts attorney can answer all of your questions pertaining to wills and trusts, as well as give you the pros and cons to each.

One of the biggest concerns of those who have or are contemplating setting up trusts are the tax implications. Some believe that trusts are not subject to NJ inheritance and/or estate taxes. Unfortunately, this is not true. Many trusts, both revocable and irrevocable, are subject to these taxes. Many factors go into determining the taxability of a trust. The entire value of a revocable trust is generally subject to inheritance taxes. Irrevocable trusts have a much better chance of avoiding the inheritance tax, but will be evaluated on a case-by-case basis. If the creator of the irrevocable trust retains certain powers, such as the right to receive income from the trust, the power to change who the beneficiary of the trust it, or the possession or enjoyment of property that is transferred to the trust, the entire value of the irrevocable trust will be subject to New Jersey estate tax when the creator dies.

Avoiding estate and/or inheritance taxation on your New Jersey Trust can be a complicated matter. A knowledgeable New Jersey Trusts lawyer can help answer all of your questions and assist you in setting up a proper trust or will.

Please contact Fredrick P. Niemann, Esq. at 888-800-7442 if you have any further questions. He can also be emailed directly at fniemann@hnlawfirm.com. He looks forward to helping you.