The Documents You Need for Your Estate Plan

The Documents You Need for Your Estate Plan

Whether you are thinking about creating an estate plan or already have one in place, it is important to ensure you have the proper documentation. Unless you have a law degree, understanding estate planning can be confusing.

In this DIY age, you may be inclined to try and create your estate plan on your own via the internet. Don’t. In fact, without an effective estate plan and proper documentation, your future heirs may suffer and your last wishes may not be upheld.

Following are the documents you need to ensure your legacy is preserved:

1. A will — For many people, this is the be all/end all of estate planning – the holiest of holy documents and the only one seen as worth having. A will is indeed vital to your estate plan as it provides instructions on how your property and assets should be disposed of and who your beneficiaries should be. In your will, you may describe how you wish to be buried, what charities you wish to donate to, who should care for your pets, and more. Additionally, your will allows you to name an executor to handle the administration of your estate after your death. Without this document, your estate is subject to New Jersey’s intestacy laws.

2. A health care proxy — A health care proxy is a document that names a trusted individual to make decisions about your health should you become unconscious or mentally disabled. No one wants to imagine what might happen to their loved ones if they should fall into a vegetative state or suffer from a terrible illness like dementia. Yet considering such possibilities and setting up a health care proxy is important to ensure your family knows your wishes should something happen to you.

3. Durable Power of attorney — Unfortunately, many estate planners stop at their will. While your will is extremely important to your estate plan, the buck doesn’t stop there. What if you should become incapacitated via accident, injury or illness? Who will handle decisions about your healthcare and finances? With a durable power of attorney, you name a trusted person who takes care of things like paying your bills, making medical decisions or handling your investments.

No two estate plans are the same. Your estate plan reflects your life, your estate, your assets and the legacy you wish to leave behind. Depending on your unique situation, your plan may be more or less complicated.

For more information about estate planning in Union or Hunterdon County, consult with Alec Borenstein, Esq., a partner with the firm at alec@bmcestateplanning.com or call 908-236-6457 today.

Looking a Gift-Horse in the Mouth: Renouncing a Bequest

gift horse, wills and trusts, renunciation, bequests, hunterdon county, union county, new jersey

Looking a Gift-Horse in the Mouth: Renouncing a Bequest

Why would anyone lucky enough to be a beneficiary under a will decide to reject the gift being left to them? The law calls this type of rejection a “disclaimer” or “renunciation”—and it’s a very important estate planning tool to consider whether you are administering or are the beneficiary of an estate.

First, let’s consider why someone would renounce a gift. For some people, it is simply a personal preference—for one reason or another, they do not want to benefit from the estate of the decedent. Far more common though, are situations where the intended beneficiary has substantial financial obligations, or is in a position where any inherited property would be at great risk.

For example, imagine your great-aunt named you as a beneficiary in her will and then she unfortunately passed away right on the same day you learned that a collection agency is hounding you for tens of thousands of dollars. In a situation like this, you might expect to be bankrupt within a couple of months. If you accept the bequest from your great-aunt, all or a portion of it may be consumed by your creditors. That’s probably not what your great-aunt would have wanted, so you can renounce the gift, have it go back to the estate and then be paid out to the other beneficiaries.

Most bequests can be renounced, assuming the following criteria are met. The renunciation must:

• Be formally made in writing to the executor or administrator

• Identify exactly what property is being disclaimed (for real estate, you must also identify the municipality, block, lot and precise interest of the beneficiary)

• Be made within a specific time period (See N.J.S.A. 3B:9-4.2)

There are some situations where renunciation is not available. The most common situation is one where the beneficiary has already acted in some way to “encumber” the bequest.

For example, if you borrowed money from someone and the loan was made based on the fact that you were expecting to receive a bequest from your great-aunt (which would be used to pay back the loan), you cannot then renounce the bequest. You are barred by statute and common law from renouncing because doing so would be inequitable to the lender.

Sometimes the beneficiaries of an estate are asked to “waive” their rights to renounce (aka disclaim) bequests. When this happens, the beneficiaries are asked to sign a formal written document that bars them from exercising the right to disclaim in the future. This is common when real property in the estate has been left to multiple beneficiaries or if the beneficiaries are attempting to obtain financing based in whole or in part on an expected inheritance.

One important final issue to consider is the tax consequences of accepting or renouncing a bequest. In some instances, the IRS will not honor a renunciation, and thus it is important to obtain the advice of a qualified estate or tax attorney prior to making any decisions about renunciation. For experienced counsel on estate planning in Hunterdon or Union Counties, New Jersey, contact Alec Borenstein, Esq., by email at alec@bmcestateplanning.com or call 908-236-6457 today.

After we sign the Will, where should we keep it?

Florence Griffith-Joyner, wills, trusts, union county nj, hunterdon county nj, estate planning

After we sign the Will, where should we keep it?

One question I hear from clients all the time: After we sign the Will, where should we keep it?

Before we answer that question, let’s ask another, related question: What if your loved ones can’t find your Will?

Consider the matter of famed Olympic runner, Florence Griffith-Joyner, the fastest woman in history. In 1998, at the age of 38, Ms. Joyner passed away in her sleep when she suffocated after an epileptic seizure.

After her death, her grief-stricken husband, Al Joyner was unable to find the original Will executed by his wife. By California law, Mr. Joyner was required to file the original document within 30 days of her death. Because he could not find it—he could not file it.

As a result, Mr. Joyner and the mother of Ms. Joyner engaged in estate litigation for four years following her death.

Even if you take the time and effort to create estate planning documents—if the documents cannot be found and filed, you are considered to have died intestate. This means your assets are divided according to state probate law—even if your family members know you put your wishes on paper.

What if you only have copies of your Will? In New Jersey, you can only probate an original version of your Will. If you only have copies, you’ll have to file a motion with the Court, which can often be costly and extremely time-consuming.

Back to our first question, where should you store your Will? Consider these suggestions for preserving your documents—in order to preserve your wishes:

  • There is no legal requirement to store your Will and estate planning documents in any particular place. You can store your executed Will at home, at your office, or with business associates.
  • Safety is an important factor. In New Jersey, flood and storms destroyed critically important documents stored by families in homes and offices in recent years.
  • Many people store important documents, like a Will, in their safety deposit box. This is ONLY a good location if the box is held jointly, with a spouse or loved one. In the event of your death, a person co-named on your box may remove the documents. Otherwise, your family may face a wait to have the box opened after your death. As a general rule, we don’t recommend using safety deposit boxes.
  • We recommend that original copies of our clients’ Wills be held in our fire-proof safe. If our building burns down, your Will is still safe. Also, if you have to make changes to the documents in the event of a birth, or divorce, we can quickly create new documents for your signature.

Regardless of where you store your Will, tell loved ones where you placed it. Give a copy to your executor and leave written instructions indicating where the original can be located.

If you have any questions about your estate plan in New Jersey or New York, please feel free to call us at (908) 236-6457 or email alec@bmcestateplanning.com.

Save Your Children From Themselves: The Estate of Whitney Houston

wills and trusts, estate planning, Union County NJ, Hunterdon County NJ, Whitney Houston, Bobby Brown, Bobbi Kristina

Save Your Children From Themselves: The Estate of Whitney Houston

Whitney Houston passed away in 2012.  In her estate plan, Whitney named her daughter, Bobbi Kristina Brown, as her sole heir.  In January of this year, Bobbi Kristina was found unresponsive in a bathtub in her residence.  She has yet to regain consciousness. Bobbi Kristina’s story has a lot to teach us about how to protect our children with proper estate planning.

In Whitney’s Will, created in 1993, and updated in 2000, Ms. Houston created a testamentary trust for her daughter.  The trust is structured to release funds to Bobbi Kristina as follows:

  • 10% of Whitney’s estate was transferred to Bobbi Kristina on her 21st birthday
  • Another 1/6th on her 25th birthday
  • At 30, Bobbi Kristina gets the remainder

While the testamentary trust created by Whitney shows some foresight in holding back assets until her daughter is slightly older, it sidesteps the questions faced by parents interested in passing wealth to their children, including:

  • Is my child mature enough to receive significant wealth with no outside guidance? When will he or she be old enough?
  • Are there better ways to transmit wealth where I can avoid estate taxes?
  • Can the money be protected once my child inherits my estate?

Unfortunately, the tragic postscript to Whitney’s death and Bobbi Kristina’s accident is still not over.  Bobbi Kristina’s partner, Nick Gordon, has made claims that he and Bobbi Kristina were married at the time of her accident.  Representatives for the Houston family deny that claim.

Moreover, Whitney’s Will was created when she was still married to Bobby Brown, when Bobby Kristina was just seven years old.  Whitney never updated her Will when she divorced Mr. Brown. In Whitney’s Will she named Mr. Brown as guardian of Bobbi Kristina at that time.  As it appears Bobbi Kristina is now incapacitated, Mr. Brown is now insisting on being named Bobbi Kristina’s guardian, giving him more access to the Houston estate than otherwise due to his divorce from Whitney.

This dramatic story speaks to the importance of using your estate plan to protect your children from themselves, as well as the need to update your documents after a change in family status. It’s extremely unfortunate that Bobbi Kristina’s plight is common knowledge, and we hope for a full recovery, but we must learn from her situation to ensure we protect our families to the best of our abilities.

If you have any questions about your estate plan in New Jersey or New York, please feel free to call us at (908) 236-6457 or email alec@bmcestateplanning.com.

Do You Have Unclaimed Property in New Jersey?

unclaimed property, estate planning, union county new jersey, wills and trusts

Do You Have Unclaimed Property in New Jersey?

The state of New Jersey returned $125.1 million in unclaimed property and funds to residents in 2014. According to the The Unclaimed Property Administration, 70,762 people submitted claims during the 2014 fiscal year.

So what is this unclaimed property? It is tangible and intangible possessions that have remained unclaimed by their rightful owner. This means that unclaimed property can range from a stamp collection worth thousands to bank accounts worth millions.

In fact, included in the $125.1 million in unclaimed property and funds that NJ returned to residents this year was a $1.3 million estate that belonged to a Hudson County family and $424,000 in bank checks that belonged to an Ocean County man.

Of course it is logical for you wonder, How in the world does someone not realize they have a million dollar estate or hundreds of thousands of dollars in bank checks? During the normal course of business, an individual or business may misplace or lose track of checks issued to them or bank holdings.

An important part of estate planning is knowing exactly what property you own and what it is worth. Let’s say you have multiple heirs and you would like to leave them equal assets and property. To do so, you need to know about all the property that is rightfully yours. If you’re an heir and your relative recently passed away, you also want to make sure that he or she does not have any unclaimed property or assets.

Property is presumed abandoned after the rightful owner fails to claim it within a certain period of time. In New Jersey, this period is determined by the type of property. For example, for bank accounts, checks or drafts, money orders, stocks, dividends, and distributions and shares in a financial institution, the allotted time is three years. Safe deposit boxes are presumed abandoned after five years and proceeds from class action suits are considered abandoned after only one year.

When property is presumed abandoned, it is turned over to the Unclaimed Property Administration of the State of New Jersey Department of Treasury. This occurs so that “stale” property is not taken by banks and other financial institutions. Essentially, the state safeguards your property until it is returned to you. In addition, the state strives to locate rightful property owners through various methods, including mass mailings and media campaigns.

It is also important to keep in mind that since this property is rightfully yours and not income, it is not taxable. If you believe that you may have unclaimed property, you may conduct your own search by visiting NJ’s Unclaimed Property Administration’s website and following the appropriate links.

Should you discover that you have unclaimed property, your next step is to file a claim. The Unclaimed Property Administration will then send you a claim packet which details the unclaimed property being held as well as a request for documentation to establish your ownership/identity. If you have further questions about unclaimed property or about estate planning in North or Central New Jersey, feel free to contact Alec Borenstein, Esq., at alec@bmcestateplanning.com or call 908­-236­-6457 at your convenience.

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