The impacts of COVID-19 have been felt in so many ways. Some are right in front of us and have harmed so many so quickly, like the physical suffering and loss of life caused by the virus, or the astonishing economic impacts such as market fluctuations and job loss. The impacts, of course, do not end there. Instead, we’ve seen our whole way of living change, with new ways of doing things from getting groceries, going to the doctor, and handling financial transactions. This undoubtedly holds true for Elder Law and Estate Planning matters. Indeed, since March we, like many other practitioners, have had to deal with a number of new administrative and practical issues that made otherwise straightforward tasks much more complex, time-consuming, and frustrating.
Take, for example, a woman who recently called to speak about accessing life insurance proceeds left to her by her boyfriend who had recently passed away. She had an urgent need for those assets as a means to continue paying for her primary residence. As is commonly the case, the insurance company was requiring a death certificate to process payment of the life insurance proceeds. Even though several months had passed since her boyfriend passed away, she was unable to obtain a death certificate due to the fact that he passed away in an area hard-hit by COVID-19, resulting in an extreme delay in production of death certificates. To make matters worse, her boyfriend had not executed a Last Will and Testament meaning that she, as a non-spouse and non-blood relative, was not entitled to any of his other assets. As a result, she will likely be unable to continue living in the place she has called home for years.
Additionally, what were once routine bank transactions have also become more difficult as a result of the pandemic. Opening a trust account or being added to someone else’s account using a Power of Attorney are typically routine transactions that play a critical role in an estate plan and/or accessing assets to pay for a loved one’s long-term care. During normal times, these tasks were handled during a quick visit to a local branch of your bank. Once the pandemic hit, these tasks became more onerous to complete due to many banks closing branches yet still requiring in person appointments. Even when banks were willing to help or an in-person visit to the bank could be made, the processing time was much greater than usual. The delays this caused had different effects in different situations including, among other things, postponed eligibility for Medicaid benefits or inability to effectively help a loved one with pressing financial matters.
These are just a few of the ways in which the current landscape has made implementing estate and long-term care plans more difficult. Both, however, make clear that proactive estate planning is more important than ever. Indeed, in each example above, early action would have prevented or mitigated the issues faced. If the boyfriend in the first example had executed a Last Will and Testament, his girlfriend could have easily obtained access to his assets thus enabling her to continue living in their shared home. In the second example, individuals who waited until there was a pressing need to accomplish estate planning tasks were left in a difficult situation when trying to act during the pandemic. This could have been avoided through the simple steps of planning before an urgent need arises.
The bottom line is that this pandemic has made clear that waiting is not an option and can produce some very difficult consequences. Do not put yourself or your loved ones in that position by putting off tasks that can be accomplished today. If you would like to talk to an attorney about getting your estate and/or long-term care plan in order in New Jersey, New York, or Pennsylvania, please do not hesitate to call our office at 908.204.3477 to schedule a free consultation with an attorney. If you prefer, you can also use our website – www.themurrayfirmllc.com – to schedule a new client in take with a member of our team.
By Ryan Broedlin, Esq.
There can be no doubt that the COVID-19 pandemic has created a great deal of uncertainty at this time in our lives. In light of this uncertainty as well as the pandemic’s economic impacts, it is likely that many people are considering their long term financial and estate planning. The need to respect social distancing requirements, however, can make updating estate planning documents and completing certain financial transactions tricky tasks at this time due to requirements that such documents be notarized and/or witnessed.
For example, proper execution of a Last Will and Testament often requires that the testator (the person signing the Will) sign the document in front of two witnesses who must also sign the document. Additionally, if you want to make the Will “self-proving” – meaning the witnesses do not need to appear before a court to have the terms of the Will carried out – a notary is required. Under normal circumstances, these requirements typically result in all of these people – the testator, the witnesses, and the notary – coming together in one place to complete the execution of a Will. Indeed, most states specifically require that the witnesses and the notary be physically present when the document in question is signed. Additionally, it is not uncommon for real estate transactions, life insurance forms, and retirement account forms to require notarized signatures.
It is not difficult to see why this presents a problem in times of social distancing. Not only would execution of estate planning documents in the manner described run afoul of social distancing requirements, it would also unnecessarily put multiple people at risk of infection. This issue is only exacerbated when you take into account the fact that those most likely to have a pressing need for updating their estate planning – senior citizens – are also the most at-risk population right now.
Thankfully, states are starting to recognize these issues and are reacting with common sense solutions to address them. In New York, for example, Governor Cuomo has issued two separate executive orders to help remove some of the roadblocks to signing estate planning or other financial documents at this time. The first allows a licensed notary to notarize documents remotely, using audio-video technology. The second, issued just a few days ago, allows the same accommodation for witnesses of, among other things, a Last Will and Testament, Powers of Attorney, Trusts, Healthcare Proxies, and Real Property Instruments.
There are, of course, certain requirements that must be fulfilled to utilize remote methods of notarizing and witnessing documents. First and foremost, the New York orders only apply to documents that are actually executed in the state of New York. As such, out-of-staters cannot take advantage of New York’s relaxing of the formalities of document execution. Second, remote notarization processes must use audio-video technology that can record the document execution and that recording must be saved. Third, there are specific rules about the timing and means of execution of the documents by the witnesses and notary, including that they must at least sign faxed or emailed copies of the document on the same day it is signed by the individual in question.
Much like New York, Pennsylvania has addressed this issue, at least in part, by allowing for remote notarization of documents. The process differs somewhat from New York in that it requires already-licensed notaries to become approved electronic notaries. Furthermore, Pennsylvania limits the technology platforms that can be used to a short list specifically approved by the Department of State. Finally, Pennsylvania has not addressed the witness issue at this time.
New Jersey is also at least considering this problem but has been slow to act thus far. A law allowing for remote notarization is working its way through the New Jersey legislature but: (i) it has not been signed into law by Governor Murphy; and (ii) it specifically exempts Wills and related documents from the list of documents that can be notarized remotely. We are continuing to monitor progress of this legislation and will provide updates when appropriate.
Overall, these procedural updates by New York and Pennsylvania represent a very welcome change in light of the challenges we currently face in, among other things, keeping transactions and business moving. Allowing remote notarization and/or witnessing should allow those with urgent situations – or those that now find themselves with some extra time on their hands – to find a safe and secure way to get necessary legal and financial documents executed properly. We have quickly adapted to these new rules and have the people and technology in place to help our clients do so. If you would like to talk to us about taking advantage of these new rules to update your estate planning, please reach out to us today to schedule a free consultation at 908.204.3477.
Long Term Care Insurance – A Primer
By Ryan Broedlin, Esq.
A substantial portion of the elder community will require long term care services, such as home health aides, assisted living or skilled nursing. As these services can be quite expensive, many people purchase long term care insurance (LTCI) to help cover, or at least defray, the costs. Just like any insurance, however, the LTCI claims process can be difficult, confusing, and time-consuming, making policy benefits difficult to access. The attorneys of The Murray Firm have successfully assisted clients in receiving benefits under LTCI policies issued by numerous different insurance carriers. Based on our experience with those claims, we have developed some key insights for how to handle the claims process.
First, it is incredibly important to have a thorough understanding of what your policy does and does not cover, what it means to be eligible for coverage, and how to initiate a claim, including any early notice requirements. These policies are often lengthy and complex, so here are some key provisions to look for in your policy:
Second, submitting a “clean” claim can eliminate a substantial amount of back-and-forth with the insurance company, as well as a few headaches. A “clean” claim is one that includes all information and documentation necessary for the insurance company to perform a full review of your claim. Typically, this will included completed claims forms, HIPAA authorizations, medical records to show medical eligibility, and invoices from your long term care providers. Additionally, if you are submitting the claim on behalf of a family member or friend, you will have to provide documentation of your authority to do so, such as a valid Power of Attorney. By submitting all of these documents together, you reduce the amount information the claims examiner will have to spend time requesting – either from you or from third parties – and therefore help speed up the claim process.
Third, follow-up is everything. Do not rely on an insurance company representative to move your claim quickly to completion. Our standard practice is to follow-up on claims regularly (and politely), including an immediate check-in within 72 hours of submission of the claim. Most importantly, this allows us to identify that the claim has been received, learn the insurance company’s next steps, and discover any additional documentation or information that the insurance company may require. WE also make sure to follow-up with our clients’ long term care providers to be sure they are being responsive to any requests made by the insurance company.
If you have a LTCI policy and have any questions, we offer a free one-hour consultation for clients in New Jersey, New York, and Pennsylvania to review your policy with you, answer questions you may have, and to help with a long term care plan utilizes your insurance benefits. Please reach out to us today to schedule an appointment at 908.204.3477.
IRA Planning Update: The SECURE Act
by Ryan Broedlin, Esq.
It’s no secret that Individual Retirement Accounts (“IRAs”) make up a material portion of the average American’s retirement plan. As a result, the attorneys at The Murray Firm pay close attention to legislation impacting IRAs and their utility as planning tools. Recently, Congress took aim at making IRAs a more valuable retirement tool for those who are so reliant upon them to fund life after leaving the workforce. Specifically, the Setting Every Community Up for Retirement Enhancement Act – a/k/a the SECURE Act – was passed by the House of Representatives earlier this year and is currently working its way through the Senate. The proposed law would yield immediate, up-front benefits for IRA owners. As discussed below, however, those benefits come at a cost of reducing the utility of IRAs as wealth transfer tools.
Let’s start with the good news. The SECURE Act, as currently drafted, will enhance the value of IRAs as retirement tools in at least two meaningful ways. First, IRA owners would get to wait longer before taking their Required Minimum Distributions (“RMDs”) from their accounts. Instead of starting at 70.5, RMDs could be postponed until age 72, providing an additional 18 months of tax deferred growth for investments. Second, the SECURE Act would eliminate the age cap – currently 70.5 – for making contributions to an IRA. These changes make clear that Congress recognizes that many Americans are working past standard retirement to grow their nest eggs and will allow IRA owners to do just that.
In addition to funding retirement, however, IRAs have also become an important wealth transfer and estate planning tool. This is due to the ability of recipients of an inherited IRA to “stretch” the RMDs over their own life expectancy, rather than the life expectancy of the original owner. Using this feature, distributions from the IRA get taxed at lower marginal income tax rates than they would if taken over a shorter period of time or a lump sum, allowing the tax avoidance features of the IRA to be prolonged, sometimes for decades after the death of the original owner of the IRA. Unfortunately, the SECURE Act has taken direct aim at this feature of IRAs and, if signed into law, would limit the ability to “stretch” an inherited IRA to a period of 10 years resulting in a substantially higher tax bill than if the IRA could be stretched over an individual’s entire life expectancy.
There are, of course, exceptions to this rule: IRAs inherited by spouses, minor children, and disabled or chronically ill individuals will not be subject to the 10-year limitation. Given these exceptions, IRAs will certainly not lose their status as a favored wealth transfer tool. If, however, the SECURE Act becomes the law of the land, adult children and other relatives may no longer make sense as the proper beneficiaries of IRAs. Instead, it will be incredibly important to review your estate plan, especially your beneficiary designations on IRAs, to determine whether you are taking the steps necessary to continue the tax preferred status of your IRAs for as long as possible.
We at The Murray Firm will continue to monitor the progress of the SECURE Act and will provide an additional update if and when it becomes law. In the meantime, we offer a free one-hour consultation for clients in New Jersey, New York, and Pennsylvania to review your estate plan, including IRA beneficiary designations, to make sure that your planning makes sense in light of the current legal landscape. Please reach out to us today to schedule an appointment at 908.204.3477.
If you, as an adult child, notice that your parents are struggling to manage their finances, you may believe that the easiest way to help them is by adding your name to their bank account. In fact, we have had many clients who have been advised to add their child’s name on an account for convenience purposes. The common rationale is that by becoming a co-owner you can ensure that bills are paid on time and interact with the bank on their behalf. While the intention may be good (let’s ignore the issue of a non-lawyer giving legal advice), the reality is there are serious consequences to making any changes in ownership for a bank account.
Exposure to Creditors
Many adult children do not realize that if they add their name to a parent’s bank account, that asset is now accessible to creditors. If you are in the middle of settling a divorce, have to file for bankruptcy, or have a judgment entered against you, the account is now available to those creditors as a means to satisfy their claims. It does not matter that you did not fund the account. Creditors have the ability to levy the account and collect whatever they can because the child’s name is on the account.
If Medicaid for Long Term Care is a possibility within the next five years for your parent, it is never advisable to add your name to their bank account. The caseworker processing the Medicaid application will do a full review of the past five years of account statements and ask for an explanation of certain transactions. If the adult child does not keep proper records of all expenditures made on the parent’s behalf or if the caseworker finds that funds in the account were used to pay for the adult child’s own expenses, the caseworker is very likely to assess a penalty, causing the parent to be ineligible for Medicaid for a period of time. In that case, the entire family could be left scrambling to find a way to pay for the parent’s continuing care until the penalty period ends.
Additionally, being co-owner of a parent’s account can be equally troublesome for the adult child with respect to eligibility for government benefits. Indeed, if the adult child ends up having a need for Social Security Insurance or other asset/income tested government benefits, the funds in the account will likely be treated as available to the adult child and thus cause the adult child to be ineligible for those much-needed benefits.
Estate Planning Issues
When your parent passes away with a co-owner listed on their account, that asset becomes the property of the surviving owner operation of law and is not controlled by the deceased parent’s Will. If there are multiple siblings, the surviving owner of the account is under no obligation to share the proceeds of the account with their siblings.
What is the Alternative?
The best option to help your parent is to have him or her execute a Durable Power of Attorney. A Durable Power of Attorney provides the agent (child) with the ability to perform financial and business transactions on their behalf to ensure that your loved one’s affairs are properly managed.
We offer a free one-hour consultation to review these important details with you and your parent. Our services are available for clients throughout New Jersey, New York and Pennsylvania. Please reach out to us today to schedule an appointment at 908.204.3477.
by Ryan L. Broedlin, Esq.
Do you have a will that leaves specific items or lumpsum payments to certain members of your family or close friends? Or are you considering having a will drafted that does so? If so, you are not alone: specific and general bequests like these – gifts of specific property or lumpsum cash payments – are a common and well-intentioned part of estate plans. While seemingly harmless, we find that this type of drafting can wreak havoc on an estate plan in a number of different ways and confuse and defeat the best of intentions. To illustrate how this can happen, we’ll use the example of Mr. Smith.
Mr. Smith is a widower and the loving father of two children who now each have two of their own: three grandsons and one granddaughter, each of whom Mr. Smith loves and adores. A successful man, he has always intended that the bulk of whatever he may leave behind go to his children but after many wonderful years watching them grow up, he also wants to provide for his grandchildren. Rather than calling an attorney that specializes in estate planning, Mr. Smith goes to the attorney he recently used for the purchase of his new home. That attorney drafted – and Mr. Smith executed – a will that leaves his assets to his family as follows: $15,000 to each of his three grandsons; his old sports car valued at roughly $15,000 to the granddaughter (he had always bonded with her over love of that car; what better way to keep it in the family?); and residuary of the estate is left to his own children.
When Mr. Smith executed this will, it looked clear that there would be more than enough money for the gifts to his grandchildren to be made while leaving a substantial sum to the Mr. Smith’s own children. The intervening years, however, were a bit tough. Between home repairs, medical bills, and other unexpected costs, Mr. Smith’s once-hefty bank accounts were substantially depleted. Health issues also robbed him of the ability to drive that sports car he loved so much and it was eventually sold to help with the medical bills. All told, after costs of administration, Mr. Smith’s estate includes only $30,000 of cash to be distributed. Even though there is not enough to fully satisfy Mr. Smith’s intentions, surely everyone can at least get something, right? Wrong.
First, it is important to note that, under New Jersey, New York and Pennsylvania law, specific and general bequests must be satisfied before any residuary beneficiary can participate in a distribution from Mr. Smith’s estate. As a result, the $15,000 gifts to the grandsons and the gift of the sports car to the granddaughter get distributed before Mr. Smith’s own children take anything. While there is not enough to give each grandson a full $15,000, they do get to share in whatever is available on a pro rata basis, leaving each grandson with a cool $10,000; not Mr. Smith’s exact intention, but still pretty good. Then, the executor of his estate would simply hand the keys to the sportscar to Mr. Smith’s granddaughter, but wait: it’s gone and the money from its sale was spent long ago. At least some of the money that went to the grandsons can be diverted to the granddaughter, right? Wrong again. When the object of a specific bequest has been sold, destroyed, or otherwise disposed of, the gift will adeem and the intended beneficiary takes nothing (there are some exceptions to this rule, but none apply here). Finally, there is simply nothing left in the estate to distribute to Mr. Smith’s children so they too receive nothing.
As you can see, the effect of the specific and general bequests to Mr. Smith’s grandchildren was to almost completely frustrate Mr. Smith’s intended plan. His children – who should have taken the bulk of his estate – get nothing, his grandsons get less than Mr. Smith had hoped, and his granddaughter – who Mr. Smith wanted to treat the same as his grandsons, also gets nothing due to the sale of the car.
This result could have been avoided with some very simple changes to Mr. Smith’s will. Indeed, had he consulted an experienced estate planning attorney, that attorney would likely have advised Mr. Smith of the pitfalls of gifting the cash and car the way he had hoped and to instead look at his estate as a pie that he could divvy up amongst his children and grandchildren in different sized pieces. For example, Mr. Smith could have assigned percentages to leave the biggest piece of the pie to his own children while giving smaller, but still meaningful, pieces to his grandchildren. In doing so, each of them would have received something from his estate – a far better result than what actually occurred. Additionally, had it still been around, the sports car could have been used to satisfy the gift to his granddaughter as an “in kind” distribution, thus ensuring that all of Mr. Smith’s intentions were fully met. At the very least, an individual that absolutely wants to make gifts of specific property in his or her will should revisit those documents often to 1) ensure that the specific items of property gifted are still in his or her possession and 2) review whether his or her estate will have the funds necessary to make sure the intended beneficiaries – usually the residuary beneficiaries – can take under the will.
Ultimately, this is a prime example of how not hiring an attorney that specializes in estate planning to prepare your last will and testament can have some tough consequences. If your will has any specific or general bequests that may need changing – or if you have been considering setting your will up like Mr. Smith’s – please call The Murray Firm, LLC at (908) 204-3477 to schedule a free consultation to discuss.
The Murray Firm, LLC is proud and excited to announce that our paralegal, Kristen Frolich, has passed the official test to become a Certified Medicaid Planner! She joins an elite few in the country that have earned the title of CMP™ and she is the first Certified Medicaid Planner in the State of New Jersey.
In order to become a CMP™, Kristen needed to demonstrate a mastery of subject matter involved in Medicaid planning including eligibility standards and financial strategies. In order to sit for the exam, Kristen was required to have 6 years of experience in the field of Estate Planning and Elder Law as well as a Certificate in Paralegal Studies.
Medicaid planning is a complex and confusing path to navigate, specifically in the State of New Jersey. With the constant change in Medicaid rules and strategies, utilizing a Certified Medicaid Planner will ensure that you are working with someone who is an expert in the field and that your interests are protected.
The Murray Firm, LLC is committed to constantly improving the type of service that we can provide to our clients. We congratulate Kristen on her success!
Recently, Americans have been flooded with information regarding impending changes to the federal tax laws. With all of the news of the proposed federal tax regulations, it is easy to overlook the changes to the estate tax coming to New Jersey next year. Beginning on January 1, 2018, the New Jersey estate tax will be completely eliminated. This means that if a person passes away on or after January 1, 2018, their estate will not be subject to the New Jersey estate tax. The current tax law states that if a person passes away prior to January 1, 2018 and their estate is valued at more than $2 million, an estate tax would be imposed.
The repeal of the New Jersey Estate tax does not affect the current state inheritance tax. The New Jersey Inheritance Tax is imposed based on the relationship between the decedent and the beneficiary. New Jersey places beneficiaries into various classes (Classes A, C, D & E). The amount of the tax is based on the class of beneficiary and the amount of the inheritance received. Click here for more information on New Jersey beneficiary classes. For example, a spouse or child would be considered a Class A beneficiary and not subject to inheritance tax. However, if an estate is left to a sibling (a Class C beneficiary), each sibling would be subject to inheritance tax depending on the value of the estate. In the case of a Class C beneficiary, each beneficiary would be taxed between 11-16% for any inheritance more than $25,000.00. Class D beneficiaries are anyone who is not a Class A, C or E beneficiary and the tax is either 15% or 16% depending on the amount of the inheritance. Class E beneficiaries are qualified charities, religious institutions, and other exempt organizations from whom no inheritance tax is owed.
The repeal of the New Jersey Estate Tax has no bearing on the federal estate tax. The tax plan that has been proposed by President Trump would mean an end to estate tax altogether. Until Congress can come to an agreement, beginning on January 1, 2018, if an estate is valued at more than $5.6 million, it will face a federal estate tax (also known as the death tax). For a married couple, when a spouse passes away, the surviving spouse has the option to elect portability of the deceased spouse’s unused exemption to pass the unused portion of the $5.6 million exemption to his or her estate. In effect, a married couple has the ability to exclude $11.2 million from the federal estate tax.
Overall, it is important to remember that New Jersey tax laws are likely to change with a new Governor taking office in January. While the removal of the New Jersey estate tax will certainly be a welcome change to the New Jersey tax code, it is more important than ever to ensure that your estate is set up in such a way that your beneficiaries will feel as little tax consequence as possible. With years of experience in the estate planning and elder law field, I am confident that my team will be able assist any client in navigating the planning that should be put into place. Please call my office at (908) 204-3477 to schedule a free consultation to discuss any estate planning issues.
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