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New Jersey’s New Death with Dignity Act Explained

Published on: September 16, 2019 | by Elizabeth Candido Petite

New Jersey’s passage of the “Aid in Dying for the Terminally Ill Act” makes it the eighth state in the nation to allow terminally ill patients to request medication to end their lives. The bill was signed into law by Governor Murphy on April 12, 2019, and became effective on August 1, 2019.

In brief, the new law allows New Jersey residents who are terminally ill to obtain medication from their physician that will likely result in death a few hours after it is ingested. Specifically, the law requires:

The person must be a “qualified terminally ill patient,” which is defined as a capable adult who is in the terminal stage of an irreversibly fatal illness, disease, or condition with a prognosis, based upon reasonable medical certainty, of a life expectancy of six months or less. This status must be determined by the person’s attending physician and confirmed by a consulting physician.

Basic Estate Planning Terminology

Published on: June 19, 2019 | by David G. Hardin

One of the hallmarks of estate planning is the use of terms of art in legal documents. Terms of art are often encountered in a will or revocable trust. This article will discuss the Latin phrase “per stirpes” and related concepts in the context of estate distributions to beneficiaries.

A. Per Stirpes. The term “per stirpes” literally means “by roots or stocks.” In the context of a disposition in a will or trust, the term is frequently used, for example, as part of a distribution to “surviving descendants, per stirpes.” The term is defined in New Jersey law as follows:

If a governing instrument requires property to be distributed “per stirpes,” the property is divided into as many equal shares as there are: (1) surviving children of the designated ancestor; and (2) deceased children who left surviving descendants. Each surviving child is allocated one share. The share of each deceased child with surviving descendants is allocated in the same manner, with subdivision repeating at each succeeding generation until the property is fully allocated among surviving descendants.

Funeral and Disposition Representative – In Re: Estate of Travers

Published on: June 19, 2019 | by Mary Patricia Magee

A recent decision from the Morris County Chancery Division, Probate Part, serves as an important reminder to not only think about the final disposition of your remains, but to communicate those thoughts to the significant people in your life. In an unpublished opinion, In the Matter of the Estate of John E. Travers, Jr. (New Jersey Superior Court, Morris County, Docket No. P-2253-2017, 2/19/2019) (hereinafter “Travers”), the Court addressed the question of who may control the disposition of a decedent’s remains when the decedent has not expressed his intentions in this regard. The Travers case contained no significant legal principles, nor did it break new ground in the estate planning field. It did, however, highlight the importance of specifying the person who should be in charge of your final arrangements and the disposition of your remains.

In this case, Mr. Travers was 22, single and had no children. He had no will and had made no direction regarding his funeral or the disposition of his remains. He was survived by his mother and father, his closest blood relations. His parents were divorced. His father felt strongly that Mr. Travers should be buried, and his mother thought he should be cremated. This disagreement took them to the Superior Court of New Jersey, where the Chancery Judge was called upon to decide the question.

The Court began its inquiry with an examination of the New Jersey law that allows for the appointment of a funeral and disposition representative. New Jersey Statute 45:27-22 provides that a decedent may specify who is to be entrusted with funeral arrangements and the disposition of bodily remains. See N.J.S. 45:27-22.a. This direction must be in a will. Id. If the decedent has not left a will that includes such an appointment, the statute sets forth the order of priority of the persons entitled to control the funeral and the disposition of remains as follows: (1) the surviving spouse or civil union or domestic partner; (2) a majority of the surviving adult children; (3) the surviving parent or parents; (4) a majority of the brothers and sisters; (5) other next of kin according to the degree of relationship with the decedent; and (6) if no next of kin, any other person acting on a decedent’s behalf. Id.

Recognize Red Flags in Estate Planning to Avoid Litigation

Published on: May 15, 2019 | by Elizabeth Candido Petite

Most clients do not want their lawyers to inherit their property. Yet sometimes the plans they desire to put into place are simply asking for that to happen. Litigation is expensive, and many states permit the attorneys’ fees to be paid from the trust or estate assets before anything is distributed to the beneficiaries. In addition, these proceedings are often lengthy and emotional, something that few wish to ever endure, and especially not after the death of a loved one.

Often trust and estate litigation can be avoided by careful planning. Thus, it is important for practitioners to recognize “red flags” during the planning process and to know how to advise their clients so that their estates are not settled in the courtroom, with the lawyers being the only ones walking away with full pockets.

Unequal distribution of assets amongst children

Elizabeth Candido Petite Interviewed for Princeton TV’s “Discover a New Future” (part 1 of 2)

Published on: April 3, 2019 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Elizabeth Candido Petite, a member of Lindabury’s Wills, Trusts & Estates practice group was interviewed by Faith Saunders of Princeton TV for her series; “Discover a New Future.” Elizabeth discusses some common issues concerning wills, trusts, and what happens to one’s property upon death. Among the questions Elizabeth answers are:

Who gets my property if I die and do not have a will?
Who can write a legally binding will?

Elizabeth Candido Petite Interviewed for Princeton TV’s “Discover a New Future” (part 2 of 2)

Published on: April 3, 2019 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Elizabeth Candido Petite, a member of Lindabury’s Wills, Trusts & Estates practice group was interviewed by Faith Saunders of Princeton TV for her series; “Discover a New Future.” Elizabeth and Faith discuss powers of attorney, advance directives for health care, and the consequences of not planning for incapacity during one’s lifetime. Among the questions Elizabeth answers are:

What is a power of attorney?
Why do I need one?

Tax Updates from Washington (February 2019)

Published on: February 13, 2019 | by Elizabeth Candido Petite

Increased exemptions for 2019. The IRS has announced that the gift and estate exemption has increased to $11.4 million per person in 2019. The exemption amount in 2018 was $11.18 million. This means that in 2019, an individual can make gifts during life or at death totaling $11.4 million without incurring gift or estate tax. In addition, a married couple can now transfer $22.8 million worth of assets during life or at death tax-free. The annual gift tax exclusion amount remains at $15,000 per recipient ($30,000 if spouses elect gift-splitting).

IRS addresses estate and gift tax exemption “clawback.” The Tax Cuts and Jobs Act (“TCJA”), which was signed into law in December 2017, increased the gift and estate tax exemption from $5 million to $10 million, indexed for inflation (see current rates above). The TCJA also provides that the exemption amount will revert to $5 million in 2026. This led many practitioners to wonder: what happens if an individual makes a gift in excess of $5 million now, and dies in or after 2026 when the exemption amount is only $5 million? Because the gift and estate tax exemption is unified, this could mean that estate tax would be due since the individual’s gross estate, which includes the prior gift made, would exceed the applicable exemption at the time of death.

However, in November 2018, the Treasury issued proposed Regulations addressing this “clawback” of the exemption amount (Prop. Reg. Sec. 20.2010-1(c)). The Regulations provide that in the situation described above, the applicable estate tax credit will be based on the greater of the two amounts. For example, if an individual makes a gift of $9 million in 2019 when the exemption amount is $11.4 million and then dies in 2026 when the exemption is $5 million, the individual’s estate may use the higher exemption of $11.4 million to ensure that tax will not be due on the amount in excess of $5 million. Thus, if you are considering make a large gift (or a series of gifts), now is the time to do it, when the exemption amount is the greatest it has ever been.

Beware the New Jersey Inheritance Tax

Published on: February 13, 2019 | by Anne Marie Robbins

The New Jersey estate tax was repealed effective January 1, 2018. Coupled with the significant increase in the federal estate and gift tax exemption ($11.4 million in 2019), the repeal has reduced the need for transfer tax planning by many New Jersey residents. However, because the New Jersey inheritance tax remains in place, clients must still consider the effect of the inheritance tax upon their estate plans.

New Jersey is one of six states that have an inheritance tax, the others being Iowa, Kentucky, Maryland, Nebraska and Pennsylvania. New Jersey’s rates begin at 11% and rise to 16%. N.J.S.A. 54:34-2. The inheritance tax applies to gifts at death, or within 3 years of death, to beneficiaries who are separated into different classes based upon the relationship of the decedent to the beneficiary. N.J.S.A. 54:34-1 and 54:34-2. Class A beneficiaries (spouses, civil union partners, direct descendants, direct ancestors, and stepchildren) are exempt from the tax. Class B was eliminated as a category in 1963. Class C beneficiaries (siblings, sons- and daughters-in-law, and civil union partners of children) receive a $25,000 exemption and are taxed at rates ranging from 11% to 16%. Class D beneficiaries (everyone else) are taxed at 15% on bequests up to $700,000, with a rate of 16% for amounts above $700,000. Qualified charities are Class E beneficiaries and gifts to them are exempt from application of the tax.

There is no exemption from the New Jersey inheritance tax based upon the size of one’s estate. Even transfers from a very modest estate will incur the tax if the recipients are in a taxable category. The inheritance tax is assessed against the recipients unless the will directs otherwise. Executors are charged with deducting the tax from the bequests before distributing to the beneficiaries. N.J.S.A. 54:35-6.

The Potential Confusion Over Joint Accounts

Published on: February 13, 2019 | by James K. Estabrook

As our clients age they often tell us they do not feel comfortable with their ability to continue to manage their financial affairs. They also express the unfounded fear that upon their death all their bank accounts will be frozen for months on end with no ability for anyone to access their funds to satisfy their obligations after death for the care of their home or loved ones. The common step taken by many is to put a family member or trusted friend on their accounts as joint owner so that in the case of a disability or death, funds will be readily accessible to satisfy the client’s obligations without interference.

Unfortunately, this step, although well-intentioned, has sometimes resulted in significant confusion, litigation and costs to the client’s estate because the creation of the joint account and the transfer of those assets to the surviving joint owner at death were not clearly understood by the elderly client or were not properly explained to her by the custodian of the account.

This miscalculation was recently demonstrated in an Appellate Division case, In the Matter of the Estate of Jones, No. A-2557-16T2, 2018 WL 4471686 (N.J. Super. Ct. App. Div. Sept. 19, 2018). Subsequent to the death of her husband, Erna M. Jones visited her investment broker with her middle daughter, Barbara, to open a new account distinct from the one she held jointly with her husband. Mrs. Jones executed a new account application that identified her daughter Barbara as a second party, and the box was checked that the account was “Joint Tenants with Right of Survivorship.” Subsequent to this account opening, Mrs. Jones managed the account, paid her bills and handled her investments with the representative of the brokerage company. At her death in 2015, her daughter Barbara claimed the account as hers as the surviving joint tenant. Barbara’s older brother, David, objected and filed a Complaint under New Jersey’s Multi-Party Deposit Account Act (“MPDAA”) alleging that the account was not held with right of survivorship but was merely a “convenience account,” and that all money in the account was to be distributed equally amongst Mrs. Jones’ surviving three children. Mrs. Jones’ Last Will and Testament provided that her estate was to be divided equally amongst her children and throughout her life, David stated, she had always treated her three children equally. David further alleged that Barbara had utilized undue influence in getting her mother to name her as a joint owner on the account.

Agents Acting Under a Power of Attorney

Published on: October 19, 2018 | by David G. Hardin

One of the useful documents in the estate planner’s tool kit is the power of attorney. Briefly, a power of attorney allows a person (the “principal”) to name another individual (the “agent” or the “attorney-in-fact”) to act on the principal’s behalf, typically in financial and health matters. A power of attorney may be “general” or “limited,” meaning it can authorize the attorney-in-fact to act broadly on the principal’s behalf, or it may restrict the attorney-in-fact’s authority to certain enumerated types of conduct (i.e., a limited power of attorney may apply solely to acts involved in the sale of a principal’s real estate). In addition to being “general” or “limited,” a power of attorney may also be “durable,” meaning the power of attorney remains effective in the event of a future disability or incapacity of the principal. For purposes of this article, the power of attorney is to be considered a durable general power of attorney, meaning the power of attorney is effective immediately upon execution, it authorizes the attorney-in-fact to act broadly on the principal’s behalf, and it remains effective in the event of any subsequent disability or incapacity of the principal.

New Jersey’s Revised Durable Power of Attorney Act, as codified in N.J.S. 46:2B-8.1 et seq. (the “Act”), grants broad authority to an attorney-in-fact to act on a principal’s behalf. The Act provides: “All acts done by an attorney-in-fact pursuant to a durable power of attorney during any period when the power of attorney is effective in accordance with its terms, including any period when the principal is under a disability, have the same effect and inure to the benefit of and bind the principal and the principal’s successors in interest as if the principal were competent and not disabled.” N.J.S. 46:2B-8.3. This section purports to state that the acts of the attorney-in-fact are binding upon the principal and the principal’s successors in interest, suggesting that the acts of the attorney-in-fact have the same effect as if the principal had acted himself or herself. While this is true, the law in New Jersey requires more.

New Jersey law imposes a higher duty upon an attorney-in-fact acting on behalf of a principal under a power of attorney. An attorney-in-fact in New Jersey has a fiduciary obligation to the principal and must act “within the powers delegated by the power of attorney and solely for the benefit of the principal.” N.J.S. 46:2B-8.13.a [emphasis added]. A common situation in which a power of attorney may expressly authorize an attorney-in-fact to act, but where the act will be prohibited, involves lifetime gifts. While an individual generally has broad power to make lifetime gifts of his or her own property, unfettered by any restrictions or constraints, an attorney-in-fact operating under a power of attorney does not have that same authority. An attorney-in-fact may not use the principal’s resources unilaterally to favor himself or herself in ways that are contrary to the principal’s wishes.