Disclaiming Your NJ Inheritance to Avoid Creditors

The news that you have been named a beneficiary in someone’s will is generally considered a positive thing; although you (hopefully) aren’t looking forward to the passing of your loved one, it usually feels good to know that they cared enough to bequeath part of their estate to you. There are times, however, when you may not wish to receive your New Jersey inheritance. Do you have the ability to say “thanks but no thanks?”

In New Jersey, estate law says that you can refuse to accept a gift, which in this case is your inheritance. This right to refusal is known as a disclaimer.

While it may seem strange that someone would choose to turn away inheritance money or life insurance proceeds, there are a few reasons for doing so. One of these reasons is avoiding creditors.

Do you have a lot of debt? Are creditors constantly calling? If so, you may worry that all of your inheritance money will go directly to paying off your debts. This is a very valid worry, because that is precisely what would happen if you accepted any kind of windfall while swimming in debt.

If you are attempting to disclaim your inheritance so that your creditors don’t have access to it, you may be hoping to divert that money to your children or other beneficiaries. Unfortunately, in New Jersey, it is illegal to use a disclaimer to get out of paying your creditors. If you choose to disclaim your inheritance under these circumstances, it is highly likely that your creditors will still be able to access the funds due to the Uniform Fraudulent Transfer Act.

Discussing your situation ahead of time with your loved one will give them a chance to protect the money that you are hoping to avoid giving directly over to your creditors. One way to do this is to set up a protective trust or to simply leave you out of the will altogether and instead name your children or other family members as beneficiaries. Your creditors have zero claims to any money that is inherited directly by your children.

Going to these lengths to avoid paying your creditors signals that you are significantly deep in debt. While we understand the desire to keep from handing a large windfall directly to creditors, we also must note that there are steps you should take to get out of debt, and the sooner, the better.

Your options for debt relief in New Jersey depend a lot on the specific details of your situation.

  • How much debt are you carrying in comparison to your income?
  • Are you living beyond your means?
  • What is your credit score?
  • Do you own a home that you wish to keep?
  • How many different kinds of debt are you carrying?

NJ debt negotiation and relief is available to you. Beyond refusing windfalls, disclaiming your inheritance and any other steps you’re taking to avoid paying your creditors, imagine if you didn’t have to worry about those creditors at all anymore. Ridding yourself of a large chunk (or potentially all) of your debt is very possible; your financial future can look anyway you want it to as long as you take the right steps, now.

 

 

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Fear of Death: The Newest American Epidemic

As medical advances began to rapidly increase several decades ago in the United States, the concept of death has become “optional” to a large percentage of Americans. Treatments, cures and therapies all have put a giant safety net under our lives; if one doctor can’t fix you, there is almost always one who is willing to try.

While progress in the medical field has allowed millions of people to live healthier, more fulfilling lives – the most notable change has been the rise in life expectancy rates. Over the past century, the average American has tacked on almost 20 years to their expected life span.

Americans who lived a century ago were not scared of death because of how common it was. Today’s Americans view medicine, science, diet and exercise as a cure for the problem of dying. Now that death has become something that typically occurs in old age, growing old feels like the ultimate failure to many. Denial of death has become the newest American epidemic.

Why is this a problem?

The intense fear of death in our country has put blinders on a large portion of the population, making it impossible to talk about or plan for the inevitable.

As the Baby Boomer generation now edges into old age, many of them are “fighting” growing old with facelifts, hair transplants, fillers, implants and a staunchly oblivious attitude toward their chronological age.

Denial of the eventuality of death has led to a stifled community who cannot even think about dying without breaking into a cold sweat. What this means is that no one wants to talk about their own mortality, or that of their parents (who may be Baby Boomers).

Depending on your own spiritual/religious/personal beliefs, you may not agree that death is something to fear. There are groups of Americans who welcome death as a part of life – a passage into a new beginning.

However, statistics show that most Americans are of the mindset that death is something that can be avoided. Many people in this group simply refuse to plan for their own demise, which leaves a whole new set of problems for those who are left behind.

Overcoming your fear of dying is imperative in that you simply must make plans for your children, your assets, your funeral – even your organs. Prior to dying, you may become ill or unable to care for yourself. Without an Advance Care Directive, no one will know your wishes in such a scenario.

Talking to a therapist about your fear of dying can be immensely helpful. You can learn how to make your life matter so that you develop an acceptance of your mortality. These are important steps for your own mental health, and they will allow you to make decisions about the end of your life – decisions that no one should make but you.

Start here. We’ll help gently guide you through setting up a proper estate plan.

 

Image: “No Fear” by Thomas Leuthard – licensed under CC 2.0

Can I Disinherit My Child in My NJ Will?

In New Jersey, as in most other states, a parent is permitted to legally disinherit a child, provided this intention is clearly stated in a valid will. What follows are the steps you must take to ensure that your wishes are fulfilled with regards to your estate, as well as a few caveats you should be aware of.
In New Jersey, if a person dies without having created a will, any property not disposed of in life will be governed by intestate succession rules. These rules are laid out in N.J.S.3B:5-3 through N.J.S.3B:5-14.

Can I choose to simply leave my child out of my will?
Though it might seem to be the most tactful way to handle this delicate matter, you must clearly state that you wish to disinherit your child in a valid will. Otherwise, the child will be protected by Section 3B:5-16 of New Jersey’s statutes, which protects children from accidentally being left out of a parent’s will.

Include a clause that mentions your child by their full name; this will attest to your having been of a sound mind when the will was drafted. You may keep it simple, saying only, “I have intentionally made no provision for my youngest child, John Doe.”

Do I have to state the reason I wish to disinherit my child?

The reason for disinheritance does not need to be included in your will, though whether or not to do so depends on the circumstances. If no ill will is intended, and there is no acrimony in the parent-child relationship, it is probably advisable to include a clause saying so. “I have adequately provided for my beloved son, John Doe, throughout his life; he is now a successful, independent man. I have therefore made no provision for him.”
There may, however, be good reason to remain silent on the cause for disinheritance. If including the motivation could give the child ammunition for challenging the will, or questioning your state of mind, it would be prudent to refrain from doing so. For similar reasons, it is advised that parents do not speak harshly of their child in a will. The disinheritance is most likely an adequately sharp gesture; there is no need to further attack the child after you have passed away.

Keep in mind that a disinherited child will likely attempt to contest the will. However, if you’ve followed the advice laid out here, your assets will be protected.
The Takeaway:

Here are the steps you must follow to protect your assets:

1. You must create a legally binding will.

2. Update this will any time there is a change in the family: birth, marriage, adoption, or death.

3. Clearly state your intention to disinherit your child in your NJ will, and use your child’s full name when you do so.

4. Include the reason if it will help your child feel more positively about the omission, but exclude it if it will give a hostile child more ammunition to contest your will.
Image: “footsteps” by Catrin Austin – licensed under CC 2.0

Multi-Generational Living Arrangements & Home Ownership Rights

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Today’s modern families are ever-shifting in a multitude of directions, some of which were made possible by the evolution of our nation’s legal system. Still other present-day families form when an adult “child” returns to live at home after attending college, job loss, divorce, or simply by choice. Additionally, many older parents live with a daughter or son and their family in order to cut costs and to share child-rearing duties of the next generation.

Regardless of the reason, the changing structure of the typical American family can raise some questions about ownership of the family home. When other adults outside of the original home owner live together, what are their rights if that homeowner passes away?

Example: Single mom Nicole and her mother decide the best course of action after Nicole’s divorce is for the two of them to move in together. Nicole’s husband kept the marital home, so Nicole and her two children move into her mother’s more-than-ample house. As Nicole’s father passed away several years ago, this decision will allow companionship for Nicole’s mother, and will relieve the financial burden on both women.

Something important for Nicole and her mother to think about is what will happen to the home when Nicole’s mom passes away? Assuming the current living situation continues until such a time, what will Nicole’s rights be?

In New Jersey, Nicole and her mother can modify the home mortgage paperwork to include special language that will protect Nicole and her children from losing the home upon the death of her mom. The deed to the home must say that Nicole and her mother are joint tenants with right of survivorship.

Joint tenancy means that both parties named own the property equally, and upon the death of one of them, the deed to the home will automatically transfer to the other, superseding anything that is stated in the decedent’s will.

If Nicole’s mother had previously created a will indicating that upon her death, her home should be divided equally between all three of her children (Nicole and her two siblings), as long as the proper language was added onto the title documentation, Nicole should have no problem being granted full ownership of the home.

While in theory this is a relatively simple concept, it must be handled with the utmost seriousness and attention to detail.  As has happened in the past, if the joint tenancy language is not used precisely as required, legal disputes can and likely will arise.

Do you have questions about your rights to real property that you shared with another family member or unrelated roommate who has now passed away? If you were not joint tenants, you may still have some recourse, but you will have to act swiftly and with the aid of a very experienced NJ estate planning/real estate attorney.

If you’re currently in a situation like Nicole’s, be proactive and make sure that your living arrangements are solidified for the future by taking title of the home in joint tenancy.

Image credit: Bryan Anthony

Does my NJ Will Have to be Notarized?

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The laws surrounding estate planning differ from state to state regarding the signing of your will, how many witnesses must be present, and what conditions make your will complete and valid. It’s true that anyone can print up their own will – or hand write one if they prefer, but it must be in some written form to be legal. There are several qualifications a testator (person creating his or her will) must fulfill in order to execute their will without the help of an estate planning attorney:

  • 18+ years of age: In the State of New Jersey, you must be at least 18 years old in order to write your own Last Will and Testament.
  • Of sound mind: To be of sound mind means that you are able to reason and understand things on your own. You may have been found to be legally incompetent in a court of law if you’ve suffered a brain injury or other mental disability .  If you have been found to be incompetent, you likely have a guardian who was appointed by the court. That guardian can help you draft your will.
  • Two or more adult witnesses: NJ law requires that all wills be signed by the testator in front of at least two witnesses who are both 18+ years of age and are of sound mind. Your witnesses validate your will by agreeing that you are who you claim to be and that your signature is authentic. If a disability prevents you from signing your name to your will, you can authorize someone else to sign for you. This act must also be affirmed by your witnesses.
  • Signed by witnesses: Along with attesting your own signature on your will, the witnesses will also need to sign their names as official acknowledgement of your signature and their presence when you signed.

Does my New Jersey will have to be notarized?

Legally, you are not required to have your NJ will signed by a notary as long as you have met the above listed requirements. However, if you want to make the probate process significantly easier on your loved ones after you pass away, you’ll definitely want to have your will notarized. Your witnesses need to be with you when the will is notarized so that the public notary can attest to their identity.

Wills signed by a notary are considered to be ‘self-proving’ in New Jersey. A self-proving will is one that will move quickly through the probate system after the testator has passed away.

When a decedent has failed to have their will notarized, it means a whole lot of a headaches for their beneficiaries at a time when they are already undoubtedly grief-stricken and overwhelmed.

Additionally, self-made wills often have problems or omissions that lead to intense family disagreements, fighting and potential irreparable damage.

What can I do to ensure that my will is without fault, errors or omissions?

Naturally, you want to save your family members from any strife related to your will after you pass. The best and most cost-effective way to do that is to work with an estate planning attorney. Even if you are reading this page to find out how to execute your will without professional help – we’ll still tell you that your best bet, in this case, is working with an experienced NJ estate planning lawyer.

The cost of having your New Jersey will drawn up by an estate planning attorney is very affordable, especially compared to the exorbitant fees your heirs will end up paying after the fact to fix any mistakes you may make if you go the DIY route. Consultations are FREE at most estate planning firms. Take the time and invest in execute your will with a professional’s assistance. Your surviving heirs will be so thankful that you did.

Image credit: Dan Moyle

Keeping the Peace When Estate Conflicts Arise

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If you have been named Executor in one or both of your parents’ will(s), there are probably a multitude of reasons why you were selected for the duty. Undoubtedly, your parents (and likely the rest of your family) recognized that you possess certain personality traits that make you an ideal candidate for the job. Most people name executors who exhibit the following qualities:

Honesty
Resourcefulness
Book smarts
Responsibility
Reliability
Solid organizational skills
Confidence
Control
Ability to be impartial
Fairness
Authenticity
Loyalty
Safety
Trustworthiness
Sound-mindedness

Naturally, when establishing an estate plan, every decision is taken very seriously, especially when it comes to appointing the executor. If conflicts arise after their passing, the decedent can rest peacefully knowing that you were left in charge of their estate.

Unfortunately, there are entirely too many cases that make their way through the NJ probate system wherein at least one of the beneficiaries (heirs) is unhappy with all or part of the details of the will. This understandably can lead to irreparable damage within a family. Because you are the chosen executor, you must now live up to your reputation that got you the job.

As negotiation may be one of your natural instincts, you may make attempts to reason with the disagreeable beneficiary, hoping that they will come to their senses. However, as these issues tend to date back to unresolved feelings of “favoritism” or other familial conflict, it can often be next to impossible to talk sense into your sibling, especially when emotions are already running high so soon after the death of a parent.

Your best plan of action as estate executor is to follow your legal duties to the letter of the law. Become as familiar as possible with what is expected of you as executor. If your parent worked with an estate planning attorney when they established their will, get in touch with that attorney and bring him up to speed on the current difficulties you are facing.

Even if your parent(s) didn’t work directly with a New Jersey estate planning lawyer, it’s a good idea to reach out to one early in the probate process if it looks like you’ll be dealing with ongoing conflict from one or more of the heirs. As executor, you’ll be able to use funds from the estate to pay the legal fees you incur on behalf of the estate (assuming that the decedent possessed sufficient funds/assets when they passed away.) Even if you don’t retain the services of an attorney immediately, it’s in your best interest to bring your attorney up to speed in case you need to retain him later on in the probate process.

The best way to approach an estate conflict as executor is to be kind but firm to the beneficiary who is being difficult. Resist bending any rules and instead remind them about the laws and timelines that surround the distribution of any assets.

By sticking strictly to your duties as estate executor, you will fulfill the duty that you were so chosen for. It is extremely difficult to satisfy someone who feels they’ve been “wronged” by a decedent, as the deceased is no longer around to explain him or herself. If someone is unhappy with the content of the will, they may take issue with your every move. Stay within the law, and refer to your attorney for help if the disgruntled beneficiary becomes more than you can handle.

Image credit: Hans Vandenberg

NJ Wills: What is Probate?

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Most people go to great lengths to avoid even thinking about their own mortality and that of their closest loved ones. Admittedly, processing the fact that you or someone very near and dear to you will inevitably pass away can be overwhelming and sad.

Our best advice to those who are struggling with the concept of dying is to face it matter-of-factly. Being prepared for all of the details surrounding someone’s passing certainly won’t make it any easier in terms of missing them, but it will put your mind at ease regarding their estate.

What is an estate?

After someone dies, their estate consists of any and all assets (property of value) that they owned. Assets include things like real estate, vehicles, personal items, life insurance proceeds (in some cases) and money. If the deceased person owed any debts, the money in their estate will be used to pay these debts before anything can be dispersed to beneficiaries.

How do I start the process of sorting through my loved one’s estate?

If you were named as the executor of an estate that has assets, you’ll need to visit the surrogate court in the New Jersey county in which the decedent lived. This will start the NJ legal process known as probate, and it can be initiated 10 days after someone passes away.

What happens in probate?

In New Jersey, probate is necessary only if the deceased had assets in his or her name only. Official appointment of the executor will occur in probate court with the production of the will and death certificate.

If there was no will, an administrator will be assigned to the estate in probate court. As long as there are no protests of the will, surrogate court will then give full authority to either the estate executor or administrator. You can find a full list of the executor’s duties here.

Does an estate executor get paid?

In New Jersey, estate executors or administrators can be paid for their duties, which can, in certain cases, be quite time consuming. The amount they can receive is limited to 6% of any income to the estate, plus 5% of the total gross value of the estate.*

How long does it take to probate a will?

The length of time it will take for anyone’s estate to move through the probate process is dependent on how large and complicated the estate may be. On average, moderately sized estates typically make it through to the end of NJ probate within a year. More extensive and complex estates can languish in probate for up to a decade.

For more information about New Jersey probate laws call or contact our office today. In addition, take this time to make an appointment with us to draft your own estate plan.

Image credit: Bosc d’Anjou

How is a Spendthrift Trust Affected by Bankruptcy in NJ?

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If someone close to you has passed away and made you the beneficiary of a spendthrift trust, you may be wondering exactly what this means. First and foremost: your loved one cared enough to think about and plan for your financial future after they were gone.

A spendthrift trust is typically left to a beneficiary who is dealing with one or more of the following:

  • Past or present financial difficulties
  • Addiction(s) that may lead to irresponsible spending
  • Significant debt(s) that may entitle creditors to the beneficiary’s assets

Spendthrift trusts are set up with a trustee in place. The trustee is in charge of distributing funds from the spendthrift trust to the beneficiary on a set schedule. This type of spendthrift trust acts as a form of income for the beneficiary, and prevents them from wasteful spending behaviors that may occur if they were to be granted the full amount in one lump sum.

Sometimes spendthrift trusts are set up so that the trustee does not distribute any money to the beneficiary. Instead the trustee will be directed to provide the beneficiary with goods and services that are paid for by the spendthrift trust. This type of situation is called for when the beneficiary is extremely irresponsible with money. The trustee typically uses the trust money to purchase groceries, clothing, and other monthly living expenses encountered by the beneficiary.

I want to file for bankruptcy. Will my creditors take my spendthrift trust money?

As we’ve talked about before, New Jersey bankruptcy law states that if a debtor files for bankruptcy in NJ, they are subject to a 180 day “look back” period with regard to inheritance money, life insurance funds and a number of legal settlements.

The 180 day look back period was instated to reduce abuse of the bankruptcy system. Essentially, if a loved one dies within 180 days of when you filed for bankruptcy, your creditors are technically allowed to take any financial windfall you may experience as payment on your defaulted debts.

A spendthrift trust does not allow even the beneficiary to have direct access to the funds, let alone the beneficiary’s creditors. Only the trustee has access to the money while it is in the spendthrift trust. However, once the trustee disperses any of the funds to the beneficiary, those funds become subject to creditors’ claims if the bankruptcy has been filed within the 180 day look back period.

Language can be inserted into anyone’s estate plan to prevent creditors from getting any of the spendthrift money. This will, of course, require you to engage in a difficult and uncomfortable conversation with the person whose will in which you are named as a beneficiary.

The language used must specifically state that if you (the beneficiary) file for bankruptcy during the 180 day look back period, that you are not entitled to any money in the spendthrift trust until 181 days after the date of death.

If you or a loved one need help setting up a spendthrift clause in your estate planning paperwork, seek assistance from a New Jersey estate planning attorney to ensure that the correct language is used. Estate planning is a significant life event that must be taken seriously as it can have a powerful effect on the lives of the beneficiaries.

 

Image credit: Terry Johnston

What are Creditors Entitled to After my Bankruptcy Discharge?

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You received your bankruptcy discharge – congratulations on a fresh financial start! Ridding yourself of the debts that were weighing you down can be extremely liberating and is cause for a gigantic sigh of relief.

After your debts are discharged,  there are still certain protocols to follow so that you don’t make an expensive mistake. These rules were created to prevent bankruptcy fraud. For example, a debtor cannot give someone a large sum of money that they will then retrieve after the case is over. The reason for this would be to hide money from the trustee so that it cannot be used to pay creditors. That is a blatant example of bankruptcy fraud, and any debtor who attempts to outsmart the bankruptcy court in this manner has little chance of “getting away with it.” Punishment for bankruptcy fraud is harsh.

There are certainly situations that arise naturally, are totally unplanned, and involve a (former) debtor legally coming into money after their bankruptcy has been discharged. In this case, there are some time limits set to further prevent foul play:

  • Inheritance – If someone close to you passes away within 180 days of the date on your bankruptcy petition, you are obligated to alert the bankruptcy court and that money will then go to your creditors. This rule was instated to prevent people from filing for bankruptcy when they knew someone close to them was on their death bed. By filing for bankruptcy before their death, the inheritance money would be protected and the debtor would have essentially scammed the system. Creepy and illegal.
  • Insurance proceeds – The same rules apply to life insurance proceeds that you become entitled to within 180 days of filing for bankruptcy. It is imperative that you keep careful track of the specific dates of important events surrounding your case. The important date in this case is when your family member or loved one passed away and you became entitled to any life insurance proceeds. If the date of death is within 180 days of the date that you filed for bankruptcy, the life insurance money will go to paying off your debts.
  • Lawsuit settlements – All of your legal claims and lawsuits pending must be listed in your bankruptcy paperwork. If you receive a payout from a lawsuit you initiated before you filed for bankruptcy, that money will generally become part of your bankruptcy estate and will go towards paying your creditors. In New Jersey bankruptcy cases, you can choose to follow either NJ or federal exemption guidelines. NJ exemptions allow you to keep $1000 of any money received via lawsuit. Federal exemptions regarding lawsuit settlements during bankruptcy can be found here.
  • Divorce settlements – While child and marital support obligations will not be affected by a bankruptcy (filed by either spouse), part or all of the marital property settlement, if established within the 180 days following the initial bankruptcy petition, may be liquidated and used to pay your (or your spouse’s) creditors. Your divorce lawyer should discuss the specifics of this with your bankruptcy attorney to ensure that you and your ex-spouse are able to keep as much of your marital assets as possible.

Always consult with your bankruptcy lawyer if you have any questions about the rules following your bankruptcy discharge to ensure that you make wise decisions that won’t end up costing you a significant amount of money.

Image credit: Investment Total

 

Estate Planning Basics: What You Need to Know to Get Started

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The term ‘estate planning‘ can make preparing your will sound a lot more daunting than the process really is. In fact, some of our clients come to us without understanding that your estate is simply everything you own. So, estate planning is essentially just making plans for what will happen to your real estate property, personal items, investments, life insurance policies and anything else you own after you pass away.

The process of setting up your estate plan is commonly referred to as ‘writing your will.’ Along with the fact that not very many people enjoy thinking about and planning for their own death, the process in itself can seem like it might be complicated.

The good news is that the reality of estate planning is quite simple for most people. At Veitengruber Law, we like to start getting to know our estate planning clients by having them fill out a questionnaire. Ideally, clients will return the questionnaire to us before their consultation so that we have time to get a feel for your overall financial details. Alternatively, you can bring the (completed) questionnaire along with you to your first appointment.

We will help you to determine which of the following documents that are appropriate for your needs:

Last Will and Testament – Also referred to as your ‘will,’ this document’s purpose is to let all of your survivors know how you want your property to be divided after your death. You’ll need to name someone to carry out your wishes (an executor) and you will have to decide who should get what. One of the tougher decisions to be made in your will involves custody of your children (if applicable).

Durable Power of Attorney – Another extremely important facet of your estate plan, your Durable Power of Attorney names someone to make decisions for you regarding your finances if you become unable to make sound decisions for yourself. This document will name someone as your ‘agent’ in case you become ill and/or incapacitated. Your agent is automatically your spouse if you are married. If you aren’t married, you definitely need a Durable Power of Attorney to ensure that your finances will be responsibly managed if you become unable to make smart decisions for yourself. This document expires when you do, so your agent will not make any decisions after your death unless s/he is also your executor.

Living Will – This document will set out any specific health care directives that you wish to be followed if a time comes when you are not able to communicate your wishes verbally. Some things included in your living will are:

  • What (if any) life extending procedures do you wish to be carried out?
  • Do you want to be resuscitated or would you like doctors to follow a DNR protocol (Do Not Resuscitate)?
  • Are there certain situations in which you would want doctors to stop life saving treatments?
  • Would you want to be tube fed or be placed on a ventilator? For how long?
  • Do you want to donate any or all of your organs for donation or scientific study?

Along with the above documents, we will also talk to you about your life insurance coverage, especially if you have a family who is dependent on you. Call us today or fill out our quick info form to get your estate plan started.

 

Image credit: Mark Moz