For SSI Recipients, Does Inheritance Spell Disaster?

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What is SSI?

SSI stands for Supplemental Security Income, and it is a financial assistance program offered by the US government to low-income United States citizens who are blind, over the age of 65, or otherwise disabled. SSI benefits are available to children who are blind or disabled, as well.

SSI is not to be confused with SSDI (Social Security Disability Insurance), which is available to people who have been working for a significant number of years and have paid “their dues,” so to speak, in the form of Social Security taxes that are deducted from an employee’s paycheck. SSDI can be received by anyone who becomes disabled and is no longer able to work, regardless of their current assets. In comparison, SSI funds are provided by the US Treasury, and recipients must have limited incomes and assets along with specific disabilities.

Can an inheritance affect Supplemental Security Income?

If a family member or loved one bequeaths money to you when they pass away, it’s important to know the possible ramifications so that your financial stability remains intact. Receiving an inheritance does not affect SSDI, as it is based on your earnings as an employee in this country. SSI, however, is distributed on a needs-based system, and because of this, anyone who receives an inheritance can become ineligible for SSI benefits.

Those receiving SSI must be intimately familiar with the strict rules that surround Supplemental Security Income so they don’t risk losing their benefits, which not only provides them with much needed financial assistance, but may also provide them with health care coverage through Medicaid.

Although an inheritance is usually viewed as a positive financial windfall, if it causes you to lose your only steady income and health care coverage, it can definitely spell disaster.

Should all SSI recipients refuse an inheritance in order to avoid losing their benefits?

It would seem unfair to exclude SSI recipients from accepting any inheritance money. After all, people who receive Supplemental Security Income are by definition financially distressed and living with a disability.

In order to help SSI beneficiaries from losing their benefits in order to accept the financial windfall of an inheritance, a Special Needs Trust can be established.

What is a Special Needs Trust?

A Special Needs Trust allows a person with disabilities or special needs to accept their rightful inheritance without jeopardizing their government benefits. Typically, parents or caregivers of a disabled person will create a Special Needs Trust when they are establishing their estate plan (will), although one can also be set up after a person dies.

Instead of inheriting their portion of their parent’s money directly, a person with a Special Needs Trust in place will have a trustee to manage the trust for them. In this way, no (or limited) SSI benefits will be lost due to accepting the money that was left to them.

Special Needs Trusts are complex and have many intricate timing details that must be followed to the letter for them to work as they were intended. Also, each family’s financial situation will determine the type of Special Needs Trust that will best meet their needs.

In order to ensure that your special needs loved one receives their rightful portion of their inheritance, you must work closely with an estate planning attorney who is familiar with all of the details surrounding Special Needs Trusts.

 

Image credit: Chris Dlugosz

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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.

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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.

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Can an Executor Make Changes to a Will?

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If someone close to you has recently passed away, you may be a beneficiary if they’ve left a will behind. Also more formally called a last will and testament or an estate plan, a “will” generally refers to a group of documents that detail the deceased person’s final wishes regarding their assets.

A beneficiary is a person who is to be a recipient of some or all of the decedent’s assets, whether in the form of money or property. You will be notified by the executor or executrix (female executor) of the estate if you have been named in the will. The estate executor is appointed by the testator upon creation of their will.

An estate executor is typically someone close to the testator who exhibits solid organizational skills and an ability to file paperwork correctly and on time. An executor should be responsible, level-headed and someone with a good work ethic. It is often the executor’s duty to sift through a lifetime of memorabilia and other personal effects, so testators are advised to select an executor who is relatively young and in good health.

As they will be in charge of all of the money, property and other assets that are part of the estate (anything owned by the deceased at their time of death), executors should possess enough common sense to fulfill their duties. It’s not necessary for executors to have a financial background as long as they’re honest and not afraid to ask for professional help if they need it.

Can the executor make changes to a will to make all of the beneficiaries happy?

This question sometimes arises when dealing with testamentary wills. When the testator passes away and the beneficiaries learn the details of the will, they may discover that everything is not as evenly distributed as they would like.

Example 1: A decedent with two adult children named her son executor of her estate. Although the assets were to be split relatively evenly, a provision required that the executor set up a testamentary trust for the daughter of the decedent. The daughter, upset at the terms of the trust, wished to receive her inheritance in cash. Can her brother, as executor, ignore their mother’s wishes to make his sister happy?

Example 2: A grandmother passed away leaving four grandchildren as beneficiaries. For reasons unknown, she left 70% of her money to one grandchild. Only 10% was to be split between the remaining three grandchildren.

The executor in the second example was also a family member and a beneficiary, but not a grandchild. In the interest of family harmony, can the executor make changes to the will so that each grandchild receives the same amount of money?

Answers: An executor must carry out the terms of the will – that is the point of naming an executor in the first place. To allow executors the ability to make changes would cause estate planning to be pointless. In all but a few (extremely rare) instances, testamentary wills are irrevocable, which means they may not be changed. This is especially true when the testator specified that a trust be set up for one or more of the beneficiaries.

In the situation presented in example 2 above, although the executor is still required to abide by the terms of the will, it is possible to keep peace in the family on the beneficiaries’ end. Because any beneficiary can refuse all or part of their inheritance, the grandchild who was left 70% of the decedent’s money can choose not to accept the full 70%.

When a beneficiary disclaims (refuses) all or part of what was left to them, the beneficiaries next in line will receive it. Another way of maintaining family harmony involves the 70% beneficiary claiming their inheritance and then sharing it (after the fact) with the remaining beneficiaries.

Have you chosen your executor and beneficiaries? Set up your estate plan now with Veitengruber Law.

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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

Can I Write My Own Will or Should I Hire an Attorney?

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Just the thought of preparing your last will and testament (also known simply as your “will” or your “estate plan”) is enough to put some people on edge. That reaction is completely understandable given the nature of the information contained in said documents. Being uncomfortable, however, is not reason enough to avoid doing something so important.

A question on this topic that many people ask themselves is, “Can I write my own will or do I need an attorney’s help?” The best answer to this question is that it depends on your specific situation.

Legally binding wills can be drafted without an attorney’s help by using estate planning software to walk you through the process. You may be able to go the DIY route, but only if you need a basic, simple will, you don’t have a lot of assets and you have a small, uncomplicated family.

Anything beyond the most basic wills are best handled by a qualified estate planning professional. Too many people have made seemingly small blunders on their estate planning paperwork, costing surviving family members a significant amount of money, stress and angst.

If you have young children (and/or a complicated family), own your own business (especially if you are a co-owner), have a significant amount of investments, assets, debts or if you think there’s a strong possibility that someone may contest your will, you’ll be better off working with an attorney to come up with the will that works for you and all of your unique life circumstances.

With your estate planning attorney, you’ll work in tandem to create not only a will but a number of other important documents like a living will and a health care directive. Having an experienced professional to guide you will ensure that you avoid making mistakes that would likely end up causing a gigantic amount of trouble for your loved ones after you’ve passed away.

It can be easy to put off setting up your estate planning paperwork because, after all, it doesn’t affect you directly. You must take into consideration the aftermath you’ll leave behind if you die without a will in New Jersey. Your family members will not have the proper time to adequately grieve your passing if they have to spend all of their time figuring out what to do with your assets.

Don’t leave a bunch of questions for your family and friends to puzzle over. If you haven’t done so yet, make a promise to yourself to write down your last wishes as soon as possible. Take that list with you to your NJ attorney meeting. After your estate plan has been completed, you’ll feel a weight lifted off your shoulders – even if you never realized the weight was there.

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When Should I Make Changes to my Will?

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We understand just how uncomfortable it can be to give much thought to your own mortality. Sometimes, however, it’s necessary to put your discomfort aside in order to do the right thing, which, in this case, is setting up an Estate Plan.

Otherwise referred to as a “will” or Last Will & Testament, having an Estate Plan in place means that your loved ones will have the guidance they need after your passing in order to make decisions on your behalf. Keeping your Estate Plan updated means that you may be able to keep your dearest family members and friends out of major disagreements that can be extremely harmful during the mourning period.

Assuming that you already have a will in place, many people wonder if and when it is necessary to make changes to their Estate Plan. After all, our world is an ever-changing place, and naturally, so are our lives. What we set into place five years ago may be obsolete today.

Consider making formal changes to your New Jersey Estate Plan if:

  • Your love life blossoms – Whether you get married or enter into a long-term committed relationship, it’s important to add your significant other to your will, because without doing so, your legal partner has a right to half of your property and a partner that is not legally recognized will get nothing. If you object to either of those situations, you need to put it in writing.

 

  • A marriage ends in divorce – Although most states automatically revoke any property rights from a former spouse as soon as a divorce is finalized, some states do not. It’s important to check. Also, it’s entirely possible that you may still want to include your ex-spouse in your will, especially if you have children together. If that’s the case, you may have to “write them back in.” You may also need to make changes if someone named in your will gets divorced – for example if your daughter divorces her husband, you may no longer want him to be named in your will.

 

  • You hear the pitter patter of little feet – Whether you give birth to, adopt, or gain step-children by marriage, you’ll want to ensure they are cared for in the event of your passing. Children are automatically given certain rights to some of your property, so if you want to be specific about who will receive what, be sure to put that in your Estate Plan. Also note that step-children are not automatically entitled to inherit anything from you, but most step-parents do want to include them.

 

  • You have a change of heart – Let’s face it – things happen in life, and that’s putting it mildly. Oftentimes, people change their mind about who they’d like to leave part or all of their property to – due to special or unforeseen circumstances not listed above. The important thing is making sure it’s in writing, because otherwise, you’ll be shaking your fist from beyond.

 

But How Do I Change My Will?

You can make changes to your will by speaking to an attorney who specializes in NJ Estate Planning. He will help you modify your paperwork by adding a codicil or by writing a completely new Estate Plan. A codicil is an amendment or a “PS” to an Estate Plan document that overwrites part of your will or adds new provisions. If you decide to add a codicil, it must be signed and legally witnessed exactly as your original Estate Plan was in order to be legal. Today, it is usually much easier to create a completely new Estate Plan, stating in which that you revoke all past wills and codicils. This helps to avoid any confusion regarding which papers are most current and accurate at the time that they become necessary.

Image credit: Walter