Summer 2009 Probate & Elder Law Newsletter

NJ Probate & Elder Law Newsletter Summer 2009 In this issue: 1. Suspicious circumstances could void Will and require under influence neighbors to pay attorney fees 2. Federal Estate and Gift Tax exemption increases in 2009 3. New Jersey Estate Tax Return still required on Estates over $675,000.

4. NJ Inheritance tax forms revised 5. Power of Attorney and Living Wills­ Provide copies to agent & family 6. NUTS & BOLTS OF ELDER LAW & ESTATE ADMINISTRATION SEMINAR 500+ page Book and audio CD on Elder Law and Estate Administration now available 1. Suspicious circumstances could void Will and require under influence neighbors to pay attorney fees When there is a confidential relationship coupled with suspicious circumstances, undue influence is presumed and the burden of proof shifts to the Will proponent to overcome the presumption.

If there is undue influence in making of Will and transfer of Deed by persons in Confidential relationship, this could subject those persons to punitive damages in some instances, plus voiding of the Will. In the Matter of the Estate of Madeleine Stockdale, Deceased 192 NJ 518 (2008)

The NJ Supreme Court held in the landmark Stockdale case: Actions arising from disputed Wills and related documents designed to dispose of estate assets and which rest on allegations of undue influence are most often resolved through the equitable remedies available in the Probate Part. Although a finding that a party in an estate has engaged in undue influence may also, consistent with common­law notions of making an injured party whole and deterring particularly egregious behavior, support an award of punitive damages, the circumstances in

1

which a punitive damage award is permitted is limited.

1. In a probate matter, the burden of proving undue influence ordinarily is on the Will contestant. However, when there is a confidential relationship coupled with suspicious circumstances, undue influence is presumed and the burden of proof shifts to the Will proponent to overcome the presumption. If there is a conflict of interest on the part of an attorney coupled with confidential relationships between testator and the beneficiary as well as the attorney, the presumption must be rebutted by clear and convincing evidence rather than a preponderance of the evidence. An attorney­client relationship is inherently a confidential relationship and because suspicious circumstances need only be slight, the existence of that relationship often results in both the shifting of the burden and the imposition of a clear and convincing standard of proof.

2. In probate matters, a tort­based claim can only arise if someone has acted so as to deplete or reduce the estate of its assets. In probate proceeding, there is generally neither compensatory damage­type award nor, by extension, the underpinnings needed for imposition of a punitive award.

Attorneys fees could be awarded in limited circumstances if tort of undue influence 3. In the Niles, the Supreme Court emphasized New Jersey's strong public policy against shifting counsel fees from one party to another. A narrow exception exists for circumstances in which the executor or trustee commits the tort of undue influence that would enable the estate to be made whole by an assessment of all reasonable counsel fees against the fiduciary that were incurred by the estate. There is also the possibility of a punitive damage award arising from the "pernicious tort of undue influence." However, the availability of that remedy is limited to those situations in which ordinary remedies for breach of fiduciary duty will not lie or will be inadequate.

The remedy is limited to situations were one who is essentially a stranger to the testator gains access to her through undue influence and then carries out a scheme to

2

place himself into a position to seize control of that testator's assets through inter vivos transfer or by bequest. Any punitive damage award arising in the Probate Part must be in compliance with the Punitive Damages Act. This remedy will be infrequent, limited to circumstances in which the actor is not entitled to take from the estate by inheritance or through commissions, and thus an accounting and a surcharge remedy will be inadequate to restore the estate to its proper balance.

2. Federal Estate and Gift Tax exemption increases in 2009

The amount to leave without Federal Estate Tax is increased to 3,500,000 for 2009.

2009 $ 3,500,000 tax 45% 2010 No estate tax if person dies in 2010 only, but 35% (gift taxes only) [2010 is best year for your rich uncle to pass away] 2011 $1,000,000 tax 55% 2012 ­??? Waiting for Congress to decide Gifts permitted without Federal Estate & Gift tax was increased to $12,000. The amount permitted for Medicaid transfers is zero.

3. New Jersey Estate Tax Return still required on Estates over $675,000.

New Jersey law requires that a copy of the Federal estate tax return be filed with the NJ Inheritance Tax Branch within 30 days after the filing of the original with the Federal government. Also, the Branch must receive a copy of any communication from the Federal government making any final change in the return, or confirming, increasing or reducing the tax shown to be due.

New Jersey has an Estate Tax on amounts over $675,000. So, even if no Federal Estate Tax due, the estate must still file a Federal Estate Tax Return, plus NJ Estate Tax Return.

3

4. NJ Inheritance tax forms revised The NJ Inheritance Tax Return instructions were revised in 2008. The L­9 Resident Decedent Affidavit Requesting Real Property Tax Waiver Form was revised in 2007. Throw out your old forms. Even if no inheritance tax due, a Tax Waiver on a house must be obtained and filed if the house was not co­owned by the spouse.

5. Power of Attorney and Living Wills­ Provide copies to agent & family Do not use a form purchased online, unless it contains reference to the NJ statute requiring banks to honor the Power of Attorney. Section 2 of P.L. 1991, c. 95 (c. 46:2B­11). After you sign the Power of Attorney in the attorney’s office, give the original to your agent, or advise your agent where the original is located.

After you sign the Living Will in your attorney’s office, provide a copy to your doctor and family.

6. NUTS & BOLTS OF ELDER LAW & ESTATE ADMINISTRATION SEMINAR 500+ page Book and audio CD on Elder Law and Estate Administration now available Elder law continues to offer elder law professionals a booming opportunity for growth. As your current clients continue to grow older, you need to position yourself to be able to offer them and their families the legal services required by the elderly in today’s society. Or, you may be looking for lucrative areas in which to expand your current practice, including administering their estates.

ELDER LAW & ESTATE ADMINISTRATION BOOK AND AUDIO FOR SALE

Book elder law & estate administration including: • Why Have a Will? Gathering information; standard provisions; designation of fiduciaries; protective clauses; sample forms; Ethics ­ who is the client?

• Powers of Attorney Types of POAs; what should be included; why clients need them; POAs and Living Wills; sample forms • Living Trusts (Revocable/Irrevocable) as an Estate Planning Tool Why it should be used; disadvantages; revocable vs. irrevocable; Insurance Trusts; sample forms

4

• Basic Tax Considerations Jointly­held property; “I love you” Will; no Will at all; insurance owned by clie unlimited marital deduction; estate planning in the testamentary document; sample forms/letters • Estate Administration ­ New Probate Law in New Jersey Probate process; duties of executor/fiducia gathering of assets; tax returns; tax waivers; access to property; sample forms/checklists • Medicaid Planning in Light of Federal Medicaid Reform Countable assets of Medicaid applica income cap/Medical needy standard; look­back period; transfers of property; personal residence; Medicaid est recovery rules …and more

This practical program is designed to provide the nuts and bolts of elder law practice & estate administrat practice to general practitioners and young lawyers, as well as to more experienced estate planners a professionals who help senior citizens. You’ll also gain insight on how Federal Medicaid Reform will impact senio Speakers: THOMAS D. BEGL EY, JR., ESQ.,

KENNETH A. VERCAMMEN, ESQ. Chair, ABA Estate Planning & Probate Law Committee 2006 NJSBA Municipal Court Practitioner of the Year

KATHLEEN A. SHERIDAN, ESQ.

MARTIN A. SPIGNER, ESQ.

Handbook 45.00 [$36 NJSBA Member Price] pages ] Item M57809 Handbook with Audio CD $189

[$149 NJSBA Member Price Item CDP57809

*NJSBA Member Price – To qualify for this reduced price, you must provide your NJSBA Member# at the time yo place your order Contact: New Jersey Institute for Continuing Legal Education (732)214­8500

Contact a Probate Attorney for an in office consultation KENNETH VERCAMMEN & ASSOCIATES, PC ATTORNEY AT LAW 2053 Woodbridge Ave.

5

Edison, NJ 08817 (Phone) 732­572­0500 (Fax) 732­572­0030 More information at www.CentralJerseyElderLaw.com

6