Issues to consider before gifting your home to your child

Gifting your house to your children before your death offers several advantages, however there are issue to avoid.Issues-to-consider-before-giftin-your-home-to-your-child

Shall your children inherit the property through your estate, the cost basis on the property will be the value of the home on the day of your death. However, if you gift the children the property while you are still alive, they will inherit your cost basis, including potentially large capital gains if they decide to sell the home at a later date.

You should still consider removing the property from your estate to help you better qualify for assistance with long-term-care costs. However, be aware that you are subject to a five-year look-back on assets. That means that when you apply for Medicaid, gifts or transfers of assets you make within five years of the date of the application for assistance may be subject to inclusion in your estate.

If you want to keep living on the property but hand ownership over to your children for estate-planning purposes, consider that your child will technically be your landlord. We advise our clients to make it clear up front who will be responsible for utilities, maintenance and any associated costs, and any desired renovations or updates along the way. It’s best practice for you to put these intentions in writing from the start.

Parents who want to stay in their house but no longer include any appreciated value on the home in their estate might want to consider a qualified personal residence trust, or QPRT. This instrument allows the gifting process to begin while you retain control of the house and still live in it. In most cases you would retain the right to live in the house rent-free for a specified period of years (10 is common), after which point the remainder beneficiaries of the trust become fully vested in their interest in the primary residence.

Be aware that an existing mortgage on the property can be problematic. Some mortgage lenders will call in their loans when the property are transferred to others, meaning your child could have to take out a mortgage with an interest rate and other costs that are higher than what you’ve been paying. If your child is allowed to assume your mortgage, he or she needs to be clear on all terms and future costs.

Contact one of our seasoned attorneys to discuss your estate planning needs.


The Hazards of DIY Estate Planning

Across the Internet, there are legal websites that seem to offer handy, DIY-style forms and guides at rock-bottom prices. However, like the Internet itself, things aren’t always what they seem. Sometimes, people find they get exactly what they pay for, or much less. The-Hazards-of-DIY-Estate-Planning

Take, for instance, the poor man who downloaded an online will and ended up leaving $200,000 to a person called “Insert Name Here.” Or even the lawyer who completed a will he’d downloaded from the web. He was so pleased with the result that he posted it on a website, then asked estate planning attorneys to review his fine work. It turned out that the will was fundamentally flawed. Just a few of the errors: First, he was remarried, with a child from both his first and second marriages, but the will left everything outright to his second wife—so she could disinherit the child of his first marriage. Next, if he had any additional children, they wouldn’t be covered. And procedurally, it didn’t have a “self-proving affidavit.” That meant that, after his death, the will’s witnesses would have to be found and testify in court as to its validity.

It’s not just the outright errors that are a source of concern over the DIY approach. Regular fluctuation in the laws affect estate planning. One small change can have enormous consequences. (For example, as U.S. News & World Report explained, for one year, and one year only, estates in excess of $3.5 million were exempt from estate tax.) Estate planning professionals spend their careers making sure that clients’ estate plans track with current law. DYI websites are unlikely to keep up with the changes.

Perhaps motivated by concerns such as these, in June, New Jersey’s Supreme Court in cracked down on legal advice websites in June. The Court ruled that these sites would have to change their business practices and register with the state bar. Whatever the outcome of that decision, it’s only created further uncertainty for the DIY legal market.

Estate planning may seem complicated, but—with the right counsel at your side—it doesn’t have to be. And, as these examples show, an experienced attorney can save you far more in the long run, then a cut-rate will from a website.

For questions about how to best secure your legacy, contact our seasoned attorneys today.

Possible pitfalls in naming a minor as your beneficiary

A minor generally doesn’t have the right to manage his or her assets, including any inheritance.


But sometimes a minor child becomes the beneficiary of a sizable family inheritance. That can occur because a parent dies without a will or trust, leading to an unavoidable direct inheritance by the child.

If a minor is chosen as a beneficiary of a retirement account or life insurance policy, many challenging issues can arise.

First of all, a minor is not legally allowed to take control of inherited assets left directly to him or her. Instead, an adult or financial institution has to be appointed to manage the estate until the minor turns 18.

In essence, that means the estate must be overseen by the probate court, a time-intensive and costly endeavor, which also requires an attorney to file annual accountings for the guardian or conservator.  The court then evaluates all expenses and investments to be sure the assets are managed properly.

Most spending from the minor’s assets must be authorized by the court. It’s challenging to get such approval, too, because the court typically aims to protect the minor’s assets until he or she reaches age 18.

Meanwhile, any fees to administer the estate also reduce the value of the minor’s inheritance over time, as that is the source from which the fees are typically paid.

Finally, at age 18 all estate assets will be distributed directly to the minor, a result that many families may not like. Contact one of our seasoned attorneys to discuss your estate planning needs.


What a TV Dad’s Estate Teaches Us About Careful Planning

A-TV-Dad-Lesson-in-Estate-PlanningThere’s a simmering legal battle over the estate of TV dad Alan Thicke, and there are some lessons in the story–even if you’re immune to Hollywood gossip.

Two of Thicke’s sons, Brennan and (pop star) Robin, are trustees of Thicke’s estate, and they have asked the court for help in managing the estate. They allege that Thicke’s third wife, Tanya Callau, is trying to get more of Thicke’s estate than she’s entitled to.

What’s unusual is that Thicke apparently took steps to make sure this kind of thing wouldn’t happen. The actor periodically updated his trust, most recently in February 2016, just a few months before his death.

According to The Hollywood Reporter:

In the trust, Thicke left each of his three children equal shares of a Carpinteria ranch, 75 percent of his personal effects and 60 percent of his remaining estate, according to the petition. He left Callau the ranch’s furnishings, 25 percent of his personal effects, a $500,000 life insurance policy, all of his death benefits from pensions and union memberships and 40 percent of his remaining estate. He also provided that she could live at the ranch, as long as she paid for its expenses and maintained the property.

However, Callau is now challenging the trust documents and a related pre-nuptial agreement.

At issue before the court: What specific property and assets were Thicke’s, prior to their marriage, thus are “separate property”–Thicke’s alone? And which are “community property” that Callau would automatically share ownership in?

As complicated as the litigation may be, Thicke’s existing documents and specific instructions likely means that it will be Callau’s burden to prove why Thicke’s wishes should not be followed. Without those updated documents, Thicke’s sons would bear more of the burden.

The Thicke family dispute is a reminder for all of us, that, as Americans are living longer, we’re more likely to have divorces, other relationships and, with them, children from more than one partner. The very notion of family is getting more complicated. That means estate planning is more complicated, too. And increasingly important.

Clear and concise directions for distributing your estate are essential, to protect your heirs from protracted messy litigation. Contact one of our seasoned attorneys to discuss your estate planning needs.

Review your estate plan when you move across state lines  

Review-your-estate-plan-when-you-move-across-state-linesWhen you make a move out of state, be sure to review your estate plan with an estate planning attorney in your new domicile, as trust and estate laws have some differences from state to state.

In most states, the probate court will recognize a will from another state. But in the case of a dispute, you can’t be sure the judge in the new state will understand your will the way that you meant it.

Your new place of residence might place restrictions on executors from out of state. It’s also possible that your new medical provider or bank won’t adhere to powers of attorney drafted under another state’s laws.

One big issue is whether you’re moving from a common-law property state — which is the case in most states — to a community property state, or vice versa. In a common-law state each spouse’s separate property obtained during marriage remains separate, while in a community property state assets acquired during a marriage are jointly held by both spouses. When you move between states with different governing principles on this issue, it can become unclear who owns what property at death, and measurable estate tax consequences might arise.

Income tax rules also differ from state to state. Some states don’t have an income tax, while others have significant income tax rates, which would have an impact on your estate plan. In some states, the law might allow a lower exclusion than the federal estate tax. If you don’t pay attention, you could have your estate taxed by your new state even if your estate is under the federal exclusion amount.

Contact one of our seasoned attorneys to discuss your estate planning needs.

Estate Planning: The Value of Nothing


There was a terrific piece in the New York Times a while back on the importance of crafting a Will, even if you don’t think you have anything to leave.

Allen Salkin was an investigative reporter who, in the day, drew back the curtain on the ugly spectacle of politically connected operators, who feasted on the remains of estates of people who hadn’t left a Will. Salkin’s piece in the Times recites some of the horrors of that era, but it was his own thoughts about his own (admittedly meager) estate that drives the point home:

… A copy of an early draft of the script from the “Festivus” episode of “Seinfeld”, signed by Jerry Stiller, is typical of my weird collectibles. Others include: a videotape of the first television commercial aired in the new millennium, originally broadcast somewhere in the South Pacific; a promotional boxing card from the night Laila Ali made her professional debut; a knife Ferran Adrià used to cook; a Satchel Paige autograph; and a nearly complete run of back issues of Heeb and Omni magazines.

“I don’t want,” Salkin concludes“, a junk dealer hired by Surrogate’s Court coming in and dumping these gems.”

You cannot have it any plainer than that. In “choosing” not to leave your Will behind, you are choosing to hand your legacy over to a stranger. Look through your home now: I bet that there are all sorts of tchotchkes and knick-knacks, even if they are hidden away from plain sight. You know quite well that, if you put them up for auction, they might not even attract a single bid. Yet, the mere thought of putting them up for auction gives you a shudder.

Oscar Wilde said it perfectly when he excoriated those who “knew the price of everything and the value of nothing.” Allen Salkin reminds us how steep a price we can pay when we unthinkingly and by accident (or laziness) hand over the most intimate pieces of our legacies to people who don’t care.

If you have any additional estate planning questions or would like to schedule a consultation, please feel free to contact us at your earliest convenience.

Being Body Conscious

Given my father’s act of donating his body to science upon his passing, I thought I would touch upon the fact that in the State of New Jersey, there is a 10-day mandatory wait to probate a Will.  Why is that important?

Couple that probate delay with a family dispute over funeral arrangements, or actions that could render a bodily donation moot (cremation or embalming being the foremost concerns), how can a person best plan to have their wishes for bodily donation honored?

In New Jersey, a person may appoint a “Funeral Agent” under their Will in accordance with N.J.S.A. 45:27-22 (as with all Statutes, this may at times be subject to revision).  This agent’s role may include authorizing a funeral home to carry out the decedent’s wishes for bodily donation.

This statute is supported by Section 40 of P.L.2003, c.261 (C.3B:10-21.1), as it pertains to disposition of a body prior to the probate of a Will and the appointment of an Executor/trix.  An attorney licensed in New Jersey and familiar with matters estate and probate can advise and craft a Will to reflect a client’s intent of bodily donation, to include Funeral Agency provisions.

However, it is important to note that proper application/pre-registration with a chosen medical/scientific entity, while living, should be done if it is your intent to donate. Likewise, there is no guarantee that said entity has to accept a bodily donation, even with or without an earlier application having been made (each program sets their own perimeters for acceptable condition of a body upon donation).

In all events, those triggers for rejection of a donation, and whether or not bodily remains will be returned to a family once all usefulness has been reached (and in what condition), should be well defined in the application/pre-registration process an individual will undertake with their chosen medical/scientific entity.

*Photo art courtesy of Pixabay

In Will Contest, No Need to Oversell Decedent’s Capacity

In-Will-Contest-No-Need-to-Oversell-Decedent's-CapacityImagine a situation where a loved one dies and there is a contest over the validity of the will. The question arises: What was the decedent’s mental state in drafting the will?

A typical, knee jerk answer is that the decedent had a perfectly clear state of mind.

However, testamentary capacity doesn’t require such a high level of clarity in communication and comprehension. Further, overstating a decedent’s capacity might actually lead a trier of fact to become skeptical of the will proponent, especially if other evidence exists that the decedent’s mind wasn’t as clear as stated.

When a will is contested, the proponent has to prove that the decedent had the capacity to make the will. Meeting that burden requires showing that the testator knew the nature and extent of his property, knew the natural objects of his bounty and was aware of the contents of his will. Age and sickness aren’t determinative, and mental illness or failing memory do not preclude a decedent from having testamentary capacity to execute a will.

Cases on lack of capacity really come down to a he-said-she-said analysis. In one recent case in probate court in New York, an 83-year-old woman executed her will while in the hospital. A form in her records entitled “Adult Patient Without Capacity With Surrogate for DNR [Do No Resuscitate] Order,” stated, “I have determined that the patient lacks capacity to make this decision,” by reason of “dementia.” The records also noted that the woman became disoriented during dialysis the day she was admitted.

Yet the woman’s attorneys, whom she had known for years, said that her behavior at the time of executing the will was similar to that in her prior interactions with them and indicative of a sound mind. Further, her medical records from the day the will was executed said she was alert.

In this instance, the case didn’t go to trial. The court said that the parties protesting the will didn’t provide sufficient evidence to raise a triable issue of fact that the decedent lacked testamentary capacity.

However, in an earlier case before the same court, a woman in her eighties executed her will two years after suffering a debilitating stroke. A few months later she was found to be an incapacitated person under the state mental hygiene law. The court at that time said she needed one-on-one support and suffered from dementia.

Like the case noted above, evidence was offered on both sides. The proponent offered evidence that the attorney and others said the decedent was able to speak normally and understood her surroundings. However, the parties objecting produced evidence from a guardianship proceeding and the testimony of a treating physician that the decedent lacked testamentary capacity.

In this case, the court decided the case should go to a jury.

What happens in matters like these really depends on the facts and circumstances of the individual case. But it’s important to keep in mind that in order to prove capacity to execute a will, it isn’t necessary to demonstrate that someone who had challenges with verbal communication at the end of life or showed periods of confusion was of a perfectly clear state of mind. In fact, if you try to argue that too strongly, be aware that it might lead to skepticism on the part of the decider of your case.

If you have any additional estate planning questions or would like to schedule a consultation, please feel free to contact us at your earliest convenience.

Image courtesy of ambro at

Giving Your Heart (And More) To Your Pets

pet trust photo“There is sorrow enough,” Kipling writes, “in the natural way/from men and women to fill our day.” But the most tender trap, he says, is laid by our four-legged friends: “Brothers and Sisters, I bid you beware/Of giving your heart to a dog to tear.”

The Old Man’s point is instantly obvious to many: Pets are not just animals, they often are the heart and soul of our very lives, and they take something from us when they “go.”

There’s a corollary here, though: What about those poor creatures who have given their hearts to us? It wasn’t long ago that the very idea of leaving something behind for our pets was so absurd that Disney could literally make cartoon fantasy out of it. But cultural evolution is a marvelous thing, and just last year, Minnesota became the last (and final) state or territory to legalize pet trusts.

That does not mean it is easy. There is so much to consider. Below are a few things to bear in mind as you contemplate your pet’s life without you:

1. Consider the Costs

How much kibble does your Dalmatian eat? How often does your Siamese need to see the vet? You’ll want to take a careful look at the costs to take care of your lovelies, and what it’s likely to cost in the future.

2. Consider the Caretakers

Whom do you most trust to look after your pet? What if that person decides he/she is not up to the job? Naming the proper trustee-and, sometimes, backup trustees-is essential.

3. Be Specific

Does your parakeet absolutely adore “The Magic Flute?” Does your Lab seem happiest at that dog run down by the creek? Just as in all other areas of estate planning, there is no such thing as being too specific.

4. Know Your Own Limits

A carefully executed estate plan is not just for the afterlife. What happens, for instance, if you become incapacitated, even for a short while? A broken hip, for instance, can sideline those gorgeous walks down the beach. Crafting a concrete, clear and actionable plan for your pets can give you peace of mind for what happens after you’re gone. And, perhaps even more importantly, it can inspire you to make the most of your time left together.

Contact us today to learn how to make provisions for your furry friends when you can no longer provide it to them.

Probate and Estate Administration

Probate-and-Estate-AdministrationProbate and estate administration are not the horror show some make it out to be. If a Will is properly executed and nothing unforeseen arises, it can be a straightforward process by which taxes and debts of the decedent are paid and the remaining assets are distributed to beneficiaries (if there’s a Will) or the next of kin (if there isn’t).

Probate is the court-supervised process that may be needed after a person passes. It gives a person, normally a surviving spouse or close family member, the authority to pool the decedent’s assets, pay his or her debts and taxes, and transfer remaining assets to those who are named in their Will.

Probate may or may not be necessary. The process is required if the deceased had assets in his or her name only. Other “non-probate” assets may be transferred to their new owners without probate. They include:

  • Assets owned by the deceased with someone else in joint tenancy with right of survivorship or tenancy by the entirety. They pass by law automatically to the surviving owner.
  • Assets for which beneficiary was named outside of the Will such as IRA’s, 401(k) plans or payable-on-death bank accounts.
  • Life insurance proceeds or pension benefits payable to a named beneficiary.
  • Assets part of a revocable living trust.

If there is no Will or valuable property, surviving family members could use New Jersey’s simplified probate procedures, which are quicker and less expensive than regular probate. This may be an option for a small estate in which:

  • The value of all the assets do not exceed $20,000 and the surviving spouse or domestic partner is entitled to all of it without probate, or
  • There is no surviving spouse or domestic partner and the value of all of the assets does not exceed $10,000. One heir, if given written consent by the others, can file an affidavit with the court and receive all the assets.

Probate in New Jersey is handled by the surrogate’s court in the county where the deceased lived. Typically, if things go smoothly, the process can take less than a year. If there’s a Will, the person named to be in charge of the estate (the executor if a male, executrix if a female) makes a request to the court to be formally appointed. If there is no Will, or there is no executor available to serve, a person may ask the court to appoint him/her to become the administrator (male) or administratrix (female).

Unless the validity of the Will is challenged or there is otherwise some basis to believe it isn’t valid, the surrogate’s court will issue Letters Testamentary (for a will) or Letters of Administration (if an administrator is named). This allows the person to:

  • Gather, organize, inventory and keep secure the deceased’s assets
  • Pay debts and taxes
  • Distribute the remaining property as the Will, or without a Will, as state law directs.

The executor or administrator has authority over assets that go through probate. Complete and accurate records of how estate assets are handled and distributed must be maintained. Receipts, bills and bank statements may need to be submitted to the court.

Before probate can close, the executor or administrator submits an accounting, a document outlining the assets, disbursements of estate money to pay bills and proposed distributions to inheritors. If the accounting is approved by all the beneficiaries, a formal approval from the court isn’t required.

An administrator or executor may be held liable for losses if the estate’s assets are lost, if assets are used for personal purposes, there was a conflict of interest in transactions or assets were wasted. A person serving as an administrator or executor should retain legal counsel to avoid these problems and to ensure the estate administration is handled properly.

If the estate is complex enough, it may also be a good idea to retain an accountant’s services. The fees for these services would be paid from the estate, not paid personally by the executor or administrator, with the approval of the court.

Contact one of our seasoned attorneys to discuss your estate planning needs.