Frequently Asked Questions

To avoid having State probate law or a Probate Court, not you, decide who inherits your money upon your death and who is in charge of the administration of your estate, and to reduce or eliminate estate or inheritance taxes.

While there are probate laws that do allow handwritten wills to be probated, the wills must first meet the statutory requirements of a “holographic will” and improperly drafted holographic wills often cause expensive probate litigation. Therefore the cost of having a will prepared by an attorney who is experienced in estate planning issues is minor, compared to the potential cost of an improperly drafted will prepared without an attorney.

No, writing on a will virtually guarantees that a probate judge will need to rule on whether the will should be probated and how it should be interpreted. When the probate court needs to interpret a marked-up Last Will and Testament, the probate costs will far exceed the cost of paying an experienced attorney to properly make changes to the will.

When the choices of executor, financial or medical agents are no longer good options. When there has been a substantial change in life status (such as a divorce, marriage, domestic partnership, adoption) and/or finances which might necessitate revisions to the will to add estate tax planning provisions. Also, when one’s intentions change regarding who should inherit assets.

It is a legal document in which you give that special trustworthy someone the legal authority to manage your financial affairs. The “Durable” aspect of the Power of Attorney (POA) means that the POA continues to be effective even if you become disabled.

It depends on your family situation and your preferences. A POA that is only effective upon becoming disabled, which is called a “springing Power of Attorney” would require medical proof of the disability, which would delay the use of the POA. But some people derive peace of mind from knowing that the POA would not be used unless they become disabled.

A legal document by which an individual chooses a health care representative to make medical decisions for the individual if he or she is incapacitated and unable to make those decisions about permitting or withdrawing medical treatment. This is also more commonly called a Living Will.

A Revocable Living Trust is a legal document which would allow someone to transfer the ownership of assets to a trust. If an individual dies and owns no assets in his or her name but instead has previously transferred ownership of all assets to a Revocable Living Trust, then there would be no assets to probate. However, the fees to the Surrogate to probate wills in New Jersey are usually less than $200, and the cost of setting up a Revocable Living Trust is generally much higher than that. There are other reasons to set up a Revocable Living Trust in the right circumstances, but avoiding probate is not a cost-effective reason to do so.

Yes. Under New Jersey law, when you designate a beneficiary on a specific account, that account will pass upon the death of the account owner to the designated beneficiary. Accounts that have named beneficiaries such as individual retirement accounts, 401Ks, and life insurance policies, are all non-probate assets because they are paid to the name beneficiary(ies) without passing through the Will or the decedent’s estate.

In general, Medicare is the government benefit program that covers medical expenses such as hospital bills and doctor’s fees for individuals who are at least 65 years old, or sooner, if the individual is disabled, regardless of how much money that individual owns. Medicaid is the government benefit program that can cover nursing home and assisted living care costs, but only if the individual meets the asset and income requirements of the Medicaid program.

Yes, but Medicare coverage for nursing home care will only last for a few months, at the most. After those initial months, the nursing home care must be paid privately, at an average monthly cost in NJ of $8,000.75, or through the Medicaid program if the eligibility requirements are met.

Yes, Congress passed the Deficit Reduction Act, effective February 8, 2006. This law made significant changes to the Medicaid laws, and these changes include extending the look back period and increasing the disqualification periods that result from gifting.

The look back period is the time before one applies for Medicaid benefits and the 2006 law increased that period from 3 to 5 years. The change will generally result in longer penalty periods for those who gifted assets prior to a Medicaid application.

Yes, one option is to consider a life estate deed, which would provide that the homeowner has the right to live in the property (the life estate interest), while retaining their right to claim all applicable senior, veteran and homestead rebates and incentives, as long as he or she is able but the deed would also provide that the close relatives of the homeowner would take the remainder interest in the property. This deed has advantages for both Medicaid planning and income tax planning. Another option is a caregiver agreement, which is typically used where a child provides care to a parent in exchange for compensation that is documented in the agreement. A properly drafted caregiver agreement can protect the parent’s assets in the family and avoid the Medicaid penalties that typically accompany transfers by potential Medicaid applicants. Additionally, some clients may qualify for the caregiver exception to the Medicaid regulations, which would allow a parent to transfer the parent’s home to the caregiver child who provided nursing home level of care to the parent for at least two years.

Estate taxes are assessed on an estate based on the value of the estate. It is possible to have both state and federal estate taxes assessed on an estate. Inheritance taxes are assessed in New Jersey on estates where the beneficiaries are not the spouse, children or grandchildren of the decedent.