Estate administration & probate

Published on: February 20, 2022

Should a Surviving Spouse file a Federal Form 706 Estate Tax Return to Claim the Deceased Spouse’s Unused Exemption from Federal Estate Tax?

Current estate tax law demonstrates why it is so important to consult with a New Jersey estate administration and planning attorney.

A deceased individual’s estate is entitled to an exemption from Federal Estate Tax agreement-3476369__340-300x217 currently in the amount of $12,060,000.00. However, since a surviving spouse pays no Federal Estate Tax on inheritances from the deceased spouse, the surviving spouse is permitted to claim the deceased spouse’s exemption for use upon the death of the surviving spouse. When creating an estate plan and upon the death of the first spouse, a New Jersey estate attorney must consider whether the surviving spouse would benefit from claiming the deceased spouse’s exemption. In order to claim that exemption, a Federal Form 706 Estate Tax must be prepared and filed.

The surviving spouse and her estate attorney must decide if it is beneficial to use the estate tax exemption of the first spouse to die at that time. The decedent spouse’s estate may be valued far in excess of the exemption amount, and the deceased spouse’s exemption should be used to create a credit shelter trust that will allow assets to appreciate and accumulate outside the surviving spouse’s estate.

Published on: January 4, 2022

Employment Law Decision Shows Law Enforcement Applicants Get a Fair Hearing From the New Jersey Civil Service Commission in Psychological List Removal Appeals

by Maurice W. McLaughlin

A recent appellate New Jersey employment law decision in the case of In the Matter of F.S., Police Officer (S9999U), City of Jersey City outlines the procedures for appeals by applicants who were removed from a list of eligible candidates for civil service law enforcement or joe-b-300x200 firefighter positions for psychological reasons. While the candidate lost his appeal, the Appellate Division’s opinion should give candidates faith that they will receive a fair shake before the Medical Review Panel and New Jersey Civil Service Commission.

F.S.’s Application with the Jersey City Police Department

F.S. passed the civil service test and received a conditional offer of employment to become a police officer with the Jersey City Police Department, a civil service employer. The offer was conditioned upon F.S.’s successful completion of a psychological examination.

Published on: November 30, 2020

The Effect of Joint Ownership on a New Jersey Estate’s Inheritance Tax Liability

by Jennifer C. Meusel

Except in the case of spouses, civil union partners and domestic partners, when a New Jersey resident dies owning a jointly held asset, whether it is real estate, stocks, bank accounts, etc., the entire value of the asset will be taxed as if it belonged to the decedent. If the surviving joint tenant can prove that a portion of it actually belongs to the surviving joint tenant and not the decedent, the New Jersey Division of Taxation may grant an exemption from taxation for that portion of the value of the asset. This makes selecting an estate administration and tax planning attorney extremely important.

In order to prove that a portion of the asset actually belonged to the surviving joint tenant, you must be able to show the surviving joint tenant’s financial contribution to the asset or that the surviving joint tenant inherited their portion of the asset from another. Depending upon the relationship between the decedent and the surviving joint tenant, the asset will be subject to inheritance tax at a rate between 11 percent and 16 percent. Class A Beneficiaries (which include spouses, civil union partners, registered domestic partners, parents, grandparents, and children) do not pay any tax on inheritances. Class C Beneficiaries (which include siblings of the decedent and spouses/civil union partners of a child of the decedent) receive $25,000 free from inheritance tax, are taxed at a rate of 11 percent on the next $1,075,000 of inherited assets and the rate increases as the amount inherited increases – up to 16 percent. While bequests to charities are not taxed, inheritances received by all other non-charitable beneficiaries not included in Class A or C are Class D beneficiaries and their inheritances are taxed at a rate of 16 percent for the first $700,000 and 17 percent for the remaining balance of the inheritance.

Many people list another person as a joint owner on an account or an asset because they believe it simplifies the estate administration and probate of the estate. But, it actually can result in a significant tax burden which might not have been due or would have been significantly lower if assets were not jointly held. Moreover, in New Jersey probate and estate administration are not difficult or expensive so it is not usually necessary to attempt to avoid it.

Published on: April 20, 2020

Estate Planning During the COVID-19 Health Crisis: Holographic Wills

by Jennifer C. Meusel

supreme-administrative-court-3565618_960_720-300x200 A holographic will is a will that is handwritten, signed and dated by the testator (the person whose will it is). Under New Jersey estate planning Law, holographic wills can be probated and will serve to ensure that the Testator’s assets are bequeathed according to the Testator’s wishes. In fact, a holographic will is valid even in the absence of witnesses. While a formal, written will with witnesses prepared by an experienced estate planning attorney is always preferable, a holographic will can be used in an emergency.

During the current health crisis, particularly for those who have tested positive for COVID-19 or those who are at particular risk, it may be better to have a holographic will than to have no will at all. However, it is important to know the requirements as well as the risks and downsides to using such a handwritten will. If at all possible, it is certainly better for everyone involved, from the testator to the executor and beneficiaries, for there to be a properly executed traditional will.

The crucial requirement under New Jersey wills and estate law, for a handwritten will to be admitted to probate in New Jersey is that the will was written by hand, signed and dated by the decedent and that the signature and key provisions are clearly written by the same hand and that the handwriting is identifiable as that of the decedent. To prove that in court usually requires testimony by a handwriting expert and/or witnesses who are familiar with the decedent’s handwriting. The holographic will must be presented to the Superior Court by an order to show cause in order to be probated, even if all interested parties agree that the will is valid and represents the decedent’s wishes and intentions about their estate.

Published on: January 6, 2020

Beneficiary Designations Are an Important Part of Your Estate Plan

by Jennifer C. Meusel

Senior, Elderly, People, Couple, Persons Many financial accounts provide the account holder with the option to designate beneficiaries. If a beneficiary is designated on a financial account, upon the death of the account holder, the assets to the account do not pass according to the provisions of the decedent’s Last Will and Testament, but instead will pass to the designated beneficiary. Therefore, such designations are a crucial part of estate planning, and can significantly change the distribution of an estate. Yet beneficiary designations are over overlooked during the estate planning process. Accounts with designated beneficiaries must be considered when structuring your estate plan and when estate planning documents are being drafted. You must ensure your beneficiary designations are consistent with the rest of your estate plan and together with your estate planning documents accomplish your estate planning goals. I have met with many clients who needed significant revisions to their Will because their beneficiary designations were not considered when the Will was drafted. Beneficiary designations which are not considered during the consultations and drafting of estate planning documents often skew or even completely override the intent of the decedent.

Often, people do not consider the effect a beneficiary designation will have on their estate plan. Instead, believing it to be a simple decision, they just pick someone when asked by a financial advisor or when completing account paperwork. Sometimes, they don’t want to “bother” their attorney with questions about their accounts, which people often think of as separate from their estate plan. It is routine and expected for a life insurance agent or retirement account professional to ask for beneficiary designations, but it is also a common option now for brokerage and bank accounts. Clients often think they “named the same beneficiaries” on all of their accounts, but when documentation is obtained and reviewed, the beneficiaries designated often undermine their estate planning intentions.

It is always a good idea to consult with your various professionals – you lawyer, financial advisor, and insurance broker – to confirm that you have named beneficiaries where necessary, and that these designations are carefully considered to effectuate your estate plan.