ESTATE PLANNING

A Will declares who shall inherit an individual's assets (the beneficiaries) and who shall be responsible for distributing them to such beneficiaries (the executor). For young parents and couples, a will can also be used to appoint a guardian for their children and a trustee to manage a child's money until they are old enough to handle it themselves.

A Power of Attorney should be executed appointing an agent to protect ones person and property in the event of disability. Individuals, who become disabled mentally and do not have a power of attorney, can only be protected by an expensive and humiliating procedure known as a guardianship, whereby they are judged to "incompetent" in the public forum of a court.

A Living Will or Advance Directive should be signed to set forth ones intentions in a situation where there is no reasonable hope of their recovery or regaining a meaningful quality of life. A living will is often combined with a healthcare power of attorney appointing a loved one as healthcare representative to assist in making end of life decisions.

An often overlooked aspect of estate planning is the coordination of benefits. A will disposes of assets forming part of the probate estate. The probate estate or assets only in the name of the decedent. Jointly owned property, life insurance, retirement plans, annuities and other assets pass outside the probate estate and are not governed by the will. All of these assets must be coordinated to accomplish the individuals estate plan.

What does a Will do?
A Will is the legal document that allows you to distribute your property to those you choose. A Will allows you to designate beneficiaries to receive specific items from your estate, and other beneficiaries to receive everything else. For example, if you want your house, your car, or your antique thimble collection to go to a certain person or organization, you designate that person or organization as the beneficiary.

Who's going to make sure that your antique thimble collection goes to the proper person? The executor of your Will. The executor's the person you designate to carry out your wishes.

A Will also gives parents of minor children the chance to nominate a guardian. The court makes the final decision when appointing a guardian for your children after your death, but the court will usually accept your nomination. A guardian’s legal responsibility is to provide for your child’s physical welfare.

What does a Living Trust do?
A Will comes into play only after you die, but a living trust can actually start benefiting you while you are still alive. A living trust is a trust established during your lifetime. It is revocable, which allows for you to make changes. You will transfer substantially all of your property into your living trust during your lifetime, and any omitted assets can be transferred into the trust at the time of death through the use of a simple Pour-over Will. You should always make a Pour-over Will at the time that you establish your trust.

A living trust will be used as the mechanism to manage your property before and after your death, as well as provide how those assets, and the income earned by the trust, are distributed after your death. If you should become incapacitated or disabled, the trust is in place to manage your financial affairs, usually by a successor trustee, if you were serving as trustee. A living trust is not subject to probate, and therefore, all provisions of the trust will remain private.

Joint living trusts are also possible. They simply combine the assets of a husband and wife into a single trust, governed by a single trust document. However, if estate tax minimization is important (for combined estates which will exceed $625,000), the joint living trust must be very carefully drafted with the help of an attorney in order to achieve the desired goals.

What happens if I don't have a Will or Living Trust?
The legal term for dying without a Will is dying intestate. If you do not specify through a valid Will or Living Trust who will receive your property, state law controls and generally distributes your property to your spouse and/or your closest heirs. This may or may not be what you intended. Furthermore, if you fail to nominate a guardian for your minor children, the state could appoint someone you don't trust as a legal guardian of your minor children. Finally, by failing to appoint someone to carry out your wishes, the state can appoint anyone to be the administrator of your property, and the administrator may have to pay certain fees or post a bond at the expense of your estate, before he or she can begin to distribute your assets.

If you have any questions or would like to discuss your options you can contact me at (973) 652-7989 or email me at scbrennan.esq@gmail.com.



DOMESTIC PARTNERSHIPS/CIVIL UNIONS

New Jersey appellate court, in N.M. v. Division of Medical Assistance and Health Services, 405 N.J. Super. 353 (App. Div. 2009), certif. den., 199 N.J. 517 (2009), held that an annuity purchased for the sole benefit of the community spouse after the effective date of the Deficit Reduction Act of 2005 (DRA) may be considered in determining whether the resources of the institutionalized spouse exceed the resource limit for Medicaid eligibility. This case is one of major importance in the Medicaid estate planning area, and it is a major setback for those trying to help couples protect sufficient assets for the community spouse to live on when the ill spouse is institutionalized. However, based upon recent case law developments in other states, it appears that the New Jersey court’s analysis in the N.M. case may be less persuasive than anticipated. In that regard, courts in Ohio and Massachusetts have recently ruled, contrary to the court in New Jersey, that a community spouse’s annuity purchase is not an improper transfer.

Civil Unions are not recognized under federal law. As a result, Medicaid, which is a quasi state and federal program for the elderly, disabled or indigent, does not allow for distribution of assets protection. Therefore, we must be creative in establishing alternative avenues for gay and lesbian couples, domestic partners or civil union couples.

Having a prudent estate plan is one solution. Planning ahead of the Medicaid five year lookback period by establishing a Family Trust or transferring real property by deed, are the kinds of vehicles one can use to provide for a surviving partner.

If you have any questions or would like to discuss your options you can contact me at (973) 652-7989 or email me at scbrennan.esq@gmail.com.