Tuesday, December 30, 2014

I have heard that I can “disclaim” inherited assets or property. What does this mean?

A “disclaimer” is the refusal to accept a gift, bequest, or beneficiary designation on an account (e.g., an IRA or life insurance policy).

Monday, December 22, 2014

Dementia and Driving Liability

It is natural for a person to go through certain physical and psychological changes as part of the aging process. This can include worsening eyesight, slowed reaction time, poor night vision, and in some cases a decline in cognitive ability.

As you notice these changes in your loved ones as they age, you may become concerned about their continuing ability to drive. No one wants to have to take the keys away from a friend or family member, but this may be the best option to ensure not only their safety, but the safety of others on the road as well.

But what if you cannot bring yourself to separate your loved one from their car, or if you do not realize the severity of a loved one’s physical or cognitive impairments and they get into an accident?

Monday, December 15, 2014

In Terrorem Clause/No Contest Clause

You may have heard of an “In Terrorem Clause,” also called “No-Contest Clause.” Joan Rivers had one in her Will.*

This is a provision that can be included in a Will which states that if any beneficiary or legal heir of the Estate tries to contest the Will, they will be treated as though they predeceased he Testator—in other words, they will be disinherited.

Monday, December 8, 2014

IRS Subpoenas and Summons—What to do?

The IRS is getting much more aggressive in seeking and collecting monies that may be owed. A number of my clients have received summons from the IRS.

The IRS does have the power to issue administrative summons to taxpayers, oftentimes requiring them to produce papers, books, or other documents, and requiring them to appear before an IRS worker and give testimony under oath.

However, these summons are not always enforceable. In certain cases, an IRS agent may simply issue a summons to get the taxpayer's attention. A summons may be overly broad in its request for the production of documents and cannot be enforced.

Q and A: Non-Probate Property

Q: My relative just passed away. It says in their Will that their IRA goes to me, but I found out that it is passing to someone else instead. What’s going on?

Monday, November 24, 2014

Hoarding: How Does It Affect You?

We are all affected by hoarders. Some of us more directly than others.

Almost everybody has an "Uncle Charlie" in their family who has been collecting things forever. Is he a hoarder? Does he need help? If he does need help, how can you help him? 

Even if you don't have a direct connection to a hoarder, you can be affected...

  • If your town has to condemn the property of a hoarder, it will cost the town $40,000 (i.e., your tax money at work).
  • If there is a fire in the home of a hoarder, the first responders are at greater risk of injury or death due to quick-burning rubbish, toxic fumes, and the fact that the towering piles of these items could fall on a first responder and trap or injure him/her.
  • There is an increased mold and infestation potential at the home of a hoarder.

Monday, November 17, 2014

IRS Taxpayer Bill of Rights

The IRS recently adopted a “Taxpayer Bill of Rights.” These rights already exist in the tax code, but this initiative is intended to consolidate those rights into more straightforward categories to improve taxpayers' understanding of what rights they have before the IRS.

The provisions included in the Taxpayer Bill of Rights are:

1. The Right to Be Informed
2. The Right to Quality Service
3. The Right to Pay No More than the Correct Amount of Tax
4. The Right to Challenge the IRS’s Position and Be Heard
5. The Right to Appeal an IRS Decision in an Independent Forum
6. The Right to Finality
7. The Right to Privacy
8. The Right to Confidentiality
9. The Right to Retain Representation
10. The Right to a Fair and Just Tax System

This list, along with explanations of each right, can be found here.

A publication containing the above information, “Your Rights as a Taxpayer,” will be sent to millions of taxpayers with the IRS notices this year, and will also be publicly visible at all IRS facilities.

Monday, November 10, 2014

1031 Exchanges

Often clients will come to us wanting to sell a property, but feel trapped by the high capital gains taxes that they would incur by selling.

We have the pleasure of informing these clients that there is a special rule in the Internal Revenue Code that will allow them to defer capital gains by making a “1031 Exchange.” This allows the client to sell without having to deal with the tax implications immediately. (Under the right facts, the client may never have to deal with Capital Gains Taxes.)

Wednesday, October 29, 2014

Unclaimed Property (Part 2)

Earlier, we began to discuss how to claim your own Unclaimed Property (See Part 1 on Unclaimed Property  here).

But what if the owner of the Unclaimed Property is deceased?

The process is still very simple, and similar to the process described above, but with some extra documentation required.

Wednesday, October 22, 2014

“Scams" Targeting New Homeowners

A. Certified Copy of Your Deed.

All homeowners should be aware that, for several years now, a company called “National Deed Service” or “National Record Service” targets homeowners (new homeowners in particular) advising them that they must have a certified copy of their Deed.

This is not the case. The company is selling an unnecessary product.

As the property owner, you already have the original Deed to your home. Should you lose or misplace the Deed, your local County Clerk's Office can provide you with a certified copy to replace the original at a reasonable cost—much less than the so-called national Deed Service is demanding.
B. Assignment of Mortgage.

There are many companies that will send you a notice that they have “bought” your mortgage so you must send payments to them. The letter looks very official and has very specific information, because your Deed is a public record any anybody can see it.

Don’t be fooled, and don’t send any payments until you confirm with your initial bank.

If you ever receive correspondence or a phone call regarding your property, do not give out any personal information or send payment; instead, investigate further. We can help.

Friday, October 10, 2014

Unclaimed Property (Part 1)

When property (like a bank account, annuity, or life insurance policy) goes untouched or unclaimed for a certain amount of time, it “escheats” to the State. The property still belongs to the original owner, but you now have to go through your state’s Unclaimed Property division in order to claim your property.

Wednesday, October 1, 2014

Life Insurance as a Student Loan Safety Net

With increases in college tuition outpacing inflation every year, many students turn to loans to cover the cost of school. Financial institutions generally require a cosigner on these loans to secure the student's debt—nearly always the student's parents.

Monday, September 22, 2014

Elective Share of Surviving Spouse

The New Jersey statute pertaining to a surviving spouse’s elective share, R. 3B:8-1, reads as follows:

“If a married person or person in a domestic partnership dies domiciled in this State, on or after May 28, 1980, the surviving spouse or domestic partner has a right of election to take an elective share of one-third of the augmented estate under the limitations and conditions hereinafter stated, provided that at the time of death the decedent and the surviving spouse or domestic partner had not been living separate and apart in different habitations or had not ceased to cohabit as man and wife, either as the result of judgment of divorce from bed and board or under circumstances which would have given rise to a cause of action for divorce or nullity of marriage to a decedent prior to his death under the laws of this State.”

Monday, September 15, 2014

Special issues for employees using their car for business matters

If you are a business owner and you have one or more employees who use their cars for business matters, you need to be aware of the rules governing employees’ use of vehicles. These rules not only pertain to reimbursements and deductions, but to employer liability as well. (Note that this is not for the employee commuting to and from work.)

Monday, September 8, 2014

How Assets Are Owned Will Affect Distribution at Death

Anybody who knows me knows that I always recommend a person have a Will, Living Will, and Power of Attorney.

This article will focus on a Will and the effects of how assets are owned. A Will distributes “probate assets.” “Probate assets” are assets owned by you without an automatic beneficiary.

Monday, September 1, 2014

“Domestic Partners” and Transfer Inheritance Taxes

Generally, when a person dies, New Jersey death taxes apply. We have two levels of taxes:
1.     NJ Estate Taxes. These are only owed if the decedent has more than $675,000 in total assets, including life insurance.
2.     NJ Transfer Inheritance Taxes. The rate depends on a person’s relationship to the decedent. Depending on the closeness of the relationship, the beneficiary will be either Class “A,” “B,” “D,” or “E.”

Husbands, wives, civil union members, and domestic partners are all considered “Class A Beneficiaries” under New Jersey law, which means that there are no Transfer Inheritance Taxes due on the inheritance received.

Monday, August 25, 2014

Estate Planning: Talking With Your Family

Planning your estate can be a difficult and emotionally-charged process. How does one go about discussing an estate plan with those who it will affect the most—family?

As unpleasant and painful as a conversation about your Estate plan might seem, it is an extremely important topic to discuss with your loved ones. You need to make known what it is that you want, reconcile that with what it is that your loved ones want, and explain what is in your Will and what you would like your funeral arrangements to be.

It may be helpful to have an estate planning professional—such as us as your attorney—present when having this conversation. You could have a family-only discussion first, and bring your family to meet with us afterwards if you wish. It is important to be open and honest in your discussion. You may be concerned about potentially hurting someone’s feelings, but it is better to be frank and make your wishes clear now while you are alive to prevent problems from arising after you have passed.

Thanks to our years of expertise in handling estate planning, we at the Paton Law Firm, LLC can help make this challenging conversation easier. We can offer suggestions as to how to broach the topic of estate planning with your family, and how to handle any difficulties that may arise.

Monday, August 18, 2014

Estate Planning and Retirement Accounts

When planning your Estate, it is important to recognize that certain assets will be distributed to a designated beneficiary at death, rather than according to your Will. A common example of this is a joint bank account. Say a mother and her daughter have a bank account held jointly, with right of survivorship. If the mother dies, the bank account automatically passes in full to the daughter, or vice versa, even if the mother (or the daughter) left the account to someone else in her Will. In this instance, banking law supersedes the authority of the Will in determining the distribution of the decedent’s assets.

Monday, August 11, 2014

Estate Administration Part 3: Your responsibilities as the Administrator of the Estate

As mentioned in the previous post, here are the specific responsibilities that come with being the Administrator of an Estate:

Monday, August 4, 2014

Estate Administration Part 2: So you’re the Administrator of an Estate—now what?

You have received Letters of Administration from the Court…
You submitted all the required paperwork to the Surrogate’s Court and have been officially appointed Administrator of your loved one’s Estate. This is a great honor, but also carries a great deal of responsibility. To help you understand your responsibilities and to help you administer the Estate, we have prepared this memo.

Monday, July 28, 2014

Estate Administration Part 1: How to Apply for Letters of Administration

Ordinarily, a person specifies in his or her Will who they would like to deal with the matters of their Estate when they pass away. This is often a spouse, relative, or close friend—someone who the person trusts to act in the best interests of their Estate and their family. The person named in a Will to be responsible for the decedent’s Estate is called the “Executor.”

Sometimes, however, a person will pass away without first creating a Will, or their Will may not appoint an Executor. When this happens, somebody must request that they become “Administrator” of the Estate. Generally, this is a relative of the decedent. The Administrator handles the Estate in almost precisely the same way an Executor would, and regardless of title, the responsibility to act in the best interest of the Estate and its heirs is the same.

Thursday, July 24, 2014

Minimum Wage—Increase as of January 1, 2014

New Jersey increased its minimum wage as of January 1, 2014, which is more than the federal minimum wage. Don’t make the mistake of paying below the minimum.

Monday, July 21, 2014

Did You Know? The Need for Worker’s Compensation Insurance

Although all employers are required by law to have Workers’ Compensation Insurance (aka “Workers’ Comp”) policies, it is frequently overlooked, and employers are often under-insured.

Workers’ Comp is rated based on the classification of the type of business and the payroll. Premiums change according to the business’ payroll, not the number of workers employed.

You do not have to notify your insurance company as you hire new workers, or if your payroll increases. The insurance company performs audits independently to find out the number of employees a business has, as well as its payroll.

A standard Homeowners’ policy has minimal coverage for “transient workers,” limited to the maximum amount of coverage on the home. This covers two domestic servants or household employees working part-time (less than 40 hours per week).

If you have more than two workers, or if you have any full-time employees, such as a live-in nanny or full-time housekeeper, you will have to contact your insurance company to obtain additional coverage. Even if you have an umbrella policy, it will not cover this additional employee exposure (i.e., having a full-time employee and/or more than two employees in your home).

A failure to provide workers’ comp can result in penalties of up to $5,000 for the first ten days and $5,000 for each ten-day period thereafter.

Do not wait to find out that you are underinsured—call your insurance agency and make certain that you have adequate coverage.

Monday, July 14, 2014

Q and A: “My mother passed away and the bank won't let me use her POA. What happened?”

Unfortunately, a Power of Attorney is no longer valid if the Principal dies. The purpose of your POA was to allow you to act on your Mother’s behalf during her lifetime. At her death, the POA automatically terminates. Now you must qualify as her Executor (if she has a Will) or Administrator (if she does not) to deal with her assets.

 Learn more about Power of Attorney by following this link to our other articles about POAs, or speak with your lawyer for consultation on your specific situation.

Monday, July 7, 2014

Power of Attorney Part 6: Does the POA expire?

Unless specified otherwise, a POA will not expire.

Monday, June 30, 2014

Power of Attorney Part 5: What if I want to change my POA?

Many people are satisfied after establishing their Power of Attorney. However, things can change and you may lose trust in your Agent, or your Agent may move away. 

Monday, June 23, 2014

Power of Attorney Part 4: What if I don’t have a Power of Attorney, and am injured/fall ill?

Having a Power of Attorney (“POA”) is essential for being prepared for possible accidents in the future

As an example, say a person over the age of 18 gets into an accident and is incapacitated as a result, and now needs someone to act on his or her behalf. However, they did not set up a POA prior to the accident, so that no one has this legal authority.

Monday, June 16, 2014

Power of Attorney Part 3: Who needs a Power of Attorney?

A Power of Attorney (POA) is vital for any adult. In fact, adult children who are 18 years of age or older should have a POA. Even if the parent of an adult child pays for school and medical bills, personnel from these institutions are not allowed to speak to the parent; only the child

Monday, June 9, 2014

Power of Attorney Part 2: A closer look at the Agent’s duties under a Power of Attorney

We discussed the basic definition of a Power of Attorney (POA) in Part 1 of our series on POAs. Now let’s take a closer look at the powers granted to the Agent by a POA, and what responsibilities accompany them. 

Monday, June 2, 2014

Power of Attorney Part 1: What is a Power of Attorney?

A Power of Attorney (POA) is a legal document that lets another person (the “Agent”) make financial, health, and living arrangements for you (the “Principal”). This other person should be an individual whom you trust (such as a spouse or adult child), as they will able to act on your behalf. Some of their duties might include signing your name on documents, paying your bills, and caring for your children, among other things. 
A POA can either be effective immediately, or can become effective only in the event that you are incapacitated by an accident, illness, or other situation. The Agent can do whatever is necessary in order to protect the Principal, and should act with the Principal's best interests in mind.

In order to be prepared for whatever may come in the future, it is important to complete your POA as soon as possible. This will ensure that your finances, health, and family are protected even if you become incapacitated.

Click here for Part 2 of our Power of Attorney series.