by Jose D. Roman | Feb 3, 2025 | Estate Administration, Estate Planning, Legal Bulletin, NJ Supreme Court, Probate
On January 27, 2025, in In the Matter of the Estate of Michael D. Jones, Deceased (A-28-23) (088877) the Supreme Court of New Jersey addressed whether an ex-spouse’s right as the pay-on-death (POD) beneficiary of U.S. savings bonds was modified by the couple’s divorce agreement. The case, which involved the interplay between federal bond regulations and New Jersey’s estate and family law, ultimately affirmed that the ex-wife retained her right to the bonds despite the divorce.
Case Background
The husband purchased Series EE U.S. savings bonds during his marriage to his ex-spouse, designating her as the POD beneficiary. The couple later divorced and executed a divorce settlement agreement, which provided for certain asset distributions but did not explicitly mention the savings bonds. The settlement agreement also required him to pay $200,000 in installments. At the time of his death, the ex-wife had received approximately $110,000 of this sum. After his passing, she redeemed the savings bonds, which were valued at approximately $77,800. The estate, administered by his daughter from a prior relationship, argued that the bond redemption should count toward the outstanding settlement agreement payments, effectively satisfying his financial obligation. The trial court agreed, but the Appellate Division reversed the decision, holding that federal regulations governing savings bonds preempted state law, thereby affirming the ex-spouse’s entitlement to the bonds. The NJ Supreme Court affirmed the Appellate Division’s decision, though it disagreed regarding the issue of preemption.
Key Legal Issues
- Federal Preemption and State Law
- The Appellate Division held that N.J.S.A. 3B:3-14, which revokes certain property transfers upon divorce, was preempted by federal law regulating savings bonds.
- However, the New Jersey Supreme Court disagreed, stating that preemption was not at issue because the state statute explicitly defers to governing instruments, which in this case were the federal regulations governing savings bonds.
- Effect of the Divorce Settlement Agreement
- The court found that the settlement agreement was silent on the savings bonds and did not revoke the ex-spouse’s beneficiary status.
- A catchall provision in the settlement agreement stating that “any marital asset not listed belongs to the party who has it in their possession” was interpreted as reinforcing the ex-spouse’s claim to the bonds, because they were the husband’s before his death and immediately passed to the ex-spouse upon death.
- Right of Survivorship Under Federal Law
- Federal regulations establish that upon the death of a bondholder, the designated POD beneficiary becomes the sole owner.
- The court ruled that the trial court’s assumption that Michael intended to revoke Jeanine’s status was speculative and contrary to federal protections of survivorship rights.
Court’s Decision
The Supreme Court of New Jersey ultimately ruled that:
- Jeanine rightfully retained ownership of the savings bonds as the designated POD beneficiary under federal regulations.
- The bonds were separate from the $200,000 owed to Jeanine under the settlement agreement, meaning she was still entitled to the remaining balance of the settlement.
- The trial court’s ruling impaired the ex-spouse’s federal survivorship rights, a result not permitted under the governing regulations.
Implications and Takeaways
This case serves as an important reminder for estate and family law practitioners, particularly concerning the treatment of federal savings bonds in divorce settlements. Key takeaways include:
- Explicit Clarity in Divorce Agreements: Individuals going through a divorce should ensure that all assets, including savings bonds, are explicitly addressed in settlement agreements to avoid future litigation.
- Deference to Federal Regulations: State courts must recognize and uphold federal regulations governing financial instruments like U.S. savings bonds.
- Automatic Revocation Limitations: N.J.S.A. 3B:3-14 does not automatically revoke all beneficiary designations upon divorce when federal law dictates otherwise.
- Importance of an Estate Plan: The case highlights the importance of seeking estate planning guidance and understanding beneficiary designations, as well as probate versus non-probate assets.
By affirming the ex-spouse’s rights to the bonds, the court reinforced the importance of adhering to federal estate regulations while also ensuring fair application of state divorce laws. This ruling will likely guide future disputes involving federal financial instruments and marital property division.
by Jose D. Roman | Jan 26, 2025 | Estate Administration, Estate Planning, Last Will and Testament, Probate
When it comes to estate planning, creating a Will is one of the most important steps you can take to ensure your assets are distributed according to your wishes. However, many people are unsure about whether they need to register their Will in New Jersey. Here’s what you need to know.
Is Registration Required in New Jersey?
In New Jersey, you are not required to register your Will during your lifetime. Unlike some legal documents, a Will does not need to be filed or recorded with a government office until after the testator’s death (the testator is the person who created the Will). Until that time, your will is a private document that you can store wherever you choose.
What Happens After Death?
After the testator passes away, the original Will must be submitted to the Surrogate’s Court in the county where the deceased person resided. This is why it is important to let your loved ones know how to find your Will. This process is called probate. During probate, the court validates the Will and grants the Executor (the person named in the Will to carry out its instructions) the authority to manage the estate.
New Jersey’s Voluntary Will Registry
New Jersey law, specifically N.J.S.A. §3B:3-2.1, requires the Secretary of State to maintain a Will Registry. The registry is a voluntary service where individuals can record the location of their Will and the contact information of the person who holds it. It is important to note that the registry does not store the actual Will—only information about where it can be found. This service can help Executors and family members locate the Will after the testator’s death, avoiding delays and complications. To register a Will, you must complete a registration form and pay a small fee. The registration information is confidential and accessible only to authorized individuals after the testator’s death.
Benefits of Storing Your Will Safely
Although registering your will is not mandatory, it’s crucial to ensure the document is safely stored and easily accessible to your Executor. Some popular options for storing your Will include:
- Home Safes: A fireproof and waterproof safe at home can protect your Will from damage. Make sure someone you trust knows the combination or where to find the key.
- Attorney’s Office: Many estate planning attorneys will hold onto the original copy of your Will for safekeeping.
Final Thoughts
If your Will is lost or destroyed and no one can produce the original, the court may presume it was intentionally revoked. This can complicate matters for your heirs and lead to disputes. To avoid this, let your Executor or a trusted loved one know where your original Will is stored and consider utilizing the voluntary Will Registry.
Estate planning can feel overwhelming, but taking steps to protect your Will provides peace of mind for you and your loved ones. If you have questions about drafting or storing your Will, consult an experienced estate planning attorney who can guide you through the process.
by Jose D. Roman | Jan 22, 2025 | Estate Administration, Estate Planning, Intestate Estate (No Will), Last Will and Testament, Probate
Death is not a topic many of us like to dwell on, but planning for the inevitable is essential to ensure that your hard-earned money and assets are distributed according to your wishes. One question that often arises is: what happens if you die without a Will? Specifically, does your money automatically go to the government?
The short answer is no—your money does not automatically go to the government if you die without a Will. However, the distribution of your assets Will depend on the intestacy laws of your state. If you reside in New Jersey, understanding its intestacy laws is crucial.
What Happens if You Die Without a Will in New Jersey?
In legal terms, dying without a Will is known as dying “intestate.” When this happens, New Jersey’s intestacy laws come into play. These laws dictate how your estate Will be divided among your heirs, and the process generally aims to distribute your assets to your closest living relatives.
Here’s a breakdown of how New Jersey’s intestacy laws work:
1. If You Have a Surviving Spouse
The surviving spouse’s share depends on whether you have children or other close relatives:
- No children or parents: If you leave behind only a spouse and no descendants (children, grandchildren, etc.) or parents, your spouse inherits everything.
- With children from your marriage: If all your children are also the children of your surviving spouse, your spouse inherits everything.
- With children from another relationship: If you have children who are not the children of your surviving spouse, your spouse inherits the first 25% of your estate (but not less than $50,000 or more than $200,000.00), plus half of the remaining estate. The rest is divided among your children.
- With parents but no children: If you leave behind a spouse and parents but no children, your spouse inherits the first 25% of your estate (but not less than $50,000 or more than $200,000.00), plus 3/4 of the remaining estate. The rest goes to your parents.
2. If You Don’t Have a Surviving Spouse
If you are not married or your spouse has predeceased you, your assets are distributed as follows:
- To your children, in equal shares.
- If you have no children, to your parents.
- If your parents are deceased, to your siblings.
- If you have no siblings, to your nieces and nephews.
- If none of the above relatives are alive, the estate Will be distributed to more distant relatives.
3. When the Government Steps In
Only if you die without a Will and have no living relatives does your estate “escheat” to the state. In New Jersey, this is an extremely rare occurrence. The state government is considered the last resort for inheritance when absolutely no relatives can be located.
Non-Probate Assets
Not all assets go through probate or are governed by intestacy laws or your Will. Some assets, known as non-probate assets, pass directly to beneficiaries outside the probate process. These include:
- Jointly Owned Property: Assets held in joint tenancy or tenancy by the entirety automatically pass to the surviving owner.
- Beneficiary Designations: Accounts like life insurance policies, retirement accounts (e.g., 401(k) or IRAs), and payable-on-death (POD) or transfer-on-death (TOD) accounts pass directly to the named beneficiaries (assuming you have completed these forms).
- Trust Assets: Property held in a trust is distributed according to the terms of the trust and bypasses probate.
It’s important to keep beneficiary designations up to date and coordinate these with your overall estate plan. Even if you have a Will, these non-probate assets will not be subject to its terms unless the estate is named as a beneficiary.
Why You Should Have a Will
While New Jersey’s intestacy laws are designed to ensure that your estate passes to your family, this may not align with your specific wishes. For example:
- You may want to leave a larger share to a particular family member.
- You might wish to include friends, charities, or other beneficiaries who are not covered under intestacy laws.
- If you have minor children, you can appoint a guardian for them in your Will.
- You can also name an Executor to manage your estate, reducing potential conflict among family members.
Without a Will, the probate process can also be more complicated and time-consuming for your loved ones.
Final Thoughts
To ensure your assets are distributed according to your wishes and to simplify the process for your loved ones, it’s essential to create a Will. Consulting with an estate planning attorney can help you navigate the complexities of New Jersey’s intestacy laws and tailor a plan that fits your unique situation.
While your money generally Will not go to the government if you die without a Will, relying on state laws to determine the fate of your estate leaves much to chance. Taking the time to draft a Will is one of the most thoughtful and impactful gifts you can leave behind for those you care about.
by Jose D. Roman | Jan 21, 2025 | Estate Administration, Medicaid, Medicaid Estate Recovery
Medicaid provides crucial health coverage for individuals and families with limited income and resources, as well as people who require long-term nursing care. However, many recipients and their families may not realize that Medicaid is often entitled to be paid back after the recipient dies. Let’s talk about Medicaid Estate Recovery in New Jersey.
What Is Medicaid Estate Recovery?
Medicaid Estate Recovery is a federal requirement that obligates states to recover the costs of certain Medicaid benefits paid on behalf of a recipient after their death. This means that New Jersey’s Medicaid program may seek reimbursement from the estate of a deceased Medicaid beneficiary for services provided.
When Does Medicaid Estate Recovery Apply?
In New Jersey, Medicaid Estate Recovery applies in the following cases:
- Age 55 and Older: Medicaid benefits provided to individuals aged 55 or older are subject to estate recovery. This typically includes expenses related to nursing home care, home and community-based services, and other long-term care costs.
What Assets Are Subject to Recovery?
The state can only recover from assets that are part of the deceased’s probate estate. In New Jersey, this includes assets owned in the individual’s name at the time of death, such as:
- Real property (e.g., a home)
- Bank accounts
- Investments
Assets held jointly, in a trust, or designated with a beneficiary (like life insurance) may not be subject to recovery or recovery may be delayed, depending on the structure of ownership.
Are There Any Exceptions?
- Hardship Waivers: Families may apply for a hardship waiver if estate recovery would create significant financial hardship for survivors.
- Surviving Spouse: Recovery is deferred until the death of the Medicaid recipient’s surviving spouse.
- Dependent Family Members: If the deceased has a surviving child under age 21, or a blind or disabled child of any age recovery is postponed.
- Home Exemptions: If an adult child lived in the home and provided care that delayed the need for Medicaid benefits, the home may be exempt from recovery.
How to Protect Assets from Medicaid Estate Recovery
There are legal strategies to safeguard assets, but they require careful planning well in advance:
- Creating Trusts: Irrevocable trusts can shield assets from probate and Medicaid recovery.
- Gifting Assets: Transferring assets to family members or others, while adhering to Medicaid’s 5-year look back period rules, can minimize exposure.
- Joint Ownership: Structuring assets as jointly owned with right of survivorship can limit probate exposure.
- Exempt Transfers: Some transfers of assets are exempt from Medicaid’s 5-year look back.
Conclusion
These rules are complicated and confusing, even for the average attorney. It is essential to consult with an attorney who specializes in elder law to explore these strategies and implementing a plan that complies with both federal and your state’s Medicaid regulations.
by Jose D. Roman | Jan 13, 2025 | Estate Administration, Estate Planning, Intestate Estate (No Will), Last Will and Testament, Probate
A last will and testament is one of the most important legal documents you can prepare in your lifetime. It ensures that your assets are distributed according to your wishes and provides clarity and peace of mind to your loved ones after you are gone. In New Jersey, the absence of a Will can lead to a host of complications, from family disputes to lengthy probate proceedings. Here’s why having a Will is essential and how you can create one tailored to New Jersey’s legal requirements.
- Control Over Asset Distribution: Without a Will, New Jersey’s intestacy laws dictate how your property will be distributed. This may not align with your personal wishes, especially if you want to provide for specific family members, friends, or charities.
- Protection for Minor Children: A Will allows you to name guardians for minor children, ensuring they are cared for by someone you trust. It also enables you to provide financial support for their upbringing.
- Avoiding Family Conflicts: Clearly outlining your wishes helps minimize misunderstandings and disputes among heirs, reducing the emotional strain on your loved ones during an already difficult time.
- Efficient Probate Process: A well-drafted Will can streamline the probate process, saving time and reducing administrative costs.
How to Create a Last Will and Testament in New Jersey
Creating a valid Will in New Jersey involves specific steps to ensure its enforceability. Here’s a step-by-step guide:
- Determine Your Assets and Beneficiaries:
- Make a comprehensive list of your assets, including real estate, bank accounts, investments, personal property, and digital assets.
- Identify the individuals or organizations you wish to inherit your property.
- Choose an Executor and Trustee:
- The Executor is the person you designate to manage your estate. Choose a trusted individual to manage your estate and ensure your wishes are carried out. This person will handle tasks like paying debts, filing taxes, and distributing assets. It is recommended that you also choose at least one alternate executor.
- The Trustee is the person you designate to manage any funds that are to be held in trust – usually for the benefit of a minor or a person incapable of managing their own affairs. You should also choose a trusted individual and it is also recommended that you choose at least one alternate.
- Choose Guardians for Minor Children:
- If you have children under 18, name guardians to care for them in the event of your death.
- Draft Your Will:
- Working with a qualified attorney ensures compliance with New Jersey laws and reduces the likelihood of challenges. It is not recommended that you use an online template or prepare a holographic (handwritten) Will.
- Sign and Witness the Will:
- In New Jersey, you want to have a “self-proving” Will, which is one that is properly witnessed and notarized. This minimizes the time and cost of probate.
- The Will must be signed by you in the presence of two witnesses who also sign the document. These witnesses should not be beneficiaries to avoid conflicts of interest.
- The Will must also be notarized, either by your attorney or a notary.
- Store the Will Safely:
- Keep the original document in a secure location, such as a fireproof safe, and inform your executor of its location.
- Avoid keeping the Will in a bank safe deposit box because that may be difficult for your Executor to gain access to after you pass away.
Updating Your Will
Life circumstances change, and your Will should reflect those changes. Review and update your Will after major life events, such as:
- Marriage or divorce
- Birth or adoption of a child
- Significant changes in assets
- Death of a beneficiary or Executor
What Happens Without a Will in New Jersey?
If you die without a Will, your estate is distributed according to New Jersey’s intestacy laws. Typically, this means:
- Your spouse and/or children will inherit your assets, with specific proportions depending on the family structure.
- If you have no close relatives, your property may go to distant relatives or even revert to the state.
This process can lead to outcomes you may not have intended and cause unnecessary stress for your family.
Final Thoughts
A Last Will and Testament is more than a legal document; it’s a way to care for your loved ones and leave a lasting legacy. In New Jersey, creating a Will is a straightforward process, but it’s crucial to follow the state’s requirements to ensure its validity. Whether you are drafting your first Will or revising an existing one, taking this step is an act of responsibility and compassion.
If you are unsure where to start, consider consulting an estate planning attorney in New Jersey to guide you through the process. Your loved ones will thank you.
by Jose D. Roman | Jan 8, 2025 | Estate Administration, Estate Planning
Probate can be a confusing and emotional process, especially if you are dealing with the loss of a loved one. If you live in New Jersey or are handling the estate of someone who resided there, it’s important to understand how probate works in the state. Here’s a quick guide to help you navigate the probate process in New Jersey.
What Is Probate?
Probate is the legal process through which a deceased person’s estate is settled and distributed to beneficiaries. During probate, the court validates the deceased’s will (if one exists), appoints an executor or administrator to oversee the estate, and ensures that debts, taxes, and other obligations are paid before assets are distributed.
Is Probate Necessary in New Jersey?
In New Jersey, whether probate is necessary depends on the type and value of the assets left behind. Some assets, such as jointly owned property, life insurance proceeds with named beneficiaries, or accounts with payable-on-death (POD) designations, bypass probate. However, assets solely in the deceased’s name typically require probate to transfer ownership.
Types of Probate in New Jersey
New Jersey has two primary probate processes:
- Formal Probate:
- Required when there is a dispute about the will or the estate’s administration.
- Overseen closely by the Surrogate’s Court.
- Informal Probate:
- The most common process when there is no dispute.
- Streamlined and less costly, as it requires minimal court involvement.
Steps in the Probate Process
- File the Will with the Surrogate’s Court:
- The executor named in the Will must file the original will and a certified copy of the death certificate with the Surrogate’s Court in the county where the deceased resided.
- If there is no Will, the court will appoint an administrator, usually a close family member, to handle the estate.
- Appoint an Executor or Administrator:
- The court officially appoints the executor or administrator to act on behalf of the estate.
- This individual receives “Letters Testamentary” (if there’s a will) or “Letters of Administration” (if there isn’t a will), granting them legal authority to manage the estate.
- Notify Creditors and Beneficiaries:
- The executor must notify all beneficiaries named in the Will and publish a notice to creditors, allowing them to make claims against the estate within a specified timeframe.
- Inventory the Estate’s Assets:
- The executor compiles a list of the deceased’s assets, including bank accounts, real estate, personal property, and investments.
- Pay Debts and Taxes:
- The executor ensures all outstanding debts, including medical bills, funeral expenses, and taxes, are paid before distributing the remaining assets.
- Distribute Assets to Beneficiaries:
- Once all obligations are met, the executor distributes the remaining assets according to the will or, if there’s no will, New Jersey’s intestacy laws.
How Long Does Probate Take in New Jersey?
The timeline for probate varies depending on the complexity of the estate. Informal probate can take as little as a few months for simple estates, while complex or contested cases may take a year or more to resolve.
Avoiding Probate in New Jersey
There are ways to minimize or avoid probate in New Jersey:
- Create a living trust and transfer assets into it.
- Designate beneficiaries for accounts and insurance policies.
- Hold property jointly with rights of survivorship.
Do You Need an Attorney?
While New Jersey’s probate process is relatively straightforward, hiring an attorney can be beneficial, especially for larger or more complicated estates. An attorney can help navigate legal requirements, resolve disputes, and ensure the executor fulfills their duties properly.
Conclusion
Probate in New Jersey is a manageable process, but understanding the steps and requirements can help reduce stress and ensure the estate is handled efficiently. If you’re dealing with probate, consider consulting a qualified attorney to guide you through the process and provide peace of mind.