The Executor Who is Neither a Resident Nor a Citizen (Part 1)
We received a call the other day regarding an estate administration matter. A New Jersey resident died leaving a home and other assets in her name. She named her her sibling as the sole heir as well as her executor. Sounded pretty straight forward. An inheritance tax return would need to be filed and inheritance tax paid in order to complete the estate administration process but since the executor would be the sole heir no accounting would be necessary. There was, however, one potential wrinkle. The executor is neither a New Jersey resident nor a U.S. citizen. In fact, the executor does not speak English. The caller wanted to know whether that would prevent her from serving as executor. New Jersey does not have a specific requirement that an executor named in a will be a New Jersey resident or even a United State citizen. Where there is no will and an administrator needs to be appointed, court rules establish a preference for a New Jersey resident unless there is a compelling reason otherwise. There is no such rule that even suggests a preference for the choice of a non resident or non citizen as executor of a will. I did tell the caller that as a practical matter, however, there are
New York Long Term Care Trust Act – Part 2
In last week’s post I wrote about a bill introduced in New York that we may eventually see in New Jersey. Modeled after a Washington state law, if passed it would mandate a payroll tax on all employees to cover an insurance policy that will provide coverage for their long term care. As I noted last week, the Washington law has flaws in it that the draft of the New York law attempts to fix. The New York law provides for an exemption from the tax as long as you have a long term care insurance policy in place as of January 1 of whatever year the new law becomes effective. It does not appear likely that this will happen in 2022 but if it does occur any time in 2023 one would need to have policy in place by the end of this year. The policy benefits are small, $100 a day for 1 year. The total of $36,500 will not be enough for many people, since the average cost of nursing home level care can approach $168,000 or more a year, however, the feeling is that with the oldest baby boomers starting to turn 80 in 2026, any attempt to ease the increasing burden
New York Long Term Care Trust Act – Part 1
A bill introduced in the New York Senate may be something to pay attention to here in New Jersey. The law is titled the “New York Long Term Care Trust Act” and is modeled after a similar law passed in the State of Washington last year, although attempting to avoid that law’s negative aspects. The law in Washington provides limited long term care coverage to its residents funded by a mandatory payroll tax. Many, however, considered that law to have some serious flaws. For one thing, it contained an exemption from the payroll deduction as long as residents had a long term care insurance policy in place by November 1, 2021. This deadline threw the insurance industry into a bit of a crisis, causing such a high demand in requests for policies that some insurance companies stopped selling new policies. Secondly, the law did not specifically provide that any private policy purchased must be kept in force to maintain the exemption, a pretty big gap that Washington legislators failed to see. New York is considering passing a similar law, but with an effort to improve on Washington’s flaws. While the proposed New York law would obviously only apply to New York residents it is worth paying attention because
A Mysterious Disappearance – Part 2
In last week’s post I told you about Joe’s call concerning the disappearance of his brother Jim while on a trip to South America. The fishing boat he was on came back without him but his body has not been recovered. While the loss and uncertainty obviously is causing much pain for the family the financial impact is why Joe called us. He said that at this point the family has accepted the fact that Jim is deceased but without a body no death certificate can be issued. I explained to Joe that New Jersey does have a statute that lays out the process by which someone can be declared dead. A court action can be filed seeking an order directing that a death certificate be issued, however, there is a waiting period of 5 years before that action can be entertained. “But does that mean the date of death will be 5 years from now”, Joe asked. He was concerned about Jim’s life insurance policy and being able to put in a claim. I told him that while the waiting period to file is 5 years, the family can ask to have the date of death declared earlier than that. In this case he would look for
A Mysterious Disappearance – Part 1
We recently received a call from Joe. He said his brother, Jim, who lives in New Jersey with his family, went to South America on a fishing trip. When the boat returned to shore Jim was nowhere to be found and the crew had no answers as to what happened to him. It was now 60 days since Jim had disappeared Joe told me that Jim has assets and life insurance. He called to ask how those assets could be accessed to help Jim’s wife and children pay the bills. Joe said he believes there was foul play and that Jim is dead, however, a death certificate has not been issued since no body has been recovered. I explained that without a death certificate Jim’s will can’t be probated and the life insurance company won’t pay out the death benefit under his life insurance policy. Joe said that a local investigation is being conducted to determine whether any civil or criminal charges will be filed concerning Jim’s disappearance. I told Joe that at the conclusion of that investigation he should request that a death certificate be issued. He can then proceed with accessing Jim’s assets. “But I have no idea how long that will take”, Joe told me. He asked
Why and When a Surety Bond is Necessary – Part 3
In this third post of three I once again discuss surety bonds. Last week I explained the types of situations where a court would require one. The cost of a bond is the premium - an annual fee that must be paid each year the bond remains in place. How long is that exactly? Basically until the fiduciary’s job is done. If, for example, we are talking about an administrator of an estate, the bond must remain in place until the estate administration process is complete. The administrator must gather the assets, pay the debts and taxes if any, and then disburse the remaining net estate to the rightful heirs. Before disbursement the administrator must provide an accounting to all heirs showing what was spent and how the administrator arrived at the amount to be distributed. This is called an accounting. It can be done informally or formally. An informal accounting does not require court participation. It is less time consuming and expensive. The accounting is submitted to all the heirs for their approval before final distribution. A formal accounting is one in which the accounting is submitted to the court for its approval. Court rules and procedures must be followed with notice given to all interested parties. A judge reviews the accounting and then