Estate Administration to Pursue Legal Claims – Part 2
In last week’s post I referred to a recent case in our office in which an administrator ad prosequendum was needed with respect to an estate whose only potential asset was a legal claim for damages resulting from a wrongful death. Not knowing how much might be recovered and there being no other estate asset, appointing an administrator for the limited purpose of pursuing the claim is the best option. So what is the process and who can be appointed administrator ad prosequendum? New Jersey court rules establish that the surrogate’s court of the county where the intestate (person who died without a will) resided or, if not a New Jersey resident, the surrogate’s court of the county where the accident resulting in the death occurred grants letters of administration ad prosequendum. The persons entitled serve are those closest in relation to the intestate. First right would be the surviving spouse or domestic partner, if any, and then the remaining heirs or some of them. In our case there was no surviving spouse or partner but there were four children. Since each would have equal right to serve, anyone not wishing to serve needs to sign a renunciation. Alternatively, an application by the person wanting to serve must
Estate Administration to Pursue Legal Claims – Part 1
We recently received a call from a personal injury attorney in need of help. The attorney had pursued a wrongful death claim on behalf of the children of their father who died in motor vehicle accident. Their father had no assets at the time of his death and in fact was a Medicaid recipient. Because, in wrongful death actions, there typically is a claim brought by the estate in addition to one by individual family members, an executor or administrator needs to be appointed to pursue - or prosecute - the claim on behalf of the estate. Dad left no will, however, so no executor could be appointed. No administrator had to this point been appointed because, as I related, there had been no need for one. Dad had no assets so there was no reason to go thru the estate administration process. While the value of the claim could not yet be determined with any certainty, the attorney believed the claim had value but needed someone to be able to sign necessary documents and make decisions about the claim on behalf of the estate. Enter someone called an administrator ad prosequendum. The term “ad prosequendum” is a Latin term meaning “for prosecution”. An administrator is appointed for the limited
Changing Distributions After Death – Part 3
In my last two posts I have been talking about the challenge of redistributing an inheritance after death. Many people assume that they are free to accept the sum bequeathed to them or not and that is absolutely true. But as I explained last week, there are tax ramifications, specifically gift tax. The annual gift tax exclusion can be a way to avoid gift tax but what if the amount to be redistributed is too large? Let’s say there are two children, A and B. A wants to give his $300,000 bequest to his brother. Using the annual gift tax exclusion, it could take 5 to 15 years to complete the gift, depending on whether A or B or both are married. (See my post last week.) Another option is for A to disclaim the assets he wants to direct to B. A disclaimer is a legal statement that A does not wish to receive the inheritance being disclaimed. A qualified disclaimer - one filed within 9 months of the death of the decedent who made the bequest - makes it so that the person disclaiming is treated as never having received it for tax purposes. It is as if that person predeceased - died before - the decedent. In this way,
Changing Distributions After Death – Part 2
In my post last week, I talked about a scenario where family members wish to change the distributions they are to receive after a loved one’s death. Because the death sets in place the wishes of the decedent (person who died) either by the will or the intestacy laws if there is no will, any changes made would be considered gifts from one beneficiary to another. In order to understand the implications of these gifts we first need to understand the gift tax laws. New Jersey does not have a gift tax, however, there is a federal gift tax. The rate, depending on the size of the gift, can be as high as 40%, although there are ways to avoid it. For example, there is an annual gift tax exclusion. In 2022 annual gifts of up to $16,000 per person can be made without triggering the need to pay gift tax or file a federal gift tax return. In the case where the donor (person making the gift) is married, a gift of $32,000 can be made without any gift tax implications. Where the gift’s recipient is also married the annual amount can be as high as $64,000, all exempt from gift tax. This may be an easy way
Changing Distributions After Death – Part 1
Often when we have an estate administration matter, the will being probated is an old one. In some cases the person never actually executed a will although he or she may have communicated to family members his/her wishes with regard to the distribution of assets. In other cases the family members agree after death how they wish to split assets, which may be different than what the Last Will stated or what the intestacy laws provide when there is no Last Will. While it may seem like no big deal if all the parties agree to the changes, there are potential tax ramifications to making changes after death. That’s because the method of distribution set forth by the Last Will or by the intestacy law is basically set in stone once the person has died. It can’t be changed, even by agreement between all interested parties. Now, that’s not to say if I am to receive something from Mom’s estate, that I must accept it. I can certainly choose to transfer it to someone else. It’s just that this transfer comes from me and not because Mom instructed it that way. In other words, it is potentially a gift from me to the person I transfer it to and
Happily Married or Something Else? Part 3
In this third post of 3, I continue the discussion about second marriages and Medicaid and more specifically how to handle a fraudulent marriage. Last week I explained that if we make every effort to get the documentation from an ex-spouse for the Medicaid application process, regulations provide that the application can be approved. In the case where the refusal to cooperate comes not from an ex-spouse but instead a current spouse, the State is not likely to accept that we have done everything we could. Divorce is one option at this point but we still have to contend with the 5 year lookback and getting documents concerning the ex-spouse’s accounts. This is also problematic if the ex-spouse took funds of the Medicaid spouse without authorization and, for example, sent to other family members. These transfers would cause a Medicaid penalty. If the marriage is fraudulent, however, a better option may be an annulment. An annulment is different than a divorce although the outcome is the same. The legal effect of an annulment is that the marriage never existed. It never happened. If one of the parties did not have the legal capacity to enter into the marriage, which could be the case where a caregiver marries an elderly client,