Estate Panning, Special Needs Trusts, Powers of Attorney & Medical Directives
The knowledge that we will eventually die is one of the things that seems to distinguish humans from other living beings. At the same time, no one likes to dwell on the prospect of his or her own death. But if you postpone planning for your demise until it is too late, you run the risk that your intended beneficiaries – those you love the most – may not receive what you would want them to receive whether due to extra administration costs, unnecessary taxes or squabbling among your heirs.
This is why estate planning is so important, no matter how small your estate may be. It allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want and when you want. It permits you to save as much as possible on taxes, court costs and attorneys’ fees; and it affords the comfort that you loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.
All estate plans should include, at minimum, two important estate planning instruments: a durable power of attorney and a will. The first is for managing your property during your life, in case you are ever unable to do so yourself. The second is for the management and distribution of your property after death. In addition, more and more, Americans also are using revocable (or “living”) trusts to avoid probate and to manage their estates both during their lives and after they are gone.
Special Needs Trusts
Parents and guardians of loved ones with disabilities should understand the benefits of creating a Special Needs Trust, also known as Supplemental Needs Trusts. Government benefits, such as DDD services, Medicaid and Social Security Income (SSI), are extremely important for adults with developmental and other disabilities. They provide cash benefits, medical coverage, long-term supports and services for individuals with disabilities. Eligibility is essential to accessing adult services through New Jersey DDD and is based on several requirements, including that an individual’s personal assets not exceed $2,000.
Government cash benefits are minimal, amounting to income less than the federal poverty level. They do provide for an individual’s most basic needs: food, clothing and shelter. However, individuals with disabilities often have significant needs beyond what government benefits provide.
As their name implies, Special Needs Trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds. These trusts typically pay for things like education, recreation, counseling and medical attention beyond the simple necessities of life. Parents planning for the future of their loved one with special needs want to provide their loved one with a full life beyond the bare necessities. This is especially important when considering estate planning. If parents, guardians or grandparents leave assets in their Will directly to an individual who is receiving government benefits, they run the risk of disqualifying that individual from receiving future benefits and/or losing services. On the other hand, if they leave assets to a third party with direction that the assets be used on behalf of the disabled individual, they run the risk that the child might not receive the intended assets. A Special Needs Trust will allow a disabled beneficiary to receive inheritances, gifts, lawsuit settlements or other funds while protecting the individual’s eligibility to receive government benefits and services. The trusts are drafted so that the funds will not be considered to belong to the disabled individual in determining his/her eligibility for government benefits and services.
In response to these concerns, the government has established rules for Special Needs Trusts. These rules allow assets to be left in a special needs trust for a recipient of benefits such as DDD services, SSI benefits and Medicaid, without the individual losing his/her eligibility. Special Needs Trusts can be created for both children and adults though planning earlier in a loved one’s life is wise.
Powers of Attorney and Medical Directives
Powers of Attorney
A power of attorney allows a person you appoint – your “attorney in fact” – to act in your place for financial purposes if, and when, you ever become incapacitated. In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that he/she could implement immediately under a simple, durable power of attorney.
A medical directive may encompass a number of different documents, including a health care proxy, a durable power of attorney for health care, a living will and medical instructions. The exact document or documents will depend on your state’s laws and the choices you make.
Both a health care proxy and a durable power of attorney for health care designate someone you choose to make health care decisions for you if you are unable to do so yourself. A living will instructs your health care provider to withdraw life support if you are terminally ill or in a vegetative state. A broader medical directive may include the terms of a living will, but will also provide instructions if you are in a less serious state of health, but are still unable to direct your health care yourself.
Signing Procedures During Covid-19 State of Emergency
On April 14th, Governor Murphy signed Assembly Bill A3903, which modified the Notaries Public Act of 1979, to allow a notary (or lawyer admitted to practice in New Jersey) to perform notarial acts using communication technology for a remotely located individual. Simply stated, Notaries can now watch a person sign a document via a phone or computer and notarize the document if:
The notary knows the person signing the document or has two types of identification;
The notary must include a special certification on the document to be notarized; and
The notary must maintain the audio-visual recording of the “signing” for 10-years.
So, we can now notarize a Will remotely. We can also Notarize powers of attorney and Medical Directives/Living Wills.
The law is rarely simple and signing a Will comes with some complexity. A significant concern is that a Will that does not comply with the formalities of executing a Will in New Jersey may be subject to a Will challenge. Moreover, a properly executed Will should be admitted to probate by the County Surrogate with a minimum of cost and delay. A Will that is not properly executed can only be admitted to probate by a Superior Court Judge, which is far more expensive and time consuming as compared to the process in the County Surrogates office.
So now we get to the big potential “hitch.” In New Jersey, for a Last Will and Testament to be admitted to probate before the Surrogate, there must be two witnesses. The remote notary law says absolutely nothing about witnesses. However, there are solutions under New Jersey law. The first solution is contained directly in the statute governing the execution of a Will. The statute says that witnesses can either sign within a reasonable time after each person watched the signing of the Will or the person making the Will can later “acknowledge” their signature on the Will. As a second level protection, we have a statute addressing “writings intended as Wills.” So, if a Client signs, notarizes, but does not obtain witnesses on a Will after the Client has consulted with a lawyer who drafted the Will, the “writing intended to be a Will” statutes allows the Will to be admitted to probate before the Superior Court. In short, there are currently procedures that will allow individuals to remotley execute estate planning documents.