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Wills & Estate Admininstration

Whenever a person dies, his or her estate needs to be collected, managed, and distributed. Estate administration involves gathering the assets of the estate, paying the decedent's debts, and distributing the assets that remain in the estate.

In recent years, state legislatures have attempted to reduce the complexity of estate administration. Currently, about 20 states have adopted some version of the Uniform Probate Code (UPC), which was designed to simplify the estate administration process and provide similarity among probate laws from state to state.

Which State Law Applies?

In some cases, an estate may need to be administered in more than one state. Generally, the state in which the decedent resided at the time of death will be the state where the decedent's estate is probated. However, state law governs the transfer of real estate, so if the decedent owned real estate in another state, it may be necessary to do an ancillary proceeding to probate that one piece of property in the state where it is located. An ancillary proceeding is a scaled-down probate proceeding, which governs only the assets located in that state. In some instances, it may be necessary to consult two attorneys, one in the state where the decedent lived and another attorney in the state where the decedent owned real estate.

Practitioner Orders for Life-Sustaining Treatment (POLST):

On February 22, 2013, a new POLST form was unveiled at a press conference with the New Jersey Hospital Association. View the new POLST form here.

On December 21st, 2012, Governor Christie signed legislation that will enable patients to indicate their preferences regarding life-sustaining treatment. The law calls for the creation of a standardized Practitioner Orders for Life Sustaining Treatment (POLST) form that is signed by a patient’s attending physician or advanced practice nurse and provides instructions for health care personnel to follow for a range of life-prolonging interventions. This form becomes part of a patient’s medical records, following the patient from one healthcare setting to another, including hospital, home, nursing home, or hospice.

What exactly is the POLST Form?:

POLST, which stands for Practitioner Orders for Life-Sustaining Treatment, is a set of medical orders that help give seriously ill or frail elderly patients more control over their end-of-life care. Produced on a distinctive green form and signed by both the doctor/APN and patient/surrogate, POLST specifies the types of medical treatment that a patient wishes to receive toward the end of life. As a result, POLST can prevent unwanted or medically ineffective treatment, reduce patient and family suffering and help ensure that patients’ wishes are honored.

Does the POLST form replace a traditional Advance Directive?

The POLST form complements an Advance Directive and is not intended to replace that document. An Advance Directive may still be necessary to appoint a legal healthcare decision maker and is recommended for all adults, regardless of their health status.

For more Frequently Asked Questions, please refer to this helpful brochure.

The NJ POLST website disclosed:
"This process makes patients and their medical professionals partners in ensuring the patient's wishes are expressed and respected. That is the promise of POLST."

Probate: Formal or Informal

In many states, a probate proceeding can be either formal or informal. An informal probate proceeding usually involves filing some basic paperwork, having the court appoint someone to manage the estate, paying the debts, distributing the assets, and having the court approve the distribution. The court's role may never require a hearing, but only a review of the papers filed.

In other instances, such as when a will is disputed, a formal probate proceeding may be required. A formal proceeding involves more court oversight and usually requires one or more court hearings. In some states, a probate proceeding can be formal in parts and informal in others. For example, the matter may start out formally, with a court hearing to appoint the personal representative, but end informally, with a paper filed with the court detailing how the assets are to be distributed.

Managing the Estate: Personal Representatives

The first task in a probate proceeding is appointing a responsible party to manage the estate. This person is usually called the personal representative. In some states this position is known as the "executor." The personal representative may be an individual or a company, such as a bank. The personal representative may have been nominated by the decedent in the will. If there was no will, the court will usually appoint the surviving spouse or another family member. There may be more than one personal representative named.

Inventorying the Estate

After being appointed, the personal representative is expected to document all of the decedent's assets. This documentation is often referred to as the inventory. The personal representative must also inform the decedent's creditors that the decedent has died. If the decedent's probate assets are sufficient to pay the creditors, the personal representative will pay them from the estate. If the probate assets are insufficient, the personal representative may need to obtain court approval to determine which creditors should be paid.

Distributing the Estate

If there are any assets left after the creditors have been paid, those assets are distributed according to the will. If there is no will, the decedent is said to have died intestate. State laws vary as to how to distribute the assets of an intestate decedent.

The personal representative will also file any necessary tax returns. If the estate is owed any money, the personal representative may need to bring a lawsuit in order to collect it. If the will is contested, or if there is any other dispute over how to distribute the estate assets, the personal representative may have to "defend" the will in a probate proceeding.

Avoiding Probate Through Small Estate Administration

If the decedent owned few assets, it may be possible to avoid the probate process. In many states, a "small estate administration" is available. Usually, in order to qualify for a small estate administration, the decedent's assets must not include real estate and must be worth less than a threshold amount determined by the state. If a small estate administration is applicable, the parties who are entitled to receive the decedent's assets may collect those assets by way of an "affidavit," a sworn statement that is filed with the court. Even in a small estate proceeding, though, the decedent's creditors may need to be paid from the assets before any estate assets are distributed. Wills are the most common way for people to state their preferences about how their property should be handled after their death. A will is similar to an instruction booklet for the probate court, the court that oversees estate administration and disputes over the will itself. The will provides the court with guidance as to how to distribute the deceased person's assets in accordance with his or her wishes.

In and Out of Probate

Wills have been referred to as "tickets to probate court." In large estates, the only way to legally transfer assets in accordance with the will is through the probate process. However, wills only control probate assets, that is, those assets that can be transferred by the probate court. Some assets do not have to be probated and generally are not controlled by a will. These assets include:

  • Life insurance proceeds, which are paid to the beneficiaries designated in the policy.

  • Property held in joint tenancy, which provides that, upon the death of one joint tenant, the deceased person's interest automatically passes to the surviving joint tenant(s).

  • Property held in living trusts.

Because these assets are transferred by means other than the probate process, a will generally does not control how they are distributed.

Example: A person names her spouse in a beneficiary designation to receive her life insurance proceeds on her death. In her will, she names her sister to receive those same proceeds. Because the proceeds are paid directly to the spouse, they never become part of the deceased person's estate. Therefore, her will, which only controls her estate, cannot override the beneficiary designation.

Will Validity

A will must meet certain formal requirements in order to be valid, otherwise it may be challenged during the probate process. These requirements vary from state to state. Generally, the person making the will (the "testator") must be an adult of sound mind, meaning that the testator must be able to understand the full meaning of the document. Wills must be written. Some states allow a will to be in the testator's own handwriting, but a better and more enforceable option is to have a typed or pre-printed document. A testator must sign his or her own will, unless he or she is unable to do so, in which case the testator must direct another person to sign the will in the presence of witnesses, and the signature must be witnessed and/or notarized. A valid will remains in force until revoked or superseded by a subsequent valid will. Some changes may be made by amendment (a "codicil") without requiring a complete re-write.

Will Limitations

Some legal restrictions prevent a testator from giving full effect to his or her wishes. Some laws prohibit disinheritance of spouses or dependent children. A married person cannot completely disinherit a spouse without the spouse's consent, usually in a prenuptial agreement. In most jurisdictions, a surviving spouse has a right of election, which allows the spouse to take a legally determined percentage (up to one-half) of the estate when he or she is dissatisfied with the will. Nondependent children may be disinherited, but this preference should be clearly stated in the will in order to avoid confusion and possible legal challenges.

Will Executors

A will usually appoints an executor or personal representative to perform the specific wishes of the testator after he or she dies. The personal representative consolidates and manages the testator's assets, collects any debts owed to the testator at death, sells property necessary to pay estate taxes or expenses, and files all necessary court and tax documents for the estate.

Dying Without a Valid Will: "Intestacy"

While wills may be "tickets" to go through the probate process, not having a will forces the probate court to distribute the property without guidance from the testator. Dying without a will leaves an estate intestate, and a probate court must step in to divide up the estate using legal defaults in order to give property to surviving relatives. A personal representative must still be appointed, but the court must choose someone rather than following the deceased person's wishes.

The court pays any unpaid debts and death expenses first, and then follows the legal guidelines. The rules vary depending on whether the deceased was married and had children, and whether the spouse and children are alive. If the intestate individual has no surviving spouse, children or grandchildren the estate is divided between various other relatives.Therefore, intestacy means that people who would never have been chosen to receive property may do so. Additionally, state intestacy laws only recognize relatives, so close friends or charities that the deceased favored do not receive anything. If no relatives are found, the estate goes to the government in its entirety. Intestacy also poses a heavy tax burden on estate assets. When made aware of the consequences of intestacy, most people prefer to leave instructions rather than subject their survivors and property to mandated division.

Probate: Not in Every Case

Where some small estates are concerned, a will may not have to be probated. If the value of the assets in the estate is below a threshold established by state law, a short estate proceeding may avoid the probate process entirely.

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THE LAW OFFICE OF ANDREW L. MILLER

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Phone. (609) 645-1599

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