|
|
April 2020 - In This Issue:
|
EMERGENCY RESPONSE
ESTATE PLANNING DURING A PANDEMIC
LIMITS OF THE "NO CONTEST" CLAUSE IN WILLS
ARTICLES OF INTEREST
|
|
I have been in the trust business for many, many years. Since 1980, I have lived through 12 Corrections with declines of 10% or more; 8 Bear Markets with declines of 20% or more lasting at least two months long; and, 5 Recessions with declines in economic conditions for two or more successive quarters. Almost all of these were due to financial circumstances causing people to worry about his or her financial future. What is happening today is unprecedented! Unprecedented because today concern is not limited to our finances. Today there is deep concern for our personal well-being and that of family and friends. We are bombarded with the daily and sometimes hourly Coronavirus scorecard on television showing new cases and deaths as well as a market in turmoil because of this virus. I know this, because I have taken Governor Murphy’s advice and am working from home.
Garden State Trust Company is considered an
essential business because we are a limited purpose bank. Many of our clients rely on us as a trustee for bill paying, for seeing that monies are transferred to their banking accounts, for making discretionary distributions and, for someone to speak with about their questions and concerns.
I want to thank our team for the unwavering dedication to our clients and to Garden State Trust Company. In order to insulate our team from unnecessary contact with others for their protection, and that of their family, we are not allowing any more than one team member in the office at any one time until we get the all clear from Governor Murphy. All of us, including myself, have the capability of working remotely from home. I am so proud of the team that we have in place!
We will get through this pandemic. From a financial perspective remember that bearish market conditions-while inevitable-don't last forever. Downturns come and go!
Please stay well,
|
|
|
|
There are no simple solutions in today's financial markets
We are in an unprecedented situation, with economic distress that we are struggling to understand. It really is different this time for the financial markets. We've seen breathtaking global market contraction. Unprecedented government reactions, including extraordinary new federal spending. Uncertainty about the course of the pandemic hangs in the air over everything.
"Don't panic" may sound soothing, but it is not an investment plan. We can't offer you a panacea for these circumstances, and you should beware of anyone who says that they can. Events may force fundamental changes in our global financial and supply-chain infrastructure. The "new economy" will take time to develop. In the meantime, we invite you to work with us to ride out this financial storm.
We do have faith that the markets will, ultimately, stabilize again. We don't know how long that will take. Whether you already have an account or trust with us, or that relationship is still in our future, we invite you to talk with us about your concerns. We are here for you.
Stay ready
We can't know when stock prices will reach their low point, just as we can't predict when the corner will be turned on the pandemic. But when that low point is reached, stocks may represent the investment opportunity of a lifetime. The Federal Reserve and governments at all levels will be working overtime to restore the economy. In time, when they succeed, that will be reflected in the stock market indices.
Rapid trading--trying to get into and out of the market during periods of extreme volatility--may be hazardous to your wealth. A longer-term focus has a higher probability of success. In that regard, if you continue with a program of saving for your retirement, such as in a 401(k) plan, you will be purchasing more assets at lower cost.
Staying optimistic during a crisis such as a pandemic is hard. It is a test. But America has come through worse tests and lived to prosper.
The value of trusted advice
Today's investors have more choices than ever for managing their investments--including doing it themselves. In the internet age, access to extensive information and sophisticated tools can make everyone feel like an expert.
But not everyone really is an expert.
If you would like to learn more about "fiduciary duties," we will be pleased to talk with you at your convenience.
(April 2020)
© 2020 M.A. Co. All rights reserved.
|
|
ESTATE PLANNING DURING A PANDEMIC
|
Even in a pandemic, estate planning must go on. Sadly, for some individuals, it will acquire a new urgency.
Attend to the essentials
The three foundational documents that everyone should consider having are the health care power of attorney, the financial power of attorney, and a will. In many cases a trust will also be essential for sound wealth management.
If a health care power of attorney is several years old, a review is a good idea. Typical questions:
- Has the best person been selected for exercising the power?
- Is the power sufficiently clear about what should happen in the event of terminal illness?
- Does the power identify the physician who should be called upon to make a determination of terminal illness or persistent vegetative state?
Similar questions may come up when reviewing a financial power of attorney that is several years old.
- Has the best person been identified for exercising the financial power? Do changing circumstances suggest that another person should be selected, or that two people should jointly be exercising the power?
- How extensive will the power be? Can the attorney-in-fact make gifts or otherwise take steps to implement an estate plan? Should so extensive a power require more than one person for exercise?
The expansion of the amounts exempt from the federal estate tax probably reduced the urgency for estate planning and drafting wills. The pandemic ought to change that dynamic. The drastic lowering of death taxes at the federal level and in most states should give estate planning attorneys more flexibility in meeting their clients' objectives. Still, the doubled federal exemption is good only until 2026.
But how can documents be executed?
In an era of mandatory social distancing, how can these important estate planning documents be executed? Meetings with legal advisors may be held by telephone, but how can documents be notarized?
In New York, the solution now is through a video notary. Governor Andrew Cuomo signed Executive Order No. 202.7 on March 19, 2020, which allows New York notaries to take the acknowledgement by video conference from a trust creator who is also located in New York. Other states may follow this example.
Another alternative is to make a holographic will; that is, one written out by hand. The requirements for such wills vary from state to state, but in general such wills do not need to be notarized.
If one is incapacitated but has created a financial power of attorney, the attorney-in-fact could create a trust and transfer assets to it, provided such action is consistent with the client's testamentary intent.
Looking ahead
The future is always unknown, but when the pandemic comes under control, and financial markets stabilize, there could be a significant temporary increase in the demand for estate planning. General Jim Mattis reportedly said, "There is nothing better than getting shot at and missed. It's really great." Those who survive the pandemic may want to take the opportunity to attend to financial chores that have been put off for too long.
They may also resolve to never have less than a two-month supply of toilet paper on hand.
The stock market slide could play into a number of wealth management strategies, such as conversions to Roth IRAs or intrafamily gifts. Reduced values means lower taxes. However, until the public is confident that the economy has stabilized and we are on the road to recovery, such ideas may not be welcome.
(April 2020)
© 2020 M.A. Co. All rights reserved.
|
|
|
|
|
LIMITS OF THE "NO CONTEST" CLAUSE IN WILLS
|
In situations where the family members are not getting along, sometimes lawyers will recommend a "no-contest" clause in the will. Such a clause triggers the disinheritance of anyone who challenges the implementation of the estate plan. However, such a clause is not enforced blindly, as a recent case shows.
Joan and Robert Barger were a Nebraska farm couple with five adult children. Robert died in 1999. Thereafter one son, Steven, handled most of the farm operations and Joan's finances. The other siblings observed Steven's dominating their mother, and her apparent acquiescence, but took no steps to intervene.
After Joan's death in 2012, her 2006 will was read to the family. One son, William, was specifically disinherited. The will provisions were generally more favorable to Steven than his siblings, but all four did share in the estate.
Following the reading of the will, two of the children met with the attorney who drafted it. He revealed that he had drafted four other wills for Joan--two in 2000, one in 2001, and one in 2003. Steven accompanied Joan on each of these occasions. With each new draft Steven's portion of the estate became greater. The final draft included a no-contest clause to disinherit anyone who challenged the will.
William brought an action to have the will set aside because of Steven's undue influence. Although he was the named plaintiff, two of his siblings helped to finance the lawsuit. The trial court determined that Joan was competent to draft a will and rejected the undue influence charge. Steven then moved to bar his three siblings from inheriting under the will, as together they had violated the no-contest clause.
That motion was rejected by the probate court, because there was probable cause for this contest, and there was a need to settle questions about whether the trust created by Joan and Robert had been successfully terminated. The Nebraska Supreme Court recently affirmed the probate court's judgment.
(April 2020)
© 2020 M.A. Co. All rights reserved.
|
|
HEALTH
We have compiled trusted websites that you can visit to find answers to your questions and concerns:
SCAMS
We suggest you pay close attention to the following:
|
|
Cherry Hill, NJ
Lebanon, NJ
Linwood, NJ
Toms River, NJ
|
|
856-251-1300
908-287-7188
888-323-5535
732-255-5000
|
|
Because of the rapidly changing nature of tax, legal or accounting rules and our reliance on outside sources, Garden State Trust Company makes no warranty or guarantee of the accuracy or reliability of information contained herein nor do we take responsibility for any decision made or action taken by you in reliance upon information provided here or at other sites to which we link. ©2017. All rights reserved.
|
|
|
|
|
|
|
