Can I Amend My Will?

Oftentimes, a client asks me to draft an amendment to his last will and testament. Most people believe that an amendment to their Will is less expensive than having a new Will drafted.

On average, to have a Will drafted costs about $200. So, as a cost-savings, an amendment to a Will would have to cost less than $200 in order to be less expensive than having a new Will drafted.

When a man makes a Will, he is known as a testator; a woman making a Will is known as a testatrix. In order to make a Will, the testator must be eighteen years of age or older. The testator must also possesses a certain level of mental capacity, commonly known as testamentary mental capacity.

An amendment to a Will is called a codicil. In order for a codicil to be valid, the codicil must be signed with the same level of formality as the original Will. What this means is that the codicil must be signed by the testator in the presence of two witnesses, that both witnesses must also sign the Will, and that the signatures of the testator and the witnesses must be acknowledged by a notary public or other person authorized to take oaths.

A codicil changes a Will in some manner. The codicil might add terms to the Will, it might delete terms from the Will, or it might change the terms of the Will. For example, in his Will, Mr. Smith named his son Joe as his executor. Several years, later, Joe moves to California, so Mr. Smith wants to name his son Frank as his executor, because Frank lives in New Jersey and Mr. Smith thinks Frank would be able to handle his estate better, living locally. Mr. Smith signs a codicil changing his executor from Joe to Frank.

The codicil must also ratify and reaffirm the terms of the Will in all respects not being altered. So, Mr. Smith would say that he is changing his executor from Joe to Frank and that in all other respects he is ratifying and reaffirming the terms of his Will.

Now, assume that Mr. Smith comes to my office and asks me to amend the terms of his Will in order to name his son Frank as his executor. I did not draft the Will for which Mr. Smith is asking me to draft a codicil.

Because the codicil will ratify and reaffirm the terms of his Will, I would need to review his entire Will. I cannot draft a document through which Mr. Smith is reaffirming a previous document without convincing myself that the document he is reaffirming is a good document. In order to be a “good Will,” Mr. Smith’s Will must accomplish what he wants it to accomplish in a manner in which I agree.

As the reviewing attorney, if after Mr. Smith died there were some problem with his Will—for instance, the Will allocated the expenses of the estate in an inappropriate manner—I would be the person who the beneficiaries of the estate would blame for allowing Mr. Smith to reaffirm the terms of a defective Will.

As a lawyer, I sell my knowledge and time. If I am going to employ my knowledge and spend my time reviewing a Will another lawyer drafted, then I am going to have to bill for my time and knowledge. The time I spend reviewing a Will another lawyer drafted and drafting a codicil that specifically amends that Will is going to be substantial enough where the codicil to the Will is going to cost Mr. Smith more than it would have cost Mr. Smith for me to draft a new Will for him.

My point is, having a codicil drafted is not less costly than having a new Will drafted. Codicils where beneficial before computers where invented. If someone came to me and I had to type a Will for him from scratch, then I would charge more for a new Will than I would for a codicil. But with the advent of computers, drafting a new Will takes far less time than creating a document from scratch that modifies and works in unison with an old Will.

How To Buy My Book

The following is an excerpt from my book, New Jersey Elder Law: A Resource and Planning Guide.  The book is published by ALM Media.  ALM is the publisher of the New Jersey Law Journal¸ the leading New Jersey legal periodical.  If I do say so myself, the book contains a great deal of information for those individuals who are generally interested in the articles that I write in this paper.

If you are interested in obtaining my book, you can contact the New Jersey Law Journal at 973-642-0075 or contact Doug Brown at dabrown@alm.com.

9-6          Transfer of the Home

The single most important asset to a client is his home. Most of the individuals who come to see an elder law attorney for purposes of Medicaid planning are interested in protecting their home. In a pre-planning mode, that is, a plan where the client will transfer the home and wait five years before applying for Medicaid benefits, there are a number of ways in which the transfer of the home can be accomplished.

9-6:1       Life Estate

Having a client transfer his home to his children and retain a life estate in the home is one of the oldest and simplest ways in which to protect the home in a pre-planning mode. The client has a deed drafted for him through which he transfers the home from himself as fee simple owner to himself as life tenant with his children as remaindermen.

When a Medicaid applicant owns real property with another individual and that other individual refuses to sell the property, the county board will treat the property as unavailable. Technically, a life tenant could sell his interest in the property (the life estate) without the consent of the remainderman, but there is no readily available market for the sale of a life estate.  Accordingly, only if the remainderman will consent to the sale of his interest in the property (the remainder interest), too, would the property be marketable. So—from a practical standpoint, if not a legal standpoint—the property is unavailable when all the Medicaid applicant owns is a life estate and the remainderman refuses to sell.

Furthermore, upon the applicant’s death, DMAHS will not seek estate recovery against the property. The New Jersey regulations governing estate recovery do not permit recovery against a life estate created during the applicant’s life.

Given the foregoing, if the client transfers his home subject to a retained life estate then waits 61 months before applying for Medicaid benefits, the home will no longer count against him for purposes of determining his eligibility for Medicaid benefits, and DMAHS will not seek estate recovery against the home after his death for any Medicaid benefits that may have been paid.

9-6:2       Life Tenancy

The difference between a true life estate and a life tenancy is that with a life tenancy, the client is simply retaining the right to use and occupy the home during his life. He is not retaining the right to the proceeds of sale if the home is sold during his life.

The advantage of a life tenancy over a life estate is that if the home is sold during the client’s life, then the client is not entitled to any of the proceeds of sale. Because the remaindermen are often interested in selling the home once the client begins to reside in a nursing home, retaining less than a full life estate for the client can be beneficial.

 

If you or someone you love is interested in the Medicaid program or the administration of a deceased individual’s estate or in drafting a proper Will, power of attorney, or living will, then my book is a must read for you.  These areas of the law are fraught with pitfalls.  In my book, I provide you with an understanding of these areas of the laws and helpful tips for navigating your way through the legal issues affecting the elderly and disabled.

Current Legislation

Currently, there are two important bills pending in the federal and state legislatures that affected the aged and the disabled.  One bill pending before the United States Congress affects special needs trusts.  The other bill, which is pending before in the New Jersey Legislature, affects the Medicaid asset transfer rules for New Jersey’s Medicaid program.

The federal bill concerns who can establish a special needs trust.  A special needs trust is a trust that permits a beneficiary of means-tested government benefits, such as Medicaid and Supplemental Security Income, to enjoy the benefits those programs offer and to have other monies that can be used to supplement those government benefits.

A disabled person may receive Medicaid benefits, and the Medicaid program may be paying for substantial medical services for the disabled person, such as nursing home care.  But the Medicaid program does not pay for all medical services that a disabled person may need or desire.  The person might want therapy or a medical procedure for which the Medicaid program will not pay because the therapy or service is not deemed necessary under the Medicaid program’s guidelines.

If the disabled person has money in a special needs trust, the trustee of the trust could decide to pay for those therapies or services that the trustee deems worthy.  The ability to obtain extra therapies and services can be a tremendous help to a disabled individual.

A special needs trust is a self-settled trust, meaning that the disabled person puts his own money into the trust.  The disabled person must be under the age of sixty-five when the trust is established and when the assets are placed into the trust.  If the person is over the age of sixty-five, then assets placed into the trust are treated as an asset transfer for purposes of the Medicaid program and will disqualify the disabled person from the Medicaid program for a period of time.

A special needs trust must also contain a payback provision.  A payback provision provides that when the disabled person dies, any money left in the trust will go to pay the state’s Medicaid program back for any benefits that it paid to the disabled person when he was alive.

Oddly enough, though, despite the fact that the trust is funded with the disabled person’s assets and is for the disabled person’s benefit, the disabled person cannot establish his own self-settled special needs trust.  The trust must be established by his parent, grandparent, guardian, or a court.

The fact that the disabled person cannot establish his own special needs trust is, for lack of a less euphemistic word, discriminatory.  It treats all disabled people as if they were mentally incapacitated, which is untrue.  Many people (probably most people) who are classified by the Social Security Administration as disabled retain their mental capacity.

The Special Needs Trust Fairness Act, which has been approved by a sub-committee of the United States Senate, seeks to correct the law that establishes special needs trust to permit the disabled person, if he retains mental capacity, to establish his own special needs trust.

The other bill of importance to the aged and disabled is pending in the New Jersey Legislature.  This bill affects the Medicaid asset transfer rules for New Jersey’s Medicaid program.

Medicaid is a means-tested government health payment program for needy individuals.  In order to qualify for Medicaid, a person must be aged or disabled and must have a very limited amount of assets.

In order to “punish” applicants who have tried to purposefully impoverish themselves by giving away their assets before making application for Medicaid, the Medicaid program has established transfer of asset rules.  In short, if an applicant has given away any asset during the five-year period of time prior to applying for Medicaid, Medicaid makes that individual ineligible for Medicaid benefits for a period of time; the more money given away, the longer the period of ineligibility.

The current legislation would permit the New Jersey Medicaid program to disregard small transfers equaling no more than $500 in any one month.  By disregarding these small transfers, the Medicaid program can be administered quicker and more efficiently.