What Standard of Proof and Evidence Is Required by Law to Win (Or Lose) a Case Alleging Undue Influence (Part 4 of a 4 part series)
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Probate Estate Litigation Attorney
I have written three prior articles on the subject of undue influence and discussed New Jersey case law where claims of undue influence were raised and decided. You can reach each of these articles here: (Part 1) (Part 2) (Part 3) This post will address what standard of proof and evidence is required by law to win (or lose) a case alleging undue influence.
Undue influence cases are challenging for both the accuser and the defendant. A claim of undue influence involving a will, trust, Power of Attorney or the making of a lifetime “gift”, must be clearly established by the person asserting it, or defending against it. “Undue influence, is a form of fraud and must be proven by clear and convincing evidence.” However, New Jersey courts have recognized that this burden of proof can be shifted if the accused “party stands in a confidential relationship to the maker of the gift”. To create a presumption of undue influence, the burden is on the contestant to show “the will benefits a person who stood (stands) in a confidential relationship to the person who made the gift and circumstances of a suspicious character were present in the making of the gift or change in estate plan which requires an explanation.”
When you read the case law it is not clear from this case law what standard of proof is necessary to sustain a presumption of undue influence, but our Appellate Division has held that to establish a confidential relationship when challenging (for example) “the ownership of a joint survivorship bank or brokerage account on the death of one party,” that a preponderance of evidence is all that is necessary. Preponderance of the evidence means a fact is more likely to be true than not to exist. Furthermore, “suspicious circumstances, for purposes of evidence and the burden of proof, need only be slight.” Once this initial burden has been satisfied, it then shifts the responding burden of proof to the accused defendant to show through a preponderance of the evidence why he or she did not unduly influence the making of the gift, joint account, last will or trust.
When trying to establish this presumption of undue influence you must show something more than mere persuasion by the accused. Instead, you must show that he or she “destroyed the free agency and…constrain him or her to do what he or she would not otherwise have done in the transfer of his or her worldly assets to someone else”.
Suspect undue influence, fraud or other unethical conduct? If so, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office. He welcomes your inquiry.
The Role of the Court Appointed Attorney as Guardian “Ad Litem” on Behalf of the Alleged Incapacitated Person in a Guardianship Action
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Guardianship Attorney
As Court-appointed attorney for an alleged incapacitated person (A/K/A), my role is to advocate for his or her wishes and preferences. The law in New Jersey, as articulated by the Supreme Court in the seminal case of Matter of M.R., 135 N.J. 155 (1994), is that an attorney for the alleged incapacitated person is a “zealous advocate” for the stated wishes of the client. Id. at 173074. “The attorney’s role is not to determine whether the client is competent to make a decision, but to advocate the decision that the client makes.” Id. at 176. Further, the Court provided clear guidance concerning the role of court-appointed attorney and the balancing of what the client desires versus the client’s best interests:
“Advocacy that is diluted by excessive concern for the client’s best interests would raise troubling questions for attorneys in an adversarial system. An attorney proceeds without well-defined standards if he or she forsakes a client’s instructions for the attorney’s perception of the client’s best interests.” Id. at 176.
It is with such underlying principals that a Court appointed guardian will submit her/his report as attorney for the alleged incapacitated person.
To discuss your NJ Guardianship matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
Understanding How a Reverse Mortgage Can Keep You at Home Longer As You Age (Part 1)
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Elder Care Attorney
In recent years, the U.S. Department of Housing and Urban Development (HUD) has made significant changes to the reverse mortgage program. As a result The Home Equity Conversion Mortgage (HECM), (aka reverse mortgage) looks very different today than it used to. Three significant regulatory changes have occurred. These changes include new “financial assessment” underwriting criteria, enhanced non-borrower spouse protections, and new lien seasoning requirements. In addition to these regulatory reforms, some lenders have significantly lowered the costs of obtaining an HECM.
Financial Assessment
“Financial assessment” is a term describing new credit and income underwriting criteria to assess the suitability of an HECM for each applicant’s financial situation and to reduce the number of mortgage defaults caused by nonpayment of property taxes and homeowners insurance. HECM lenders must now analyze each applicant’s credit history, property tax and insurance payment history, and residual income to determine the homeowner’s ability via (income) and willingness (credit) to meet his or her loan obligations. Those that don’t meet certain HUD thresholds will encounter new “Life Expectancy Set Asides”. Escrowing a portion of their HECM proceeds for future property tax and insurance payments in case they default or, in extreme cases, have their HECM application denied.
HECM applicants must demonstrate “satisfactory” credit in their housing payments and installment debt payments being on time for the last 12 months. Their property taxes, homeowners insurance, and any applicable condominium or homeowner association fees must be current. Homeowners can present supporting documentation to explain extenuating circumstances that were beyond their control and led to an identified credit or financial problem. Examples of extenuating circumstances include unemployment, reduced work hours, medical emergencies, divorce, a spouse’s death, and emergency property repairs not covered by insurance. The lender will then make an assessment to determine the likelihood of a certain credit problem repeating. You must also demonstrate adequate income to pay monthly financial obligations.
If a residual income shortfall exists, the lender will consider compensating factors such as overtime, bonuses, part-time or seasonal employment, non-borrowing spouse income, or the fact that the homeowner will begin receiving pension or Social Security payments within the next 12 months.
When an applicant demonstrates unsatisfactory credit or property expense payment history, the lender must then establish a fully funded “default fund” known as a LESA. The fully funded LESA’s size is based on the property tax and insurance payments that the lender expects the borrower to make over his or her life expectancy. Fully funded LESAs are much larger than their partially funded counterparts and the lender disburses tax and insurance payments from the LESA directly to the borrower’s insurance agent and taxing authority. The larger the LESA the less immediate access to the equity in the home.
To discuss your NJ Elder Care matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
Understanding How a Reverse Mortgage Can Keep You at Home Longer As You Age (Part 2)
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Elder Care Attorney
In part 1 of our series, we discussed recent changes made to the reverse mortgage program. Here in part 2 we will continue our discussion.
Non-Borrowing Spouses
A significant regulatory change that confronts a long-standing concern regarding HECMs (Home Equity Conversion Mortgage, aka “reverse mortgage”) addresses the issue of removing a spouse from a title as part of the HECM transaction (or lending to the only spouse who is on title). The “non-titled” or “divested” spouse is called the “non-borrowing spouse” (NBS).
Because all title holders on any home must be at least 62 years old, removing a spouse from title was usually done when that spouse was younger than 62. If the couple had other significant assets, life insurance on the borrower spouse, or a second home, the NBS could continue to live comfortably in the home if the HECM borrower spouse predeceased him or her.
For new HECMs there are now safeguards in place allowing the NBS to remain in the home without having to repay the HECM debt if the borrower spouse predeceases him or her. The NBS must continue to fulfill the ongoing mortgage requirements, which include paying real estate taxes, homeowners insurance, property upkeep, and maintaining the home as his or her primary residence. Under the new rule, the HECM does not have to be repaid until the NBS no longer resides in the subject property.
For HECM transactions involving NBS, the principal limit (initial borrowing capacity) is based on the younger NBS’s age, thus decreasing the borrower’s principal limit. The new NBS protection applies only to couples recognized as legally joined in marriage or a civil union, and is not extended to other relationships, familial or otherwise. Additionally, the couple must have been married at the time that the loan was consummated, they must remain married, and the NBS must reside in the subject property as his or her primary residence and attend the same HUD counseling session that HECM borrowers are required to attend.
To discuss your NJ Elder Care matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
Understanding How a Reverse Mortgage Can Keep You at Home Longer As You Age (Part 3)
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Elder Care Attorney
In our previous posting we discussed non-borrowing spouses. This is the third part of our discussion series.
Mortgage Seasoning
A new mortgage standard affects homeowners who wish to extinguish existing mortgage debt with an HECM. The new rule states: “Mortgagees may only permit the payoff of existing non-HECM liens using HECM proceeds if the liens have been in place longer than 12 months or resulted in less than $500 cash to the mortgagor, whether at closing or through cumulative draws (e.g., as with a Home Equity Line of Credit (HELOC)) prior to the date of the initial HECM loan application.” Now when contemplating a HECM, due diligence should include examining the age of all existing mortgages and liens on a title. Those clients with mortgage loans for HELOCs younger than one year old that cashed out more than $500 in equity will be barred from HECM eligibility until enough time has elapsed.
However, if the lender is a member of the National Reverse Mortgage Lenders Association (NRMLA), the trade association for the reverse mortgage lending industry, in addition to pe-existing “closing fee” and “net proceeds” tests, the existing HECM must now be in place a minimum of 18 months prior to being elig9ible for refinance. While recommended to all lenders, this is only enforceable by NRMLA within its membership.
To discuss your NJ Elder Care matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
Understanding How a Reverse Mortgage Can Keep You at Home Longer As You Age (Part 4)
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Elder Care Attorney
For those readers following along, the previous topics we have discussed include; Financial Assessment, Non-Borrowing Spouses, and Mortgage Seasoning. This is our fourth and final discussion in this series.
Low-Cost HECM
Rising demand and marketplace competition are propelling HECM marketplace innovation. Many elderly persons believe that all HECMs are too costly, unaware that low-cost options exist with total net closing costs less than $500.
For clients who draw less than 60 percent of their available HECM principal limit during the first year, HUD lowers its Initial Mortgage Insurance Premium (IMIP) to 0.5 percent of the lesser of the home’s appraised value to a maximum value of $625,500. For many clients, that is an 80 percent reduction (from 2.5 percent to 0.5 percent) in the IMIP. The second highest closing cost, the financed origination fee, is calculated based on the home’s value and capped at $6,000. However, many lenders are reducing their origination fees or eliminating them all together. Check with your lender up front and shop around. Some lenders even offer “lender credits” to further offset most of their closing costs, resulting in extremely low-cost HECMs.
To discuss your NJ Elder Care matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
Can You Name Multiple Persons As Joint Powers of Attorney in New Jersey?
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Power of Attorney and Healthcare Directive Attorney
Sometimes clients ask me to name joint persons as powers of attorney. While I discourage such an option I understand why some people still want it. So, here is the law on the subject. I have just listed the applicable statutes without commenting. I’ll do that in a future post.
N.J.S.A. 46:2B-8.7. Multiple attorneys-in-fact, reads
- Unless the power of attorney expressly provides otherwise, all authority granted to multiple attorneys-in-fact may be exercised by the one or more who remain after the death, resignation or disability of one or more of the attorneys-in-fact.
- The power of attorney may provide that the attorneys-in-fact may act severally or separately. If so provided, any one of the appointed attorneys-in-fact may exercise all powers granted.
- The power of attorney may provide that the attorneys-in-fact shall act jointly. If so provided then, subject to subsection a., the concurrence of all appointed attorneys-in-fact is required to exercise any power.
- If the power of attorney does not expressly provide whether the attorneys-in-fact are to act severally or separately, or are to act jointly, such attorneys-in-fact must act jointly.
- The power of attorney may provide that the attorneys-in-fact act successively. Unless the power of attorney otherwise provides for the conditions under which a successor is qualified to act, the successor may act only upon the death, the written resignation, or the disability of the predecessor named attorney-in-fact.
To discuss your NJ Power of Attorney and Healthcare Directive matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
Don’t Get Penalized By Medicare After You Retire
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Medicaid Attorney
Getting near retirement age and/or contemplating retiring past age 65? While you may decide to remain with your employer’s health plan rather than signing up for Medicare, better understand several risks with doing so like being without insurance for several months, and/or paying an annual penalty for life, if you don’t follow Medicare’s strict enrollment rules.
Here’s why. When you turn 65, you’re eligible to sign up for Medicare Part B. Medicare “B” covers outpatient services. For whatever reason you may decide that it’s easier or cheaper to continue with your employers coverage – either opting to take the retiree medical benefits or going with COBRA (generally not a good option). Under the federal COBRA law, companies with at least 20 employees must allow former workers to buy into the group health plan for up to 18 months after retirement.
That could be a big mistake. When you turn 65, you can forgo Medicare without consequence if you are still working and are covered by your employer’s group health plan. But once you leave the job, you must enroll in Part B within eight months after the month you retire, even if you continue to be covered by your employer’s health plan. This eight-month period is known as the “special enrollment period”.
If you miss this deadline and your employers coverage expires, you could find yourself uninsured for many months. You will not be allowed to enroll in Medicare Part B until the next “general enrollment period,” which runs from January 1 to March 31 and even then your coverage won’t begin until July of that year. Plus, you may be subject to late penalties.
Some retirees only realize they have made a mistake when their group health plan rejects their claims. Some plans state that when you turn 65, they will pay only for medical expenses that Part B won’t cover. Their reason is because the former employer’s plan will consider the government insurer to be the primary payer.
These enrollment rules came as a big surprise to one client. He left his job as a financial adviser at age 69. Because he liked his employers plan, he decided to go on COBRA rather than enroll in Medicare.
Over the next year or so, the plan rejected a couple of his medical claims. Its reason: Because he was eligible for Medicare, the plan considered itself to be the secondary payer. He was paying $1,000 a month in premiums for nothing. He wanted out.
By that time however, he had missed the eight-month enrollment window. When he went to sign up for Medicare in July, he was told he would have to wait until January 1 to apply and that coverage would not begin until July 1st of the following year.
To add insult to injury, he was hit with lifetime penalties for missing an enrollment period. For each 12-month period you delay enrolling when you’re eligible, you’ll pay a penalty of 10% of your Part B premium – FOREVER.
To discuss your NJ Elder Law matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
Who Has Legal Standing to File A Guardianship Case in New Jersey?
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Elder Care Guardianship Attorney
Who can legally initiate a guardianship case based on alleged mental incompetency such as in Alzheimer’s disease? Well, in most cases the answer is clear – family members and the court, among other select individuals. But who are these “select individuals” and when can they bring an incompetency action in hopes of becoming the alleged mentally incompetent individual’s guardian?
In a well cited NJ case Matter of Tierney, Jane Tierney was 55 years old and an only child. Her parents were dead, she had no living aunts or uncles, and her six distant cousins had little to no contact with her. She was injured in an automobile accident and received a judgment of $400,000. The plaintiff, Marie Sayer, brought the incompetency action in hopes of becoming Tierney’s guardian. The question in this case, was not whether Jane Tierney was incompetent (she was), but whether Marie Sayer – a childhood friend – could bring a guardianship action in the first place, and if so, be appointed as guardian.
The court’s statement of facts is summarized below:
Marie Sayer had assisted Tierney over the years with personal and financial affairs. Tierney executed a power of attorney to Sayer and her husband. Sayer also had control over Tierney’s stock certificates, assets, and bank books. Ms. Sayer was not related to Tierney nor was she financially or legally obligated to plaintiff. Sayer was, however, the principal beneficiary of Tierney’s last will and testament. However, two years after Sayer was named power of attorney, Tierney became concerned about the management of her legal and financial affairs. Subsequently, she gave her current counsel the power of attorney. In response, Sayer brought the incompetency and guardianship action.
Ultimately, the court ruled that Sayer was a mere stranger – and that only relatives who are “interested” in the welfare of the mentally incompetent individual may bring an incompetency action. The public policy reasoning the court relies upon is key, “This rule is in place to clearly protect individuals from unwanted interference in their affairs and to shield individuals from defending themselves from ridiculous incompetency charges.” Note how in the facts cited above – the court never commented once on Tierney’s alleged incompetency – that’s because there was little evidence of this! Accordingly, the court did not take issue with this dimension of the case – rather, it took issue with what interest Sayer apparently had in Tierney’s affairs. Often, friends of an elderly individual who have little to no living family will attempt to lay claim to this person’s assets through frivolous incompetency actions. In this case, the court ruled that Sayer was a mere stranger and she had no legal or equitable interests in the Tierney’s affairs. She was not a relative, next of kin, of a spouse.
To discuss your NJ Guardianship Elder Care matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
Who Can Legally File an Incompetency and Guardianship Proceeding?
By Fredrick P. Niemann, Esq. of Hanlon Niemann Wright, a Freehold, NJ Guardianship and Power of Attorney Lawyer
Who can file an incompetency action to obtain a judgement of guardianship? For most people, it seems like a straight forward answer – family members and a few select others. But who are these “few select others” and under what circumstances can they bring an action in hopes of becoming or causing the appointment of someone as an individual’s guardian?
In the Matter of Tierney, an individual was 55 years old, an only child and her parents were dead. She had no living aunts or uncles, and six distant cousins who had little to no contact with her. She was injured in an automobile accident and received a judgment of $400,000. The plaintiff, Marie Sayer, brought the guardianship action in hopes of becoming Tierney’s guardian. The question in this case was not whether the individual was incompetent (she was), but whether Marie Sayer – a childhood friend – had standing to bring this action in the first place.
Marie Sayer had assisted her friend over the years with personal and financial affairs. The incapacitated person had executed a power of attorney to her and her husband. She had control over her stock certificates, assets, and bank books. Sayer was not related to Tierney nor was she financially or legally obligated to plaintiff. She was however, the principal beneficiary of her last will and testament. However, two years after Sayer was named power of attorney, she became concerned about the management of her legal and financial affairs. Subsequently, she gave her attorney the power of attorney on her behalf. In response, Sayer brought the incompetency and guardianship action.
Ultimately, the court ruled that Sayer was a mere stranger and that only relatives who are interested in the welfare of the mentally incompetent individual may bring an incompetency action. The public policy reasoning the court relied upon is key: The rule was put in place to clearly protect individuals from unwanted interference in their affairs and to shield individuals from defending themselves from ridiculous incompetency charges. Note how in the facts above – the court never commented once on the woman’s alleged incompetency – that’s because it was a medical fact! Accordingly, the court did not take issue with this dimension of the case – rather, they addressed the interest of Sayer in the individual’s affairs. Often, friends of an elderly individual who have little to no living family will attempt to lay claim to this person’s assets through frivolous incompetency actions. In this case, the court ruled that Sayer was a mere stranger and she had no legal or equitable interests in the Tierney’s affairs. She was not a relative, next of kin, or a spouse.
To discuss your NJ Guardianship matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.