Kenneth Vercammen, Esq. handles Probate, Estate Administration and Wills. He is author of the ABA's book "Wills and Estate Administration".

New clients email us evenings and weekends go to www.njlaws.com/ContactKenV.htm

He was a speaker at the American Bar Association ABA Annual meeting and is Co-Chair of the Probate & Estate Planning Committee.
To schedule a confidential consultation, email us at VercammenAppointments@NJlaws.com or call.
Kenneth Vercammen & Associates, P.C.
2053 Woodbridge Ave.
Edison, NJ 08817
(732) 572-0500
www.njlaws.com

Monday, August 29, 2016

Post Will Instructions to Clients



I send all my clients a Post Will letter to give them several important reminders regarding the clients Will and things related to it. I am doing this in order for them to have a permanent record and also that they may refer to this letter from time to time in the future in order to refresh the clients memory. Please be sure, therefore, to keep this letter with the clients copy of their Will.
We have given the client the Original signed Will to take home. The client should advise the Executors where the original Will is going to be stored. Additionally, they should provide the Executor with our business card and instruct the Executor to contact us prior to going to the Surrogates Office or probating a Will. If they have a Living Will, please be sure to give a copy to their doctor.
If they ever want to discuss the Will with me, I will be happy to do this with the client at any time after scheduling an appointment.
I recommend that the client review the Will periodically in order to keep it up-to date regarding changes in their family, their property, their wishes, and the law. I suggest that approximately five (5) years from the present time,the client contact my office and schedule an appointment again so that we can review their Will together.
This periodic review program should not prevent the client from considering the making of a change in their Will at any earlier date. Changes should be made whenever the client believes such changes are necessary. A persons family, property and wishes may change over the years and for these and other reasons the client should re-examine their Will from time to time in order to make sure that it will carry out their present wishes.
I caution the client against making any marks upon their original Will because this can lead to a Will contest. If the client wants to make a change in their Will, they should contact my office and we will either make a Codicil (a short addition) to their Will or a new Will depending upon their needs and wishes.
In the event that a death occurs in their family, may I suggest that the client contact my office immediately in order to determine what, if anything, must be done in order to settle that persons estate. I also suggest that the client instruct their Executor and the members of their family to contact my office immediately, in the event of their death, in order to determine what, if anything, must be done to settle their estate.
We thank our clients for allowing our office to be of service.
We welcome additional business and accept referrals for:
1) Personal Injury- Car Accidents
2) Municipal Court, Traffic Tickets and DWI.
3) Wills, Power of Attorney, Living Wills and Estate Planning.
4) Criminal cases
5) Probate/ Administration of Estates
6) Injuries caused by Fall downs
7) Civil Litigation for cases over $10,000.
We recommend you pass my offices phone number to your family and friends who do not have a current Will. Our Confidential Will Questionnaire is online at
www.njlaws.com/will_Questionnaire.htm
Best regards,
KENNETH VERCAMMEN
Co-Chair American Bar Association Estate Planning & Probate Committee
Co-Author Nuts & Bolts of Elder Law & Estate Administration for the NJ State Bar Associations Institute for Continuing Legal Education

Planning with Retirement Benefits


More and more people are holding the bulk of their wealth in qualified plans and individual retirement accounts (IRAs). Although most plan participants know that these vehicles provide income tax-free growth for assets held in them, few understand the rules regarding plan distributions. With proper planning, participants can make the most of this income tax benefit and even pass some of that benefit on to their beneficiaries.

Planning Considerations



In light of the factors above, a Plan participant should always consider the following:
The Beneficiary Designation Form Governs
Participants routinely (and wrongly) assume that their wills govern the distribution of Plan assets. These assets are distributable to the beneficiary named on the form, or according to the default method in the Plan, regardless of the provisions of the participants will.
Always Name a DB, if Possible
As noted above, without a DB, the deferral of withdrawals from a Plan by either the participant or the beneficiaries may be severely limited or eliminated completely.
Review the Plan Periodically, and Always Just Before the RBD
The beneficiary designation should be reviewed at regular intervals, after a major life event such as divorce or a death in the family, and within the year before the participant reaches the RBD. The latter is particularly important, because it allows the participant to ensure that he or she will make the proper election regarding minimum distributions by the RBD.
Advanced Planning
If a participant has a large Plan balance or a complicated estate plan that involves, for example, distributing Plan assets to trusts for minor children or partially to charity and partially to children, the participant should consider working with an expert in this area to obtain the best tax planning advice.

Organ and Tissue Donation



In many states you can include in your advance directive your preference to become an organ or tissue donor at the time of death. State law varies, and you should check with your attorney. Even if your state is one in which your drivers license contains an organ or tissue donor statement, you need to express this by letting your health care proxy, your family, and your physician know your desire to become a donor. In some states you also need to be registered as an organ and tissue donor.

Order to Show Cause in Probate



Under New Jersey Law, the people selected as an executor of a Will have numerous legal responsibilities following the death of the person who signed the Will. Primarily, they have a duty to probate the Will, liquidate assets, pay bills and taxes, file all necessary tax returns, file paperwork with the surrogate, then distribute the assets to beneficiaries. If there is no will, someone can petition the surrogate to be appointed as "administrator" of the estate.
In New Jersey, the court and surrogate do not supervise how an executor or administrator handles the estate. Unfortunately, occasionally the Executor simply fails to timely carry out their duties. They may fail to file tax returns, fail to keep records, misappropriate funds or ignore instructions under the Will. If you are not satisfied with the handling of the estate, you can have an attorney to file a complaint, and an Order to Show Cause in Probate in the Superior Court.
COMPLAINT TO COMPEL FOR ACCOUNTING BY EXECUTOR OR ADMINISTRATOR
A Complaint to Compel Accounting is filed with the Probate Part to request on accounting, removal of the current executor and selection of a new person to administer and wrap up the estate. A signed certification of one or more beneficiaries is needed. In addition, an Order to Show Cause is prepared by your attorney. The Order to Show Cause is to be signed by the Judge directing the executor, through their attorney, to file a written answer to the complaint, plus to appear before the court at a specific date and time. As with a litigated court matter, trials can become expensive. Competent elder law/probate attorney may charge an hourly rate of $200-$310 per hour, with a retainer of $3000 needed. Attorneys will require the retainer to be paid in full up front.
EXECUTORS COMMISSIONS
Executors are entitled to receive a commission to compensate them for work performed. Under NJSA 3B:18-1 et seq. Executors, administrators and other fiduciaries are entitled to receive a commission on both principal of the estate, and income earned by assets. However, if you have evidence the executor has breached their fiduciary duties or violated a law, your Superior Court accounting complaint and Order to Show Cause can request that the commissions be reduced or eliminated.
SALE OF REAL ESTATE AND OTHER PROPERTY
Occasionally, a family member is living in a home owned by the descendant. To keep family harmony, often this family member is permitted to remain in the home temporarily. However, it sometimes later becomes clear that the resident has no desire on moving, and the executor has no intention to make them move or sell the house. The remedy a beneficiary has can be to have your attorney file in the Superior Court a complaint to include a Count to: 1) remove the executor 2) remove the tenant and make them pay rent to the estate for the time they used the real property since death without paying rent 3) compel the appraisal of the home and thereafter sale of the property 4) make the executor reimburse the estate for the neglect or waste of assets.
COURT RULE 4:84. THE FOLLOWING ARE COMPLAINTS IN CASES IN WHICH SURROGATES COURT NOT ABLE TO ACT 4:84-1. In General
In any case in which, under R. 4:82, the Surrogates Court may not act, any person in interest may file a complaint and apply for an order directed to all other interested parties to show cause why the relief sought should not be granted. Service shall be as provided by R. 4:67-3.
4:84-2. Probate in the Superior Court
If a will is sought to be proved in the Superior Court, proceedings for discovery shall be available pursuant to R. 4:10, R. 4:12 to 4:19 inclusive, R. 4:21 and R. 4:23. On the taking of a deposition, a photocopy of the will shall be marked for identification by the person before whom the deposition is taken. If the will is admitted to probate, the judgment of the Superior Court shall direct that the will be filed with and recorded by the Surrogates Court. Letters of appointment shall then be issued by the Surrogates Court.
4:84-3. Contested Administration
Where administration of an estate has been contested, the judgment of the Superior Court granting administration shall direct issuance and recording of letters of administration by the Surrogates Court.
4:84-4. Appointment of Substituted Trustees
An action for the appointment of a substituted trustee (a trustee not named in the trust document) of an inter vivos or testatmentary trust shall be brought pursuant to R. 4:83. The complaint shall have attached a copy of the trust instrument and the acceptance by the person or persons seeking the appointment. The order to show cause shall be served upon all persons having an interest in the trust, vested or contingent, except as otherwise provided by R. 4:26-3 (virtual representation), and upon any trustees then serving. The judgment shall direct the issuance by the Surrogates Court of letters of trusteeship.
4:84-5. Appointment of Administrator Pendente Lite or Other Limited Administrator
No order appointing an administrator pendente lite or other limited administrator shall be entered by the Superior Court without either notice to the persons in interest or their written consent, unless it clearly appears from specific facts shown by affidavit or by the verified complaint that immediate and irreparable damage will result before notice can be served and a hearing had thereon. If an order is granted without notice, it shall give any person in interest leave to move for the discharge of the administrator on no more than 2 days notice. This rule shall not apply to the administrator ad prosequendum in an action for wrongful death.
The following is a form of a Complaint and Order to Show Cause we used in 2004.
Attorney for Plaintiff, p1
IN THE MATTER OF THE ESTATE OF d1,
p1 Plaintiff, vs.
d2 Defendants. SUPERIOR COURT OF NEW JERSEY CHANCERY DIVISION: c1 COUNTY
DOCKET NO. Probate
Civil Action VERIFIED COMPLAINT TO COMPEL ACCOUNTING, REMOVAL OF EXECUTOR, AND APPOINTMENT OF p1 AS ADMINISTRATOR OF THE ESTATE
Plaintiff, p1, residing at ________, State of New Jersey, by way of complaint against defendant, d2 says: FIRST COUNT- ACCOUNTING 1. d1, while a resident of the Township of ___________, County of __________, State of New Jersey, died on ________, leaving surviving as his next of kin, _____ children, p1 and d2 and. 2. The defendant, failed to promptly provide plaintiff with copy of a Will executed by the decedent, d1 (Exhibit 1). 3. Only after requests for information from plaintiff was a copy of the Will executed by the decedent furnished by the defendant, d2 to plaintiff. 4. Plaintiff is a beneficiary under the Last Will and Testament of d1. Plaintiff as one of the surviving children of the decedent is entitled if there is no Will to a portion of the estate. 5. The defendants, d2 had control over d1s finances and care prior to death. 6. It has been brought to the attention of the plaintiff that decedents assets may have been distributed by d2. 7. No formal accounting in connection with the estate has been filed by the named executor d2 with the Surrogate. 8. Plaintiff has been informed by d2 that a formal accounting will not be filed with the Surrogate. 9. The estate is still open. Defendant d2 has received assets of the estate and disbursed some without Surrogate approval or court approval. 10. Plaintiff is entitled to an accounting of the estate assets. 11. Plaintiff is also entitled to an accounting of all of the assets of d1 that came into the hands of defendant, d2, during the last four years of d1s lifetime. 12. Plaintiff should also be entitled to an accounting of the money received and expended by d2, the names of claims presented against the estate and against d1 during the five years prior to his death, the names of the claims and any other matters necessary to show the value and condition of the affairs of the estate. 13. Plaintiff is entitled to have the accounting rendered by d2 and a final distribution of the estate made to plaintiff. WHEREFORE, plaintiff demand the following: (1) That the named executor, d2, be ordered to provide an accounting of the estate to plaintiff. (2) Defendant, d2, be ordered to provide an accounting for all assets of d1 dated five years prior to his death. (3) Payment of plaintiffs attorneys fees and costs of suit for the within action. (4) Declaring a constructive trust of the assets of the decedent for the benefit of the plaintiff and the estate. (5) That d2 be removed as the executor/administrator of the estate and that p1 be named as administrator of the estate. (6) That d2 be barred from spending an estate funds, be barred from paying any bills, be barred from taking a commission, be barred from writing checks, be barred from acting on behalf of the estate, except as specifically authorized by Superior Court Order or written consent by the plaintiff. (7) Plaintiff be granted further relief as the court will deem just.
SECOND COUNT 1. Plaintiff repeats the First Count as if set forth at length herein. 2. d2 has failed to comply with the fiduciary responsibilities to the estate and to the beneficiaries. 3. Plaintiff requests an Order barring and removing d2 from serving as executor of the estate. 4. Plaintiff requests an Order barring d2 s appointment as administrator of the estate. WHEREFORE, plaintiff demands the following: (1) That the named executor, d2, be ordered to provide an accounting of the estate to plaintiff and barring d2 from serving as executor or administrator of the estate. (2) Barring d2 from serving as executrix or administrator of the estate. (3) Payment of plaintiffs attorneys fees and costs of suit for the within action. (4) Appointing p1 as administrator/CTA of the estate. (5) Plaintiff be granted further relief as the court will deem just.
ORDER TO SHOW CAUSE IN ACTION TO COMPEL AN ACCOUNT, REMOVAL OF EXECUTOR, AND APPOINTMENT OF P1 AS ADMINISTRATOR OF ESTATE
Upon reading and filing the complaint of p1: It is on this ______________ day of _______________, 2004 ORDERED that d2, Executor of the Estate of d1, deceased, show cause before the court on the _______ day of _____________ , 2004, at ________ A.M. at the c1 County Court House, New Jersey, 1 why d2 should not be compelled to file an accounting within 45 days, 2 why d2 should not be removed and barred from serving as executor, 3 why d2 and should not be required to refund to the estate all monies received 4 why P1 should not be appointed administrator/trix of the estate 5 why d2 should not make discovery as to the condition of the estate of d1, deceased, before and after the date of death (6) That the named executor, d2, be ordered to provide an accounting of the estate to plaintiff. (7) for Payment of plaintiffs attorneys fees and costs of suit for the within action. (8)To Declare a constructive trust of the assets of the decedent for the benefit of the plaintiff and the estate. (9) Why d2 should be barred from spending an estate funds, be barred from paying any bills, be barred from taking a commission, be barred from writing checks, be barred from acting on behalf of the estate, except as specifically authorized by Superior Court Order or written consent by the plaintiff.
and it is Further Ordered that a copy of this Order and the Complaint upon which it is based, certified to be true by the attorney for plaintiff, be served upon said d2 by mailing same to d2 by certified mail, return receipt requested, at least ten days before the return date hereof.
It is further ORDERED that the defendant file an answer to the verified complaint within 20 days of the date of service, and
It is further ordered that all answering affidavits of certifications, of any, be filed three days prior to the return date.
Civil Action
ORDER TO REMOVE EXECUTOR, COMPEL AN ACCOUNT, AND APPOINTMENT OF P1 AS ADMINISTRATOR OF THE ESTATE This matter having been opened to the Court upon Order to Show Cause and Complaint by Kenneth A. Vercammen, Esq. , attorney for p1, for an Order: (1) why d2 should not be compelled to file an accounting within 45 days, (2) why d2 should not be removed and barred from serving as executor, (3) why d2 and should not be required to refund to the estate all monies received (4 )why P1 should not be appointed administrator/trix of the estate (5) why d2 should not make discovery as to the condition of the estate of d1, deceased, before and after the date of death (6) That the named executor, d2, be ordered to provide an accounting of the estate to plaintiff. (7) for Payment of plaintiffs attorneys fees and costs of suit for the within action. (8)To Declare a constructive trust of the assets of the decedent for the benefit of the plaintiff and the estate. (9) Why d2 should be barred from spending an estate funds, be barred from paying any bills, be barred from taking a commission, be barred from writing checks, be barred from acting on behalf of the estate, except as specifically authorized by Superior Court Order or written consent by the plaintiff.
and the Court having considered the Certification submitted, documents attached in support of the Motion, and the argument of counsel, if any, and for good cause shown,
it is on this ______ day of ______________ 2004
ORDERED that 1. d2 is required to file a formal accounting within 45 days of the court hearing, 2 d2 is barred and discharged from serving as executor, 3 d2 is required to refund to the estate all monies received 4 . p1 is appointed administrator of the estate 5 d2 should make discovery as to the condition of the estate of the deceased, after the date of death 6 d2 is be barred from spending an estate funds, is barred from paying any bills, be barred from taking a commission, is barred from writing checks, is barred from acting on behalf of the estate, except as specifically authorized by Superior Court Order or written consent by the plaintiff.
CONCLUSION
As a beneficiary, the heir will probably eventually be requested to sign a release and refunding bond. If you have evidence of misappropriation, you may consider asking the executor for an informal accounting prior to signing the release and refunding bond. If you have concern regarding the handling of an estate, schedule an appointment to consult an elder law attorney.

Opinion 692 Retention of Closed Clients Files (Supplement)



Opinion 692 Retention of Closed Clients’ Files(Supplement) Advisory Committee on Professional Ethics
Appointed by the New Jersey Supreme Court
Opinion 692 (Supplement)
Retention of Closed Clients’ Files
The ACPE has been asked to clarify Opinion 692, in which the Committee responded to a request for advice concerning the length of time an attorney must retain a client file following the final disposition of a matter.  There the Committee held that, absent specific instructions or express agreement, and excepting “property of the client,” attorneys are required by applicable ethics rules and principles to retain and maintain closed files for seven years.  The Committee noted in Opinion 692 that RPC 1:15(a)(b) may, by implication, require that “property of the client” be maintained indefinitely.  The opinion defined such property as (1) “…that which the client has entrusted to the attorney, such as original documents, photographs, things …”  and (2) “…that which has been created or obtained by the attorney as part of the undertaking and for which the client retained the services of the attorney…”  By way of example of the latter category, Opinion 692 refers to original wills, trusts, deeds, executed contracts, corporate bylaws and minutes, and, in a footnote, points out that what may be included in this category of property depends on the nature of the representation and the matter.  See Opinion 692, fn 2.
The first of the two inquiries before the Committee seeks clarification of Opinion 692 in the following respects:
(a)     provision of a more specific explanation of what constitutes “property of the client,” including whether medical records, x-rays, expert reports, deposition transcripts, and answers to interrogatories constitute property of the client;
(b)       whether the entire file or only that portion falling within the          definition of “property of the client” must be retained for seven years; and
(c)       whether there must be separate agreements concerning destruction, prior to the expiration of the seven-year period, of the “property of the client” and the remainder of the file.
In responding to this inquiry, the Committee takes this opportunity to provide guidance to the bar on a related issue, namely, (d) who bears the responsibility to retain and maintain closed client files under certain circumstances.
The second inquiry seeks the Committee’s clarification in cases where the insurer hires counsel to represent its insured, (e) as between the insurer and an insured, who is the client for purposes of providing instructions on file retention or destruction.
(a) Definition of Property of the Client
As Opinion 692 emphasized, determining what constitutes property of the client is fact sensitive and depends on the nature of the matter and of the representation itself.  We note that the definition adopted and examples referenced in Opinion 692 are consistent with definitions adopted and examples used in other states.  See, for example, Cal. Standing Comm. on Prof’l Responsibility & Conduct, Formal Opinion 2001-157 (2001) (finding that a lawyer has an obligation to permanently safeguard original materials and materials of inherent value); Mich. Ethics Comm., Opinion R-5 (1989) (requiring record retention plans to include safeguards for permanently maintaining client property such as stock certificates, original wills, and unrecorded deeds); ABA Comm. on Ethics and Prof’l Responsibility, Informal Opinion 1384 (1977) (stressing that a lawyer should not discard or destroy property of the client or information that the client may foreseeably need).
In responding to the current request for clarification, we apply the Opinion 692 definition of “property of the client” and conclude that in most cases, including those involving personal injury or malpractice claims, medical records, x-rays, expert reports, deposition transcripts, and answers to interrogatories do not constitute property of the client.  That does not mean, however, that there is no case in which such materials and documents could ultimately fall within the definition of property of the client.  It may well be that, depending on the nature of the matter or the representation itself, it would be foreseeable that the former client will need such documents in the future to protect an interest or defend a claim.  In such a case, the types of documents specifically referenced in the inquiry (medical records, x-rays, expert reports, deposition transcripts, and answers to interrogatories) could constitute “property of the client”

and, as such, be subject to the retention requirement applicable to client property.  See Opinion 692 and below.  Practitioners will need to apply discretion to these matters on a case-by-case basis.
(b) What Portion of the File Must be Retained for Seven Years
Absent specific written instructions or an express agreement or other legal authority, such as a court order,
 (1) property of the client must be returned, or retained and maintained indefinitely (see Opinion 692, finding thatR.P.C. 1.15(b) “implies that ‘property’ of the client may never be destroyed without the client’s permission or some legal authority such as a court order”); and
 (2) the remainder of the file must be retained and maintained for seven years (see Opinion 692, concluding that a client can reasonably expect an attorney to have a file available for seven years after the conclusion of representation).
At the end of the seven-year retention period, a lawyer has an obligation to examine the closed file to determine whether it contains property of the client.  If a file contains such property, the lawyer should take reasonable steps to notify the former client.  Reasonable steps include, but are not limited to, mailing a notice to the client’s last known address by regular or certified mail and waiting a reasonable period for a response.  Cf. D.C. Legal Ethics Comm., Opinion 283 (1998) (holding that an attorney must make a reasonable effort to reach the former client by sending a letter to the client’s last known address and waiting an appropriate period of time (perhaps six months)).[1]
Some files may contain client property that has inherent value, such as bonds, stocks, or jewelry.  Where a file contains inherently valuable property and the client cannot be found at the end of the seven-year retention period, the lawyer should dispose of the property in accordance with New Jersey’s Uniform Unclaimed Property Act,N.J.S.A. §§ 46:30B-1 to -109.
While the inquiry here at issue did not include a specific question on retention of criminal files, the Committee takes this opportunity to provide guidance to the criminal bar by noting that it will generally not be prudent to dispose of criminal files after seven years.  That is because criminal convictions can have significant consequences long after the final judgment, sentencing, and closure of the case.[2]  Thus, absent an express agreement, a lawyer should not discard or destroy files relating to criminal matters while the client is alive.[3]  Accord, State Bar of Cal. Standing Comm. on Prof’l Responsibility and Conduct, Opinion 2001-157 (2001) (holding that client files in criminal cases cannot be destroyed without the client’s authorization while the client is alive).
Finally, we emphasize again that practitioners must use their judgment and apply discretion, and must consult substantive law requirements in particular practice areas to determine the appropriate retention period beyond the required seven years for files or portions of files in certain matters.  For example, where the matter involves a minor, materials in the file may affect the client’s rights well beyond the seven-year retention period.  See, for example, N.J.S.A. § 2A:14-21 (providing that the statute of limitations for claims brought by minors tolls until the minor reaches majority).  Thus, a lawyer may need to retain file records relating to the representation of a minor until the minor reaches majority and thereafter until the statute of limitations runs.  Cf. D.C. Legal Ethics Comm., Opinion 283, fn. 10 (1998) (explaining that files relating to matters involving a minor may need to be kept beyond the minimum five-year retention period established in that jurisdiction).  See also N.J.S.A. § 2A:14-7 (providing for a twenty year statute of limitations for actions relating to real estate).
Other extended retention requirements may apply by operation of state and federal laws that require particular information to be retained for more than seven years.  While these requirements may not specifically apply to attorneys, to the extent an attorney has these types of records in a client file, and absent an agreement with the client, the attorney may be required to maintain them for the period specified in the applicable law.  See, for example, 29 U.S.C. § 1059 (a)(1) (ERISA) (requiring indefinite retention of documents essential to the determination of benefits payable to employees);  29 C.F.R. § 1910.1020(d) (OSHA) (requiring that medical records pertaining to an employee’s exposure to toxic or hazardous substances in the workplace be retained for the duration of employment plus thirty years).
Before destruction, whether based on the client’s consent or at the end of the seven-year retention period, the attorney should carefully review the file’s contents to make certain that documents that the lawyer is required by law to maintain or that the client may foreseeably need are not destroyed.  Once again, the Committee notes that counsel must exercise reasonable discretion in these matters, based upon the particular facts, and as may be required by applicable law.
As Opinion 692 emphasized, when destroying client files, the manner in which they are destroyed must conform to the confidentiality requirements of RPC 1.6.  See Opinion 692 (stressing that “simply placing the files in the trash would not suffice”).  Accordingly, a lawyer must take appropriate measures to ensure that confidential and privileged information remains protected from improper disclosure.
(c) Agreements to Destroy Client Property
The inquirer has asked for clarification whether there must be separate agreements concerning destruction of property of the client in less than seven years.  Specifically, the inquirer seeks guidance whether, in the case where there is a general agreement with the client on the destruction of the entire file (in a retainer agreement or otherwise), a specific agreement is required for the destruction of “property of the client” that may be contained in the file.
As Opinion 692 makes clear, an agreement to destroy property of the client should be executed only after the property is in the attorney’s possession, and should specifically describe the property intended to be destroyed or otherwise disposed of.  See Opinion 692 (holding that if a general retention policy calling for the destruction of a closed file “is intended to be made applicable to ‘client property’ . . . the agreement should be executed only after the property is in the attorney’s possession”).  Therefore, unless the attorney is in possession of the client property before a retainer agreement is signed, generally an agreement to destroy a file contained in a retainer agreement is insufficient to permit destruction of client property.

(d) Responsibility For Retention and Maintenance of Closed Client Files Under Certain Circumstances
From time to time the Committee has been asked for guidance on the question of who has responsibility for the retention and maintenance of client files, including property of the client, in circumstances where a sole practitioner retires or dies, the attorney who worked on the matter leaves the firm, or when the firm dissolves.  The Committee takes this opportunity to provide guidance to the bar on this issue.
Ordinarily, clients of a law firm employ the firm as an entity rather than employing a particular member of the firm.  See State v. Belluci, 81 N.J. 531, 541 (1980) (reasoning that the access to confidential information among members of a firm and the shared economic interest of the entire firm support “treating a partnership as one attorney”); Staron v. Weinstein, 305 N.J. Super. 236, 242 (App. Div. 1997) (“When a client retains a lawyer [associated with a law firm] the lawyer’s firm assumes the authority and responsibility of representing that client, unless the circumstances indicate otherwise . . . .”) (citing Restatement (Third) of Law Governing Lawyers § 26, cmt. h (Proposed Final Draft No. 1, 1996)).  Accordingly, under RPC 1.16, a law firm has an ethical obligation to protect the interests of former clients.  Where a client employs a firm, it is the firm that has the obligation to comply with the procedures for disposition of client files set forth in Opinion 692 as clarified in this opinion.  SeeN.Y. State Bar Assoc. Comm. Prof’l Ethics, Opinion 623 (1991) (holding that a law firm, and not just the member of the firm who actively represented a client, has a professional obligation to maintain that client’s closed files).  Likewise, in the event that a firm dissolves, the former partners or members of the firm have a professional and ethical obligation to make arrangements for the disposition of client property in a manner consistent with this opinion and Opinion 692.  This requirement conforms with the ethical obligations imposed on many of New Jersey’s licensed professionals to establish procedures for retrieval of records following the cessation of their practices.  See, for example, N.J.A.C. 13:30-8.7(f) (Dentists); N.J.A.C. 13:35-6.5(h) (Physicians); N.J.A.C. 13:42-8.1(h) (Psychologists); N.J.A.C. 13:44E-2.2(g) (Chiropractors).
Under RPC 1.3, a sole practitioner has an ethical duty to plan for disposition of files in the event of his/her death or retirement.  See Model Rules of Prof’l Conduct R. 1.3 cmt. 5 (amended 2002) (“To prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer to review files, notify each client of the lawyer’s death or disability, and determine whether there is a need for immediate protective action.”); ABA Comm. on Ethics and Professional Responsibility, Formal Opinion 92-369 (1992) (noting that the Model Rules on diligence and competence require a sole practitioner to plan for death); Fl. State Bar Assoc. Comm. of Prof’l Ethics, Opinion 81-8 (1981) (holding that when planning for death, a lawyer must make a diligent effort to contact all clients, review each file for documents that must be safeguarded, and index such documents before putting them in storage or turning them over to the attorney who assumes control of the practice).  RPC 1.3 specifically requires a lawyer to act “with reasonable diligence and promptness in representing a client.”  We conclude that “reasonable diligence” requires a sole practitioner to make arrangements for disposition of client files in the event of death or retirement.  This is an obligation which all law firms and sole practitioners must prepare for now.
When a sole practitioner has not arranged for file disposition in the event of death or disability, New Jersey Court Rule 1:20-19 provides for the disposition of the practice, including client files[4].  Pursuant to Rule 1:20-19, an interested party may petition the Assignment Judge in the vicinage where the attorney maintained a practice to appoint a member of the bar to perform an inventory of the practitioner’s files and take actions necessary for the protection of the attorney’s clients.  N.J. Ct. R. 1:20-19(a).  Cf. Model Rules for Lawyer Disciplinary Enforcement, 28 (1989).  When dealing with retention and disposition of client files and client property, the appointed attorney must comply with the seven-year time period established in Opinion 692 and clarified in this opinion.  See ABA Comm. on Ethics and Professional Responsibility, Formal Opinion 92-369 (1992) (concluding that ABA Informal Opinion 1384 regarding the duty to preserve client files applies to lawyers who assume responsibility for a deceased practitioner’s clients).

(e) As Between the Insurer and the Insured, who is the Client for Purposes of Complying with the Requirements set forth in Opinion 692, as Clarified Herein
Concerns about the disposition of closed client files multiply in the conflict-ridden tripartite relationship among a law firm, an insurance company, and the insured party.  Based on RPC 1.6 and 1.8 and legal precedent, the Committee reaffirms that the insured, and not the insurer, is the client for the purposes addressed in this opinion and in Opinion 692.  To the extent that Opinion 542 conflicts with this holding, we now reject it.
In Opinion 542, we addressed whether an attorney for an insured breached his duty of confidentiality by delivering closed files to the insurer without retaining copies.  N.J. Advisory Comm. on Prof’l Ethics, Opinion 542 (1984).  We explained that the insured and insurer could agree to the disposition of claims files.  However, we emphasized that the attorney must return all materials unrelated to the claims at issue to the insured, unless the insured authorized other means of disposal.  Although we held that the attorney’s procedure described in that inquiry for disposing of claims files was proper, we limited our response to files that contained no confidences of the insured.  Opinion 542 did not address whether the attorney’s duty to safeguard client property limited the attorney’s ability to transfer the entire claims file to the insurer.  However, to the extent that Opinion 542 does permit destruction of a file based on a contract between the insured and the insurance company, it is rejected.
Although this is an issue of first impression in New Jersey, prior decisions regarding the relationship between the attorney, an insurance carrier, and the insured support a finding that the file and all “client property” belong to the insured.[5]  In New Jersey, courts have concluded that an attorney’s primary duty is to the insured.  Prevratil v. Mohr, 145 N.J. 180, 194 (1996); Lieberman v. Employers Ins. of Wausau, 84 N.J. 325, 338 (1980) (emphasizing that the relationship between defense counsel and the insured should be treated as if the insured had hired and paid for the attorney’s services); Montanez v. Irizzary-Rodriquez, 273 N.J. Super. 276, 286 (App. Div. 1994) (concluding that defense counsel cannot ethically attack the credibility of the insured given the undivided loyalty that the attorney owes to the insured); Longo v. Am. Policyholders’ Ins. Co., 181 N.J. Super. 87, 92 (App. Div. 1981) (holding that an attorney has an ethical obligation to represent the insured with undivided loyalty); N.J. Advisory Comm. on Prof’l Ethics, Opinion 542 (1984) (“We first observe that in the situation where an attorney is employed by an insurance company to represent the interests of the insured party to an action, that attorney’s client is the insured.”).  Similarly, the New Jersey Supreme Court has held that an attorney owes undivided loyalty to the insured.  Lieberman, supra, 84 N.J. at 338-39.  Based on the existence of an attorney-client relationship between the attorney and the insured, the Lieberman Court stressed that “there is no diminishment of ethical obligations and standard of care applicable to insurance defense counsel.”  Id. Accordingly, as a baseline, the attorney owes all ethical obligations, including the obligations to safeguard client property and protect client interests, to the insured and not the insurer.
RPC 1.8, Conflict of Interest, makes clear that an attorney has an ethical obligation to preserve the insured’s confidentiality.  Pursuant to RPC 1.8, an attorney can only accept compensation from a third party if “there is no interference with the lawyer’s independence of judgment or with the lawyer-client relationship,” and the client’s confidential information is protected.  See also Restatement of the Law (Third) Governing Lawyers § 134, ill. e (2000) (directing an attorney to maintain the confidentiality of the insured).  Documents that an insured delivers to the attorney in the course of representation, such as medical records or financial statements, constitute “property of the client” as that term is defined in Opinion 692 and clarified in this Opinion.  These materials may contain client confidences that, under RPC 1.8, cannot be disclosed to the insurance carrier without the informed consent of the insured.  Therefore, concerns over maintaining client confidences support a finding that the insurer cannot control the disposition of closed client files.
Because the attorney’s employment by the insurer does not limit the attorney’s ethical obligations to the insured, the Committee holds that materials contained in a claims file that clearly fall within the meaning of “property of the client” must be disposed of in accordance with the insured’s instructions, or maintained indefinitely underRPC 1.15(b).  The insured may consent to the destruction or retention of a claims file by the insurer, but such consent must be fully informed.  Therefore, the insured must be aware of the materials contained in the file at the time the insured gives consent.  See In re Rules of Prof’l Conduct and Insurer Imposed Billing Rules and Procedures, 299 Mont. 321, 346-47 (2000) (“[F]or an insured to make fully informed consent to disclosure of detailed professional billing statements, the consent must be contemporaneous with the facts and the circumstances of which the insured should be aware.”).  Accordingly, in most cases, an insured may not consent to disposal of client property by way of a provision to that effect in a liability policy executed before any claims materialize.
In sum, legal precedent in this State makes clear that the insured is the client of the attorney, even where the insurance carrier hires and pays for the attorney’s services.  All resulting ethical obligations, including the obligation to retain closed client files and property of the client, apply to the insured.  Thus, the Committee concludes that, where a claims file contains materials delivered by the insured to the attorney or prepared or obtained for the insured in the course of representation, the attorney must obtain the insured’s instructions or consent regarding the disposition of the property in accordance with Opinion 692 and this opinion.

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[1] The New Jersey Administrative Code provisions regulating other licensed professionals provide guidance on the scope of “reasonable efforts.”  Pursuant to the Code, when preparing to retire or terminate their practices, psychologists, chiropractors, dentists, and physicians must establish procedures by which patients may obtain treatment records.  See N.J.A.C. 13:30-8.7(h) (Dentists); N.J.A.C. 13:35-6.5(h) (Physicians); N.J.A.C. 13:42-8.1(h) (Psychologists); N.J.A.C. 13:44E-2.2(g) (Chiropractors).  These procedures and a notice of cessation of the practice must be published in “a newspaper of general circulation in the geographic location of the licensee’s practice, at least once each month for the first three months after the cessation.”  Id.

 3
[2] See, for example, N.J.S.A. § 2C:7-2 (providing that a registered sex offender who has not committed an offense within fifteen years after conviction or release, whichever is later, can apply for termination of the registration obligation); N.J.S.A. § 2C:43-7.1 (authorizing extended sentencing for repeat violent offenders).
[3]  The New Jersey Public Defender maintains files for 50 years pursuant to a departmental policy that was approved by the State Records Committee pursuant to N.J.S.A. § 47:3-20 in 1983.
[4] The Court Rule alternative is unlikely to be as practical and effective as advance planning by the responsible firm or practitioner.
[5] Neither the courts nor the legislature in this State has addressed whether the insured and the insurer are, in some circumstances, both clients of the attorney.  See Paradigm Ins. Co. v. Langerman Law Offices, 200 Ariz. 146, 154 (2001) (holding that “when an insurer assigns an attorney to represent an insured, the lawyer has a duty to the insurer arising from the understanding that the lawyer’s services are ordinarily intended to benefit both insurer and insured when their interests coincide”).  Because we find that this is a question of substantive law, we do not address it.  See N.J. Ct. R. 1:19-2 (granting the Committee jurisdiction over inquiries concerning the proper conduct for members of the New Jersey bar).  However, if, in the future, the courts or legislature determine that an attorney owes a duty of loyalty to both the insurer and the insured, the Committee will have to revisit the question of retention and destruction of  the insured client’s files and property.


Obtaining and Maintaining Living Wills and Health Care Proxies



Your personal attorney can provide you with each of these documents. Generally, these documents require at least two witnesses. It is the policy of some hospitals and other medical institutions not to permit their employees to witness the signing of such documents. In most states there are other restrictions as to who may witness such documents. Generally, the persons who act as witnesses are not permitted to be individuals entitled to any inheritance as a result of your death, either by will or by state law. Often the law does not permit a person to witness such documents if they are related to you by blood or by marriage, or if they are responsible for payment of your medical bills. In any event, the witnesses must be adults as defined by your state law.
While all states recognize these advance health care directives, the law varies as to recognizing a document prepared in another state. It is not necessary to prepare additional documents in case you might vacation in another state. However, if you spend a considerable amount of time living in more than one state, you should consider having advance directives prepared in each of the states in which you spend significant periods of time.
Should you change your mind as to your living will decisions or your choice of health care proxy, you can simply destroy the document you have and create a new one. Once you have a living will, health care proxy, or advance health care directive, you should keep it among your important papers. Make sure a responsible adult, such as the named health care proxy, knows where you keep these documents. If you have a regular physician who keeps your medical records, you should provide a copy of the documents to him or her for your medical records. In the event you are admitted to a hospital you should take these documents with you at the time you are admitted and permit the hospital to place copies into your medical files. It is also a good idea to discuss the decisions you have made in your documents with family members so that they may better know and understand your wishes concerning these matters.