New Jersey Estate Planning Blog

Since 2001, there have been many changes to federal tax laws regarding estates. In the complicated world of estate planning, the focus has been on exemption amounts and the tax rate above it, even in New Jersey. From 2001 to 2010, the exemption rate continually rose while the tax rate declined until disappearing completely during most of 2010. The tax returned in 2011 and the exemption was set at $5 million with a 35 percent rate above that, and the American Taxpayer Relief Act made those 2011 changes to the exemption rate permanent.

This does not mean that estate planning should only concern the wealthy, however. Many concerns such as who will care for children of deceased parents and who becomes the insurance policy beneficiaries require early attention and an understanding of the Taxpayer Relief Act could affect them. The beneficiary designation form, which overrides a will, must be updated as policies and life situations change.

New Jersey residents may be interested in to hear that in 2012, a 97-year-old Holocaust survivor and real estate developer passed away, leaving no relatives and no heirs. He also apparently did no estate planning - and left an estate worth nearly $40 million. A representative for the state comptroller's office said that this is the largest unclaimed estate that the state has ever seen.

Friends revealed that the man had a wife and child who were killed in the Holocaust. The man did not talk about them. Immediately after the war, he met a woman that he reportedly believed to be the last Jewish woman alive. Unfortunately, experiments conducted on her during the Holocaust left her infertile, and the couple eventually divorced.

Some people think that only "old" people die, or that estate planning is unnecessary for the young. On the contrary, estate planning is essential for people of all ages. An estate plan will help ensure that a person's wishes are respected should the person pass away unexpectedly.

Where there is no will or estate plan in effect, the state decides on its own what should happen to the money. If a couple with young children should pass on without leaving a plan, the state will decide who should care for the children, and they may not wind up with the person the parents would have chosen. Parents may benefit from choosing a guardian in advance, to find someone who has similar values.

It's important for New Jersey residents to plan how their estates will be distributed when the time comes, but many of them may not know the importance of the estate planning process. Without a solid estate plan, their children don't always know what assets they own, and these assets are often scattered in different places. Even after the assets are assembled and the family can start dividing them, there are often issues with various ownership structures, account titles and beneficiary information.

Dated estate planning may not keep up with the changing laws, and it may not reflect a person's current financial position. As a result, surviving family members may face a mess of paperwork that is difficult to understand and time-consuming to sort through. The more convoluted the estate is with accounts in various joint names and housed at different banks, the more tedious it will be to finalize and divide.

A unique trend is emerging among Baby Boomers as they plan for retirement. Many are now attempting to position themselves through a process known as Medicaid planning to be more likely to qualify to receive Medicaid while still preserving their assets.

Medicaid, a program that is run by the federal and state governments, is a program that assists the poor in paying for health care. While the state government determines eligibility, the federal government reimburses a portion of state Medicaid expenditures. Medicaid is not the same as Medicare, federal health insurance that covers people who are over 65 and disabled people. Eligibility for Medicaid depends on an applicant's income and resources.

Medical care is expensive, and this gets even truer as people get older, especially if they develop a serious illness or have to move into a nursing home. In these situations, even people who have set aside a significant amount of assets for retirement may have a hard time paying for their medical care.

Medicaid is a federal program that helps low-income people pay for their medical care. It can be a valuable resource for older Americans who need help paying for their care. However, in addition to income limits, Medicaid also has asset limits for eligibility. This means that people with significant retirement savings may have trouble qualifying.

In April, a 43-year-old Matawan resident appeared in court to plead guilty to numerous charges, including several counts of attempted impersonation and theft by deception. The charges arose out of the man's impersonation of an 87-year-old woman's nephew. He then used his relationship with the woman to steal close to $1 million and her family home. The victim suffered from dementia and terminal cancer at the time of the acts.

The arrest followed a five-month investigation by Adult Protective Services and the Prosecutor's Office. The County was looking into reports of suspicious estate planning, real estate and financial transactions in which the man had participated. The man admitted to preparing a will for the woman, naming himself as the sole beneficiary of her estate. He also prepared a deed transferring the woman's home to himself in exchange for $1. The home was built in 1925. The value of the property was not disclosed.

When New Jersey residents consider filing for bankruptcy, one of the things they should evaluate before filing is whether or not they have any trusts. This is important because some trusts can be used to pay creditors during a bankruptcy. Therefore, even if someone has gone through estate planning to set aside money for his or her heirs, this money may be up for grabs if he or she files for bankruptcy.

There are two main types of trusts: revocable and irrevocable. A revocable trust is one in which the person who has created the trust still is in control of the funds, even if they are set aside for another individual. Irrevocable trusts are no longer under the financial control of the individuals who created them, and the only person who has rights to the funds in the trust is the person or persons the trust was designated for. Therefore, if someone is filing for bankruptcy, he or she would want to set up an irrevocable trust so that the funds he or she has set aside for someone else are protected.