Bergen County Elder Law Blog

At this point, it seems doubtful that the clouds will be breaking for our troubled American economy anytime soon. When there's a storm, sometimes the best thing to do is to hole up with a book and wait the rain out before making plans.

If we keep the metaphor of thunderstorms, then estate planning is an area of financial planning that's being rained on from several directions at once. The shaky economy makes future finances and the state of savings and other assets anything but clear. Meanwhile, the estate tax is a deluge of proposals, rejections, inaction and disagreement.

For anyone considering the creation of a will, trust or other tool of estate planning, the weather outside is frightful.

However, waiting out the storm isn't an option with estate planning. While it may be a reasonable decision in other situations, it's not here.

From a time-based perspective, the soon-to-be-reinstated estate tax is just around the corner. By any other standard of measurement, the details regarding the federal estate tax, its exemptions and demands are anything but clear. At this point, if Congress does nothing, the estate tax will come back on January 1, 2011, allowing for a mere $1 million exemption and charging a 55 percent tax on all assets above that threshold.

As columnist Sara Wyant writes in The High Plains Journal, "Even smaller farms and businesses could end up paying a bucketful of taxes (if) the owner dies next year."

Wyant is right. Farmers, who may have millions invested in equipment and property, certainly have reason to fear, as do small business owners who may be facing similar situations. In fact, everyone has good reason to be looking toward 2011 with a bit of apprehension.

Earlier this month, a Texas probate judge turned down a bid by Darla Lexington to stop the sale of five classic cars from her husband's collection - cars, she said, had been meant for her. The problem was that none of this was in writing.

The wife (by all accounts) of a famous lawyer, Lexington has nearly no proof to back it up. She has a wedding ring and most of the people who knew her husband acknowledged her as his spouse. However, there exists no legal document proclaiming them husband and wife.

His will, last updated one year ago, left everything to a charitable foundation.

Perhaps he had meant to update the will, but just hadn't gotten around to it yet. He died suddenly, in a car accident, at the age of 68. Whatever he may have planned to do, when he passed away, Lexington was left with nothing but the things she knew to be true.

However, verbal assurances only go so far in probate and, especially if what you are saying contradicts the last will and testament of the individual in question, you're probably out of luck.

Advance care directives are detailed requests for specific medical treatment, or the withholding of certain treatment, in the event that you become disabled and are not capable of giving such direction.

If you become terminally ill or are seriously injured, your doctor can use the advance care directive to guide his or her actions.

Advance care directives can also designate a family member or close friend to make medical and financial decisions for you under similar circumstances. As FamilyDoctor.org points out, advance directives usually tell doctors not to provide life-saving measures given certain circumstances, though they may also be used to request that everything be done to save your life.

After the jump, we will discuss three of the most important advance care directives for you to know.

Your estate plan is yours and yours alone. What you put in your will or the rules you designate for end-of-life care are only beholden to your discretion. Still, many times it pays to share your decisions and plans with the members of your family who will be affected by their implications.

This is especially true if you are married. Take the case of J. Howard Marshall II and Anna Nicole Smith. When Marshall passed away, Smith learned that he had left her out of his will completely. For the next 12 years, until her death, she battled in court for the inheritance she claimed he had meant for her.

This is an extreme example, both in situation and context, but think about it for a moment. Do you know your spouse's plans for the future? Does he or she know yours?

Estate planning is an intimidating, and potentially frightening, hurdle to cross. Many may not feel comfortable discussing their end-of-life plans, either because they don't want to think about them or they are afraid of offending a loved one.

As discussed last week, the federal estate tax is not the only tax to consider when planning your estate. New Jersey also levies an estate tax, as well as a tax on certain assets that are passed on after death. This second tax is referred to as an inheritance tax.

The New Jersey Inheritance Tax

The New Jersey Inheritance Tax does not apply to all inherited assets, but depends instead on who those assets are being passed on to and how much those pieces of the estate are worth.

Say that you are involved in Big Brothers Big Sisters, and you would like to pass some things on to your "little brother." If the property you transfer is valued at $500 or more, it will be subject to the tax on inheritance.

The tax operates on a graduated rate, so the percentage would be different if you passed on $10,000 than it would if you passed on $1,000.

Much in the same way estate planning can help you prepare for your financial future, nursing home planning can help you prepare for future living situations and specific healthcare needs. When you become unable to live alone and care for yourself, you and your family will have to make some tough decisions.

Most often, it is family members who will handle most of the planning.

With nursing homes, there are good ones and bad ones. You want to do everything you can to ensure that you are taken care of in a safe and friendly environment and, like all goals, long-term planning can be highly beneficial.

If a parent is afflicted with a sudden injury or health problem, you may have to find a proper nursing home on short notice. In some cases, A Medicaid planning attorney may be available to help you locate a suitable home.

If possible, though, nursing home planning is encouraged. So, what should you look for in a good home?

Estate planning is extremely important for those hoping to retire in comfort, as well as protect and pass on assets to loved ones. Estate planning, while legal in large part, also has a more accessible side. You cannot do everything on your own, but you can do some things.

As Ryan Guina explains in a recent article for U.S. World News & Report, there is plenty you can do to plan for retirement, and beyond, right now.

• First off, how much debt do you have? Whether it is credit card debt, car payments or a bank loan - pay off your debts as soon as possible. Interest is money better put towards something else, so pay as little of it as possible by paying off your debts as quickly as possible.
• When extra money pops up, stop and think before you spend it on something you don't really need. "Saving for a rainy day," as Guina puts it, gives you a bit of cushion when unexpected expenses arise. Sure, replacing the brakes won't be as fun as getting that flat screen television, but it will return more of the investment.