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New Jersey Estate Planning Blog

What is estate planning fatigue and who is affected?

  • 25
  • July
    2015

The process of planning for the distribution of one's assets at the time of death is difficult for many in New Jersey. Aside from the matter of facing the reality of one's own mortality, there are plenty of practical reasons why many prefer to postpone the estate planning process. Recent research suggests that for individuals and families who hold more than $1 million but less than $5 million in wealth, a condition known as estate planning fatigue may be to blame.

Estate planning fatigue occurs when an individual makes multiple changes to his or her estate plan, only to find that additional attention is required within a very short period of time. This type of mental fatigue is common among those who made efforts to adjust to the ever-changing estate tax issues that were prevalent in the decade leading up to 2013. During that time, it was difficult to predict how one's estate might be taxed, and many people made a number of changes to their estate plan in order to try and reduce taxation.

New tools for including digital assets within estate planning

  • 23
  • July
    2015

As more and more Americans make use of technology and the Internet, the issue of digital assets has gained greater attention. Digital assets are items of value, including emotional value, that a person creates and stores in the digital realm. This can include photographs, videos and text. Facebook, the popular social media site, is one of the largest repositories of digital assets. The company recently announced changes that can make it easier for users in New Jersey and elsewhere to include Facebook within estate planning.

Previously, Facebook responded to the news that a user had passed away by locking down that person's account. This led to a high degree of frustration on the part of family members who had hoped to access the photos and other material stored within the site. It was also a concern for family members who wanted to make alterations to the online presence presented by their lost loved one.

Estate planning solutions for blended families

  • 18
  • July
    2015

When a New Jersey resident remarries, he or she will take on a new set of family relationships. It is not uncommon for married couples to have a blend of stepchildren and shared children, as well as any number of connections to extended family members. This can create a unique set of estate planning needs, and it is important to understand what can occur if a comprehensive plan is not put into place.

When an individual dies without a will, his or her estate will enter the probate process. This is a legal scenario in which a court will determine how one's assets are distributed according to inheritance laws. In most cases, the result of probate will be the bulk of assets passing down to the surviving spouse. At that point, he or she will have no requirements on how those assets are used or further distributed, which can lead to problems.

Creating a simple estate plan for your pet

  • 16
  • July
    2015

The bulk of estate planning efforts are rightfully focused on passing down accumulated wealth to one's chosen heirs. For many in New Jersey, a different type of relationship is often overlooked when considering these matters. Pet owners very often forget to create a plan for the care of their beloved animals, which can leave a favorite dog or cat in serious trouble if the owner passes away. Fortunately, it is possible to create a simple estate plan addition that can help ensure that pets are cared for in the event of the owner's death.

When thinking about estate planning for pets, many people think of the outrageous cases that make the news every few years. From time to time, a case will arise in which an individual leaves all of his or her wealth to a cat or dog and cuts children and grandchildren out of an inheritance. These cases can make it seem as though providing for a pet is a frivolous matter, but in reality, a small volume of effort can make a world of difference in providing care for a beloved animal.

Estate planning mistakes older people make

  • 13
  • July
    2015

While it is never a good idea to make sweeping generalizations about groups of people, there are often important lessons to be learned by the choices made by others. When it comes to estate planning, there seem to be certain mistakes that older people make when considering their needs, some of which can lead to negative outcomes. The following examples are errors that a person of any age can make, but that can be particularly prevalent among older New Jersey residents.

Many people assume that the best way to pass along assets to their intended heirs is simply to enter into joint ownership while the original owner is still living. This can have a number of unintended consequences, however. For one, the individual who jointly owns an asset may have different ideas about how to manage or dispose of that asset, which can leave the original owner in a dire financial situation. In addition, jointly owned property is subject to loss through divorce, lawsuits or past-due taxes. An intended heir could end up losing all or some of his or her inheritance before the original owner passes away.

Asset protection and nursing home care

  • 11
  • July
    2015

When structuring an estate plan, the primary focus of many New Jersey residents is a smooth transition of wealth to the loved ones left behind. In many cases, this is a surviving spouse, who will be entrusted to pass on any remaining assets to children and grandchildren. This approach fails to take into consideration the chance that a surviving spouse could eventually require some form of residential medical care, which can have a devastating impact on a family's finances if proper asset protection planning is not in place.

The cost of nursing home or rehabilitative care is astounding. Many families rely upon Medicaid to help cover the cost of residential care, but are unaware of the requirements that must be met before such coverage becomes effective. In order to qualify for Medicaid, an individual or family must "spend down" their assets to a very low level. Once those assets have been depleted, Medicaid will kick in and cover the majority of residential care costs. By that time, however, the family is left with little in the way of assets and virtually no possibility of passing down an inheritance.

Estate planning across the decades

  • 09
  • July
    2015

As a New Jersey resident ages, he or she will have different estate planning needs. Understanding those needs can help ensure that a proper estate planning approach is put to use, and that one's needs are being properly addressed. While there is no such thing as an "ideal" age to begin the estate planning process, the following guidelines are given in the hopes of underscoring the benefits of putting one's wishes into a legal format.

During one's 50s, it is important to discuss estate planning with family members. Adult children who have not yet begun their own estate planning process should be encouraged to do so. Discussing the matter in a frank and open manner can remove a great deal of the emotional charge that normally accompanies such topics.

Asset protection by way of a revocable living trust

  • 03
  • July
    2015

When considering estate planning options, New Jersey families are confronted with a large volume of choices, the details of which can be confusing. For most people, estate planning comes down to a few simple goals: asset protection, the smooth transfer of wealth from one generation to the next and the lowest possible tax burden placed upon those assets. One tool that can help meet those goals involves the creation of a revocable living trust, or RLT.

An RLT is funded in the same way as many other types of trusts. Assets are placed within the trust by changing the title or other paperwork to reflect that the trust itself, and not the individuals controlling the trust, are the owners of each asset. An RLT can be funded with real estate, life insurance, investment accounts and other asset types.

Family-owned businesses and estate tax planning

  • 01
  • July
    2015

For many generations, families in New Jersey and across the nation have turned to their family business as a means of passing down wealth from one generation to the next. Through careful planning, families can use their businesses as a means of portability, giving children and grandchildren a way to tap into the family's assets without incurring high levels of taxation. This estate tax planning tactic, however, may soon be subject to change if the Internal Revenue Service places limitations on how those assets are valued.

The benefit of creating a family limited partnership or a family-owned limited liability corporation is rooted in the ability to gift a limited-partner interest to one's children or grandchildren. Any assets that are placed within the business remain under control of the parents or owners, but are excluded from their estate. In addition, the value of those assets is appraised lower than other, unencumbered assets, which means a lower tax bill. The reason why a lower value is placed upon the assets is based on the assumption that the limited partners do not directly control the assets, and they are less marketable.

How to avoid estate tax and give to charity

  • 26
  • June
    2015

Many New Jersey families have amassed a considerable amount of wealth. When considering estate planning options, many of these families are looking for ways to minimize their estate tax obligation while also allowing their wealth to have a positive impact, both for their heirs and for society in general. One option that meets both of those objectives is the creation of a family foundation funded by a charitable trust.

With the right structuring, a charitable trust can be created that has a predetermined period of viability. The trust is funded in much the same way as any other trust -- by means of cash, stocks, bonds or other assets. The trust pays the foundation annually in the form of an annuity. The family foundation, which is created at the same time as the funding trust, is tasked with determining how the charitable distributions will be made. At least 5 percent of the trust's assets must be distributed to various charitable organizations.