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New Jersey Estate Planning Blog

Estate planning options for private collections

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  • April
    2015

Completing one's estate plan provides a wonderful sense of relief for many in New Jersey. Once the distribution of assets has been structured and all incapacitation documents are in place, many people rest assured that they have adequately prepared for the inevitable. Often, however, there are holes within a given estate planning package. For many, one of the most frequently overlooked matters involves how a personal belongings will be passed on to loved ones.

Many people spend a significant portion of time amassing collections. Whether a treasured collection of salt-and-pepper shakers or a body of valuable artwork, collections hold a great deal of personal value for their owners. Determining how to pass on a collection can be a challenge, especially for those who feel strongly that the collection should be kept together.

Estate planning can protect assets from being squandered

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  • April
    2015

One of the most difficult topics for a New Jersey family to address is how to create an estate plan that allows assets to pass to children without allowing those children to squander their inheritance. For one, tackling this matter requires parents to acknowledge that their child or children are not currently able to make solid financial decisions, and may not possess those skills for some time to come. When considering how to best provide for children without allowing them to squander their inheritance, there are several estate planning options to weigh.

One of the most important aspects of this type of estate plan is to limit the ability of an heir to fully access his or her inheritance unless certain requirements are met. Some parents simply choose to set an age at which their children will have access to the wealth, and set that age well into adulthood. This, however, does not ensure that the child will have reached the appropriate level of maturity to handle a windfall of cash.

Avoiding probate just one benefit of estate planning

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  • April
    2015

A great deal of focus within estate planning is centered on the best way to transfer assets to children and grandchildren after the death of a loved one. For couples in New Jersey without children, a different estate planning approach is often taken, and the focus becomes how to best ensure that one's own needs are taken care of in the event of an incapacitating illness or injury. It is one thing to consider how one would like to be cared for in such circumstances, but another to actually structure a plan to make sure that one's wishes are followed in this most important regard. This aspect of estate planning is often overshadowed by a focus on passing on assets and avoiding probate.

If an individual becomes injured or ill and can no longer make his or her own decisions, a process must be followed to grant decision-making authority to another party. In the best outcomes, couples will have taken the time to designate the individual(s) who are best suited to play this role. This often takes the form of each spouse choosing the other to represent their medical and financial decisions in the event of incapacitation, but there are certain circumstances in which a third party is the best person for the job.

Addressing disparity within estate planning

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  • April
    2015

Within many New Jersey families, a level of rivalry exists among siblings. This is a normal and healthy set of circumstances between brothers and sisters, and is often channeled into positive level of competition and banter between family members. When it comes to estate planning, however, sibling rivalry can take on a much more contentious form. For those who plan to leave disparate inheritances to their children, it is absolutely essential to discuss the matter far in advance.

Leaving different amounts to different children is a common estate planning choice. In some cases, one or more children will have achieved a level of financial stability that is far higher than that of their sibling(s). Parents may feel compelled to leave more money to those who have a higher level of need. For certain circumstances, it may be a good idea to pass on wealth via a carefully constructed trust, which can ensure that the money is put to good use and properly managed.

Asset protection for those who live abroad

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  • April
    2015

Many New Jersey residents will spend a portion of their lives living abroad. Known as expats, Americans who live outside of the country for extended periods of time have a number of unusual legal needs. Creating a solid asset protection plan is an example, and individuals and families must take care to ensure that their wishes are properly documented prior to setting out on an extended trip abroad.

One issue that can be problematic involves the rules of residency in both one's home country and the country where a new home base will be established. For example, if one or more trusts have been put into place in New Jersey but a death occurs while living abroad, high estate taxes could be levied against one's heirs, based on the rules of the foreign country. One way to avoid this scenario is to retain one's legal "domicile" in the U.S. while taking on "residency" status in the other country.

Include a financial inventory with estate planning documents

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  • April
    2015

Many New Jersey residents experience a sense of relief when their estate planning documents have been drafted and signed. Having this important financial step completed can bring about a feeling of comfort in the knowledge that these matters have been properly addressed. However, there is one addition to the estate planning process that is often overlooked. Including a financial inventory can be a great help to the individual(s) tasked with administering the estate.

A financial inventory is just what it sounds like: it is an accounting of all of the places where one's assets are held. This often takes the form of a list of various accounts, which can include bank accounts, investment accounts, pensions, mutual funds and more. Accounts that represent liabilities should also be included, such as car loans, mortgages, student loans and credit cards. Individuals must also note any and all insurance policies.

Moving beyond the old model of estate tax planning

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  • April
    2015

In decades past, individuals who were seeking estate planning guidance were told that there are three basic places where one can leave their assets upon death: family, charity or taxes. This approach defined the overall estate planning process for many years, but it does little to meet the needs of today's clients. Many New Jersey residents want to make their estate plan about more than the simple passing of assets to family members and reducing their estate tax burden.

For one thing, changes in estate taxation mean that most married couples can pass on over $10 million in assets free from any form of estate tax. Singles enjoy only half of that allowance, which is still a considerable amount of wealth to leave behind and more than many individuals need to be concerned with. There are still certain tax considerations to be made, such as whether a move to another state would provide a substantial tax benefit. However, taxation matters do not usually take center stage within the estate planning process of the average person.

Dean Smith's generous estate planning choice

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  • March
    2015

Many New Jersey residents have seen media coverage of the generous gift that former basketball coach Dean Smith left for the players he worked with over the years. Smith, who is widely considered one of college basketball's most beloved coaches, used a revocable trust within his estate planning strategy to gift $200 to 180 of the young men who passed through his program. Not only is his generosity to be applauded, but the method through which he structured his estate also deserves admiration.

A revocable living trust is a vehicle that is created during an individual's life, and which gives individuals the power to change their mind about the trust and any assets held within. The trust is funded in much the same way as other forms of trusts. Assets are transferred in, but if the trust is dissolved during one's lifetime, those assets can be put to other uses.

Without current beneficiary information, probate court decides

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  • March
    2015

Organization and periodic review are two topics that should always be associated with the creation and maintenance of a proper estate plan. Without these two practices, it is all too easy for the wishes of a New Jersey resident to fall by the wayside. Over the course of a lifetime, many individuals will obtain a wide variety of assets, including various insurance policies. Ensuring that the beneficiaries for those assets are up-to-date is an essential aspect of good estate planning. Absent such measures, the division of one's estate can be left in the hands of a probate court.

An example is found in the estate of a man who passed away in 2011. The man had purchased two life insurance policies in 1999 and named the same three beneficiaries for each policy. However, within the same policy, he made note of his plan to establish a trust that would then become the beneficiary of the policies, and that the same three people would then become the beneficiaries of that trust. Later that year, the man made the change and designated the trust as the beneficiary of both policies.

Seek cohesion within estate planning efforts

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  • March
    2015

When planning for the distribution of one's assets upon death, many New Jersey residents make the mistake of taking a piecemeal approach to the matter. They may draft a will in which they outline how they would like their assets to pass to the designated heirs, which is an important step within estate planning. However, there may be a range of assets that have named beneficiaries, such as bank accounts, investment accounts, life insurance and more. In addition, many individuals name their children or others as joint owners on certain assets, such as their home. This approach can lead to a wide range of problems.

Having a will in place does not change how assets with a named beneficiary will be distributed. Therefore, if the goal is to divide all assets equally between one's children, and one of those children is also named as a beneficiary on one or more accounts, then the end result will be that child receiving one third share of the assets that go through probate, in addition to the full value of the assets held in the separate accounts. This can lead to a high level of contention between siblings, and such matters often end up in court.