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New Jersey Estate Planning Blog

Increase in estate tax exemption can help with gift taxes

  • 31
  • October
    2014

Each year, the IRS announces how much the estate and gift tax exemptions will be for the following year. Recently, the announcement was made that the estate tax exemption will rise to $5.43 million per person, and the annual gift tax exemption remains at $14,000 for 2015. The $90,000 increase could allow a New Jersey resident to do more gifting during his or her lifetime.

This is because the amount of every gift needs to be deducted from the total amount of the exemption. For instance, if a person has not made any gifts up to this point, he or she could give away up to $5.43 million next year, and no taxes would be due for the one making the gift. A married couple can combine each party's exemption and give away up to $10.86 million.

How a vacation home factors into estate planning

  • 25
  • October
    2014

Some families are fortunate enough to have bought a vacation home, and can share that property with those they hold dearest. When the time comes to create an estate plan, some in New Jersey are unsure how to address their vacation home within the scope of their estate planning tools. Fortunately, there are a number of ways to handle a second or vacation home, which means that there is a solution available for virtually every scenario.

The first step in addressing how to pass on a vacation home is to determine if one's children want to retain the property. This is best accomplished in a sit-down discussion with all parties present. If the children want to keep the home, the discussion should include the costs of maintaining the property, including taxes, upkeep and routine maintenance. This is also a good time to work out an agreement on who will have the right to use the property, and how the schedule might work if siblings do not want to make use of the home at the same time.

A sad but true estate planning and probate reality

  • 23
  • October
    2014

Much has been written, here and elsewhere, about the need to create and maintain a thoughtful drafted estate plan. That said, the reality is that many in New Jersey and across the nation will not address this important need, and their heirs will be forced to go through the probate process. A recent article written for estate planning attorneys puts an unusual spin on this reality, one that is disheartening for many families but also has the power to motivate some to make a change.

The piece reported that statistics suggest that between 55 and 70 percent of Americans do not have an estate plan in place. With the Baby Boomer generation now at or beyond retirement age, more Americans than ever before will soon need the protections that an estate plan can offer. However, the article does not focus on how to convince older Americans to create an estate plan; it instead suggests that the negative repercussions of failing to do so will increase awareness of the issue.

Estate planning during one's younger years

  • 17
  • October
    2014

When many New Jersey residents consider estate planning, it is a topic that they believe is geared toward those who are nearing their retirement years. Younger people often fail to recognize the need to create a solid plan that can be used in the event of their passing. This, however, is an error in judgment, one that could cost a family a great deal of time, money and stress in the event that an untimely death should occur. Estate planning is not only relevant for individuals in their 30s and 40s, it is imperative.

The foundation of a good estate plan is a carefully drafted last will and testament. This is the document in which parents can designate the individuals they wish to raise their children in the event that both parents die. It is also the guideline for the distribution of an individual's property and assets. Having a will in place can make a world of difference to those left behind, and it can simplify what is a difficult and emotional process.

Estate tax and college savings accounts

  • 15
  • October
    2014

Many New Jersey readers are aware of the tax benefits of establishing and funding a Section 529 college savings account. The money deposited within is allowed to accumulate interest tax-free, and there is no penalty for withdrawing funds to cover the cost of tuition and other college needs for the account's beneficiary. However, there are also estate tax-planning benefits associated with a 529 account, which is a fact often overlooked by many.

Money deposited into a 529 account can reduce one's taxable estate. Such contributions are considered completed gifts, which means that these funds are also allowable as part of one's annual gift tax exclusion. For those who are able to make a lump-sum contribution, the gift tax exclusion can be spread over the course of five years, leading to significant savings.

The benefits of using a living trust in estate planning

  • 10
  • October
    2014

Many New Jersey residents find it advantageous to make use of one or more trusts when setting up their estate plans. There are many different types of trusts, all of which have various benefits. In the case of a living trust, individuals are able to place chosen assets into the trust while they are still alive, and can also participate in the management of that trust. For many, the ability to see their trust in action is a big advantage, and makes the estate planning process much easier to accomplish.

For example, an individual who creates a living trust can put the family home within that trust. In addition, investment property and other types of investments can be included. Beneficiaries are named, as well as the person who will be expected to to act as a trustee. This will be the individual who will manage the trust, pay any required taxes and make decisions concerning the maintenance of property held within the trust. If the creator of the trust wishes to manage it on their own, a successor trustee will be named, and that person will take over the trust once the creator dies.

Can a digital app assist with estate planning needs?

  • 08
  • October
    2014

Think of virtually any need that a New Jersey resident might have, and there is likely an online application in place to meet that need. With the announcement of a recently released app, estate planning can be added to that list. The company offering the service is known as Estate Assist, and promises to address an estate planning need that many individuals are not even aware exists.

Estate Assist is essentially a digital safe deposit box. Users can upload a list of their online and offline accounts, as well as the user names and passwords associated with each. In this way, one's heirs will have the ability to locate and access these accounts after their loved one has died, an ability that is not always readily available. Currently, when an individual dies, those left behind can encounter a great deal of difficulty gaining access to email, social media accounts and various forms of cloud storage.

Estate planning for future children

  • 05
  • October
    2014

When most people consider their estate planning needs, they do so in order to ensure that their loved ones are able to inherit as intended. Over time, the people on that list could change, as new children are born or other loved ones pass away. The best way to ensure that one's wishes are carried out as desired is to periodically review one's estate planning documents. There is another consideration, however, to which many in New Jersey have not given a great deal of thought.

Technology has given us the ability to conceive children without actually being present at the time of conception. By harvesting and storing sperm and eggs, individuals can pass on their genetic material long after the basic components of life have left their body. This ability can even extend beyond the lifespan of one or both of the parents.

Asset protection for the 99 percent of us

  • 03
  • October
    2014

When considering how to structure their end-of-life needs, many in New Jersey hold the misconception that they do not have enough wealth to require estate planning services. They feel that asset protection is a concern only for those who sit amongst the wealthiest; the fabled one percent. In reality, however, virtually everyone can benefit from having a solid estate plan in place.

First, let's take a closer look at the word "estate." An estate is not a country home sprawled across multiple acres and featuring a large and imposing house. It is nothing more than the sum total of all assets that an individual has control over. This can include various investments, the equity in one's home, and different types of personal property. No matter how modest an individual's holdings may be, those holdings comprise his or her estate.

Understanding various estate planning tools

  • 27
  • September
    2014

For many New Jersey residents, the process of putting together a set of estate documents is a source of stress. This is largely due to the sheer volume of available choices. When confronted by the range of options, many feel overwhelmed and unsure where to begin. However, everyone should rest assured that there is a combination of estate planning documents that can meet any need.

Many people begin with a simple will, which can address the designation of heirs and the assets that they will receive. Moving beyond a will, some individuals will choose to make use of various trusts to pass their wealth on to their chosen heirs. A trust has the advantage of keeping one's estate out of probate, which saves money, time and allows the family to keep the details of the estate private.

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