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New Jersey Estate Planning Blog

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.

Storage is an important estate planning step

  • 19
  • June
    2015

Many New Jersey residents spend a significant amount of time refining their estate plan to ensure that their assets are distributed to their chosen heirs. Once that process is complete, a sense of relief often follows. It is important to understand, however, that even the most thorough estate planning package is worthless if one's heirs are unable to access the proper documents when the time comes.  

Without proper storage, estate planning documents are effectively worthless. While it seems like a simple step, many people fail to store their documents in a manner that makes them easy to locate and put to use. This can be especially challenging for those who draft estate paperwork while they are still relatively young. Multiples moves, divorce and catastrophes such as flood or fire can all result in the loss of these essential documents.

Do women have unique estate planning needs?

  • 17
  • June
    2015

When it comes to planning one's estate, each and every New Jersey resident has a specific set of needs. While there are many estate planning solutions that work for virtually everyone, there are other tools available that can customize the outcome based on an individual's goals and challenges. For example, many women have very specific needs and require a different estate planning approach than their husbands.

This differentiated approach is partly due to the fact that women have a longer life expectancy than men, which means that a large percentage of women will outlive their husbands. In addition, divorce and remarriage is far more common now than in decades past, which leaves many women with a blend of children and stepchildren from different unions. When determining how to pass on assets within a blended family, estate planning tools provide a wide range of choices.

Estate planning tips for same-sex couples

  • 13
  • June
    2015

With several landmark cases set to go before the Supreme Court, the nation is poised for a change in the manner in which same-sex marriage is handled in every state. At the same time, debate on the matter continues to rage, and the battles surrounding the legitimacy of these unions remain at play. Until the matter is ultimately resolved, many same-sex couples in New Jersey are taking an overly cautious approach to their financial and estate planning needs.

One of the best ways to ensure that one's assets pass down in the manner of their choosing is to draft a comprehensive will. It is also a good idea to check the beneficiary designations on investment, retirement and banking accounts. The assets held within such vehicles will pass to the named beneficiary, regardless of the wording of a will.

The role that basis plays in asset protection

  • 11
  • June
    2015

Prior to the passage of the American Taxpayer Relief Act of 2012, the primary focus of most estate planning was the avoidance of the estate tax, which could reach as high as 47 percent of the value of inherited assets. Now, however, only those New Jersey residents who have an estate valued at more than $5.43 million will be affected by the estate tax. For everyone else, the focus on asset protection often turns toward reducing the income tax burden placed upon heirs. The way that the IRS calculates that tax depends on the basis that is held by the individual who inherits and then sells a property.

Consider, for example, an individual who wishes to pass on a house to a loved one. If the heir plans to live in the home for a significant period of time after inheriting, his or her needs are different than if that property is to be sold soon after it is inherited. This is because an heir receives a basis in inherited property that is equal to the fair market value of the property at the time of inheritance.

How to discuss estate planning with the kids

  • 04
  • June
    2015

Most New Jersey residents are aware of the need to create a comprehensive estate plan well in advance of actually needing those documents. That said, very few families take the time to sit down with their adult children and discuss the details of that plan, which can make it hard for children to set the plan into motion when the time comes. While no one wants to have a lengthy discussion about his or her own demise, talking to your kids about your estate planning choices is part of the overall process.

Consider a case in which the last surviving parent falls seriously ill without having discussed estate planning matters with his or her adult children. Those children must now handle the fear and anxieties of having a sick loved one, with very little guidance as to how to handle the medical or financial aspects of the situation. Even if there is a comprehensive package of medical power of attorney, living will and other directives, these tools are useless if one's children are unaware that they exist or where to look for them. If the parent dies, the situation becomes even more complicated, as the children now have to make a number of financial decisions with little or no guidance, unless they stumble across the proper documents.

Integrating beneficiaries into an estate planning approach

  • 04
  • June
    2015

Some New Jersey residents are unaware that simply having a will in place does not provide comprehensive estate planning coverage. Accounts that have designated beneficiaries fall outside the scope of a will, and the provisions laid out within those account documents will supercede those within a last will and testament. Understanding the power of beneficiary designations can give individuals a degree of flexibility when it comes to estate planning.

The first step in integrating beneficiary accounts into one's estate planning package involves coordination between all trusted advisors. Individuals working with an estate planning attorney and one or more financial advisors should give those individuals the authorization to communicate with each other. It is difficult to create a comprehensive plan when advisors have different visions of the best possible outcome.

Spouse-centered estate planning tips

  • 30
  • May
    2015

For many in New Jersey, the primary focus of their estate plans is to ensure that their families are taken care of in the event of their deaths. For married couples, the person best-suited to carry out one's wishes is usually the spouse. By centering estate planning around the person one trusts the most, a favorable outcome is not only possible, but likely.

Children, even adult children, are often not in tune with the manner in which a parent would like his or her final arrangements handled when the time comes. In addition, kids often have a very emotional reaction to the loss of a parent and may not have developed the coping skills needed to make important decisions during what can be a challenging time. In the case of married couples, most have discussed the matter at length, and each partner is familiar with the wishes and preferences of the other. This bond is also why one's spouse is usually the best person to be given power of attorney rights, which will allow him or her to make all medical and financial decisions in the event of an incapacitating illness or injury.

Estate planning and beneficiaries: Potential outcomes

  • 28
  • May
    2015

For many in New Jersey, the act of creating a comprehensive estate plan brings about a sense of relief in knowing that these matters have been addressed. With the right degree of effort, estate planning strategies can work wonders in ensuring that one's wishes are followed when the time comes. It is important for individuals to understand, however, that simply creating a will is not a catch-all solution. Many assets can still pass to others upon one's death if the proper precautions are not taken.

The most common way for assets to be distributed in direct opposition to a will is in the case of accounts that have named beneficiaries. These accounts can include retirement accounts, investments, life insurance and more. At the time the account was set up, the holder was asked to name a beneficiary. That designation will stand and will "trump" provisions laid out within one's will.

Basic steps to estate planning success

  • 23
  • May
    2015

Most tasks that people find onerous can be made easier by taking a step-by-step approach. This is true for purchasing a house, adding to one's family or planning a vacation. It is also true for estate planning, and many in New Jersey find it helpful to break down the process into simple steps. The following outline offers guidance on the matter, but it is important to note that each individual or family will have a unique set of needs, and the basic steps chosen should reflect those goals.

A great place to begin is with a review of one's existing level of life insurance. For families in which financial stability relies upon the income of one party, it is a good idea to purchase a life insurance policy that would provide sufficient financial support in the event that the breadwinner passes away. This is often a priority for families who have young children, so that their needs can be met in the event that one or both parents die before the children reach adulthood.

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