February, 2016 | Shah & Associates, P.C. Estate Planning & Business Law Blog
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I’m Single and Under the Age of 30. Do I Really Need a Will?

February 29, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

When you are in your 20s, you probably don’t give a whole lot of thought to what happens to your property and possessions after you pass away. This is probably even more accurate if you have graduated recently from college and the majority of your belongings are relatively inexpensive. That being said, you might be under the impression that you can avoid making a will because you probably think you have a long time to continue living and accumulating more assets. shutterstock_130170536

However, if you were one of the lucky individuals who inherited wealth while in college or somehow struck it rich otherwise, you should definitely consider drafting a will. Even if you don’t engage in dangerous activities like riding motorcycles, accidents can and do still happen. With a will in place you can be sure that your significant other, your siblings or your parents are taken care of. If you fail to write a will, all of your property will instead pass through state laws for intestacy and will more than likely end up with your parents. Set up a meeting to consult with a New Jersey estate planning attorney in the event that this can help you regain more control over your own situation. Even those single individuals under the age of 30 can benefits from estate planning.

 

Tips for Finding the Right Estate Plan for You

February 26, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

Some research suggests that as many as 57% of Americans do not even have a will and nearly 70% of parents with children under the age of 18 do not have a will. Even though the vast majority of Americans understand the basic premise of estate planning, many of them fail to follow through. Some people might think they are able to get away without a will but many people should actually be planning for how to avoid probate as well as what they want with regard to their property being distributed after they pass away. Thinking that it is a good idea to prepare your own will can be a big mistake.

Even though the vast majority of Americans understand the basic premise of estate planning, many of them fail to follow through. Some people might think they are able to get away without a will but many people should actually be planning for how to avoid probate as well as what they want with regard to their property being distributed after they pass away. Thinking that it is a good idea to prepare your own will can be a big mistake. shutterstock_88675294

Using a generic or template will that you find on the internet may mean that you are not creating a document in line with state and federal laws. Having a New Jersey estate planning attorney look over your document and recommend any changes can help you and your loved ones avoid serious problems. With an attorney’s insight, you can avoid common missteps and ensure that your estate plan is in line with your needs.

The Basics of Asset Protection

February 25, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

As the economy is slowly plugging along and appearing to improve, credit still remains tight. Even despite this, asset protection planning is still a big topic. Read on to learn more about how you can make an asset protection plan work for you as well as your family.shutterstock_255008218

Asset protection simply refers to keeping your property safe from being taken by someone else such as someone who wins a lawsuit or a creditor. You can protect your assets from lawsuits through a process known as asset protection planning. You cannot begin asset protection planning when there is already a judgement or a creditor on the horizon.

Instead, you need to begin long before there is a sign of any lawsuit. Many individuals are exposed unnecessarily to risks associated with lawsuits but you can accomplish asset protection planning by thinking carefully about your estate planning goals as well as your short and

 

Key Tips for Choosing a Caregiver for an Elderly Loved One

February 24, 2016

Filed under: Aging In Place — Neel Shah @ 9:15 am

More than 41 million Americans have a chronic health condition that minimizes their daily activities in some way and 12 million are unable to live independently. Out of the 1 in 5 elderly individuals who have reached age 85, more than half need long-term care or are impaired in some manner.shutterstock_151335704

Most people in this situation want to continue to live independently in their own home as long as possible. For those with disabilities who are also elderly, that is possible only by bringing in outside help. Keep these tips in mind when hiring a caregiver for your elderly loved one:

  • Assess home care needs.
  • Write a job description.
  • Develop a job contract with details.
  • Know where to look for a caregiver.
  • Interview applicants.
  • Check references as well as a criminal background check.
  • Hire thoughtfully.

Continue to monitor the potential employee’s performance long after he or she has begun working for your loved one.

Are You Falling For The Biggest Succession Planning Myth In Your Business?

February 23, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

Too many business owners across the country fall for the myth that there is plenty of time left for them to do their planning. Time is either your enemy or your ally in terms of business succession planning. You can spend a lot of time planning for succession during your active business life or you can postpone it and wait till the more uncertain and chaotic and expensive succession planning happens after you have passed away. If you go for this latter option the choices are no longer yours.shutterstock_130099715

Refusing to accept the realities of time can have major consequences for your business especially since timing issues in a company are frequently beyond the control of the owner. Just as CEOs getting older are pressed for information by shareholders who want to see a succession plan to protect their investments, a small business owner should also consider a succession plan to protect the interests of all relevant stakeholders.

The key lesson in this particular situation is that it’s in your bets interest to start early. Select a possible successor for key areas in your business to avoid some of the most common challenges associated with business succession planning.

Personal Finance Tips for Women

February 22, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

Although the majority of financial planning applies to everybody, there are some specific considerations that women should keep in mind. Read on to learn more about some of these key tips.shutterstock_156983201

  • Maximize Your Social Security Benefits. The age in which you take social security benefits can have a big impact on the amount you receive and how this supports your retirement. Make sure you speak with your financial advisor and potentially your estate planning attorney to talk more about how government programs like social security or Medicaid and Medicare can assist you as you approach retirement.
  • Use Your Estate Plan. You never know what to expect in life and you should never leave your circumstances to chance. Make sure your estate plan considers your selection of guardians for any minor children and where your money will go.
  • Monitor Your Risks. Speaking with your financial advisor can tell you more about whether your investments are lined up with your goals. Your decisions should be based on facts as well as education as opposed to fears and concerns about short term market fluctuation.
  • Use Insurance. Insurance can help to mitigate many of the risks that women face today. Disability insurance and life insurance should always be used to help protect you against a worst case scenario.

Following these tips can help women stay on top of their financial management.  Being knowledgeable about your own estate planning is critical. If you have questions about how to get started, contact a New Jersey estate planning firm today.

 

 

President Proposes Eliminating Stretch IRA, Step Up In Basis at Death, and Backdoor Roth

February 19, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

Each February the president puts together a formal budget request for the federal government. The members of Congress then consider this budget request when putting together their own budget resolution. Although the majority of provisions in the President’s budget refer to a specific recommendations for appropriating various government agencies, the proposals will frequently also include tax law changes that are suggested.shutterstock_312107156

Since this is an election year and drawing to a close of President Obama’s term, there is very little chance that substantive tax changes will actually come to pass through Congress such as the increase in the maximum capital gains rate, a fair share tax for a minimum 30% tax on individuals with very high levels of income, and a rewind of the estate tax exemption back to the $3.5 million threshold of 2009. However, the proposals from President Obama do show issues that are on the radar screen for the federal government at this time, such as a variety of crackdowns and attempts to close various loopholes.

There are a wide range of possible crackdowns on individuals such as a new cap on maximum gain deferral for 1031 exchanges, the elimination of stretch IRAs and step up in basis at death, the closure of the backdoor Roth contribution strategy and lifetime required minimum distributions for Roth IRAs after an individual turns age 70 and a half. In order to stay on top of any potential changes that will come to pass this year or could be included in future years, it is a good idea to consult with a knowledgeable estate planning attorney in New Jersey as soon as possible. Do not hesitate to get advice.

What You Need to Know About Remarriage and Spousal Rights

February 18, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

The majority of people getting remarried have very little concept about the full legal impact of their new marriage. In fact, they might believe that waivers and other key documents like prenuptial agreements are only needed by wealthy couples. As a result, individuals may do very little planning when it comes to getting remarried. This can increase the conflict as well as potential chaos that happens when an individual passes away.shutterstock_282078449

Although a remarriage doesn’t generate more spousal rights than a first marriage does, there is often an unstated perspective about spouses in second marriages having limited rights to the new spouse’s assets. One way to do this is by considering spousal elected share. This refers to legal claims that a surviving spouse has rights to a particular portion of the assets of a deceased spouse even if the deceased spouse disinherited that survivor.

Every state across the country except Georgia allows for a spousal share election to a surviving spouse or community property rights to a spouse. The spousal elective share will typically range from 30% to 50% of the augmented decedent spouse’s estate. It is often in addition to other spousal claims that the spouse could have against the decedent’s estate. Make sure you consult with an estate planning attorney any time you are considering remarriage as this can have significant implications for your estate.

What Is The Scariest Tax Form?

February 17, 2016

Filed under: Taxes — Neel Shah @ 9:15 am

 

Tax lawyers and accountants spend the majority of their time focusing on exposure and you should as well. This means sometimes watching the calendar and clock until you are cleared of auditing exposure. The IRS typically will have three years to audit you. If you make a mistake with your offshore account reporting, however, the IRS gets six. There are other situations where they may get more.shutterstock_158874281

Many people may find it surprising that if you have a company holding a foreign account the issue becomes even more sensitive. These refer to controlled foreign corporations frequently referred to as CFCs. When a shareholder in the United States holds more than 50% of the value or votes in a foreign corporation the company is considered a controlled foreign operation. This triggers reporting requirements with the IRS, specifically the IRS Form 5471. This is a vital form.

If you fail to file it, you could be facing penalties of up to $10,000 per form and a separate penalty can be applied to each form filed late, and each incomplete or inaccurate return too. This penalty applies even if there is no taxes due on the return. The override of the normal statute of limitations for IRS auditing in this particular form is broad. The IRS in fact has an indefinite period to examine as well as assess any taxes associated with items on the missing form. The IRS can make adjustments to the entire tax return with no date of expiration until the form is filed. You need to ensure that any time you have a situation like this that you have filed the form appropriately.

Avoid These Critical Mistakes When You Are Dividing Your Retirement Assets During Divorce

February 16, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

From the perspective of wealth management, the most important aspect of dividing property in divorce is usually the treatment of your non-qualified and retirement assets. It is a big mistake for couples to divide traditional retirement assets down the middle, so you need to be careful about taking a more thoughtful approach that considers the realities of your life after divorce as well as potential instances that could impact the division of these assets such as one spouse passing away before the alternate payee begins to receive retirement benefits.shutterstock_252912289

The majority of private sector income plans across the United States are designed to qualify for favorable tax treatment under compliance with a law known as ERISA or the Employment Retirement Income Security Act, in order to protect these very valuable tax benefits. Individuals who participate in qualified plans that fall under the ERISA umbrella are not eligible to take early withdrawals from their plan without facing penalties. There are exceptions, however, when plans are divided for the purposes of equitable division of marital property, alimony or child support. In this instance you would need to use a qualified domestic relations order. QDROs need to be put together even if you already have a divorce decree stipulating the division of retirement assets. Some of the key tips associated with the division of these assets are:

  • Anticipating and minimizing tax liabilities from cash distributions.
  • Determining how the pension plan will be divided.
  • Dividing tax basis for contributions made after taxes for defined contribution plans.
  • Prorating contributions to defined contribution plans via the divorce date regardless of the contribution timing.
  • For non-qualified, non-divisible retirement plans including a formula to allocate future payment tax consequences.

Consulting with a knowledgeable attorney can help you understand the financial implications of dividing retirement plans in divorce. It is a good time to set up a meeting with your New Jersey estate planning attorney so that you can be prepared for your future. Post-divorce, there’s a good chance you need to update your forms and information.

Estate Planning Tips to Avoid Probate

February 15, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

When you pass away your property and possessions may go through a process known in New Jersey as probate. This means that your assets are settled and distributed in compliance with the terms of your will or in terms with the state’s discretion if you do not have a will.

There are certain assets that are exempted from probate and these refer to things that are jointly owned by you or your spouse such as retirement benefits, life insurance proceeds, jointly owned property or bank accounts. Most individuals are under the impression that having a will is enough to avoid probate but this is not actually the case.

The following five steps may be critical for helping you avoid the probate process in New Jersey. Speaking with an experienced estate planning attorney in New Jersey can help you determine which of these is most applicable to your situation.

  • Put together a revocable living trust
  • Convert your personal accounts and IRAs to pay-on-death accounts
  • Establish instances of joint ownership such as tenancy by the entirety or joint tenancy
  • Give your property away
  • Use provisions and small estate laws to your advantage

Speaking with a knowledgeable New Jersey estate planning attorney can help you determine the steps that you should take to protect your estate and keep it out of the probate process.

Three Tips for Evaluating What Your Company is Worth

February 12, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

When thinking about the future of your company and the value of business succession, it is extremely beneficial to be knowledgeable about how this process works and some of the common pitfalls associated with business succession planning. The more that you are prepared for what to expect, the easier it will be for you to identify the future course of your company and the individuals and planning documents that can help you accomplish your goals.shutterstock_185709734

First of all, you need to know the true value of your business outside of your own personal attachment to it. This is why you should engage with an experienced valuator who can provide the proper information to you. Additionally, there are various times when it’s beneficial to understand the value of your business. There are major changes constantly happening in the regulatory competitive and economic landscape in which the majority of businesses exist today. So you need to be aware of the value of your business at numerous different times.

Finally, you need to be aware of potential value gaps. Once you have identified the value of your business with a third party valuator, there is likely a discrepancy between what you thought the company was worth and what you need the business to be worth in order to sell it or pass it on. Proper planning, however, can be critical for reducing these value gaps generated by an owner’s underestimation or overestimation of the business value. One example includes qualified plans and other investments that can help to reduce the value gap in your retirement plan generated by a business valuation that comes in lower than you expected.

Ready to put together your succession plan? Contact info@lawesq.net to get started today.

Key Elder Law Planning Tips

February 11, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

Three of the most important aspects of approaching an older age involves planning for incapacity, planning for long-term care, and planning for death. Each of these can be an important component of your overall estate planning strategy. It is imperative to plan for incapacity even if you don’t believe that you will be affected by this situation. Otherwise it can be an unfortunate surprise for your family members who may not be able to carry out all of your wishes. Having a plan in place and having the documents prepared adequately with the assistance of an attorney can be extremely beneficial. It is also a good idea to update your plans regularly.shutterstock_183409916

Likewise, long-term care should be included carefully. There are multiple different options for paying for long-term care such as using a reverse mortgage, receiving benefits from Medicaid, accessing long-term care insurance benefits, liquidating assets, or receiving VA benefits. You should consult with an attorney if you are concerned about qualifying for Medicaid or whether you’re eligible for these other situations.

Finally, the last component of elder law estate planning involves preparing for your death. This means thinking carefully about what your wishes are and how you would like to pass property on. Consulting with an estate planning attorney can give you options as far as the best way to protect these assets and set them up to be given to beneficiaries in the future. There may be important planning strategies and tools that you are not aware of on your own but that an experienced estate planning attorney can help you identify.

Can Assets Inside an LLC Be Protected From Creditors?

February 10, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

 

One of the most popular asset protection tools available today is an LLC. LLCs that are managed properly are typically safe from the reaches of creditors of an individual member but there are exceptions to this rule that begins with the number of members, even if an LLC is the right strategy for a particular type of asset.shutterstock_284134766

If a debtor is a member of the LLC at the time a creditor begins collection efforts against that member individually, any profits from the LLC that would otherwise be distributable to that debtor member are stuck inside the LLC. Even though a creditor can’t enjoy the profits of the LLC or LLC assets that are allocated to the member share of the organization, the member will be unable to enjoy them either since a creditor with a proper legal standing can intercept them before the member receives them from the LLC. This is why it is imperative to be knowledgeable about how LLCs work and whether it’s truly the right asset protection plan for you.

Knowledgeable implementation can make better use of such a tool and there are numerous asset protection tools available including insurance policies, annuities, IRAs, installment sales, limited partnerships and special trusts. Consult with a knowledgeable asset protection planning attorney to learn more

What You Need to Know About Private Family Trust Companies

February 9, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

 

Many individuals who are approaching the process of estate planning, they have several key concerns as it relates to putting together the materials that they need. These are usually controlled in flexibility, privacy and the type of governance structure that seems to work best with family trusts. Modern trust structures such as family private trust companies, trust protector companies and directed trusts allow families to infuse their desires with general trust planning. shutterstock_167842049

The amount of gifting by the wealthy into trusts has increased dramatically since 1995. In 1995, gifting went from 12.5% to 40% today. Other important statistics to know are that 70% of families will usually name their family members, friends and business colleagues as trustees of their trust. As more advisors and families become familiar with the operation of these modern trusts, their popularity is only expected to grow.

One of the most popular structures is the private family trust company, primarily used by those with a great deal of wealth. These trust structures give important planning solutions to articulate the family’s desires. If you would like to learn more about whether a particular trust makes the most sense for your family, consult with a New Jersey estate planning attorney today.

Estate Planning: What Do I Need Vs. What Can I Toss?

February 8, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

When you’re organizing your documents for estate planning purposes, you can also run the risk of keeping too many things, just as you might otherwise run the risk of keeping too little. Your beneficiaries and representatives should be able to identify what is important without becoming overwhelmed in the process. Read on to learn more about what you truly need. shutterstock_269046065

Things to Hold Onto Indefinitely

  • Marriage certificates
  • Current version of your will
  • Military discharge records
  • Birth certificates
  • Divorce papers
  • Tax returns

Things to Keep for One Year

  • Utility bills
  • Paycheck stubs
  • Bank statements
  • Investment statements

 

Things to Toss Out

  • ATM receipts
  • Credit card statements after you have proof of payment
  • Utility bills older than one year

Reducing your clutter and narrowing down what you keep to only the essentials can help you stay more organized and on top of your estate planning. Make sure you reach out to an experienced estate planning attorney in New Jersey when you need to put your materials together or discuss updating existing information. Having the insight of someone who can help you align your documents with your needs can be very beneficial.

 

 

Time to Sell Your Tech Company? Keep These Tips in Mind

February 5, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

There are many different factors that can trigger the discussion about selling your much-loved tech company: nervous investors, sudden success, industry consolidation, or burned-out founders. As you may approach this point what seems like suddenly, it’s a good idea to carve out some time to carefully thing about the strategy and process.

Be Realistic About the Valuation

The value of bringing in an outside person to value the company cannot be overstated. You need to have these expectations set as early as possible so that there is no confusion or disappointment down the line. A lot of tech companies gave factors outside of financial metrics to consider. Some of the elements that should be considered in a valuation are the value of your existing team, valuation activity in the space in general, and the possibility associated with outsized demand.

Set the Stage for the Company

There’s no point in talking about a sale unless you’re crystal clear on your processing. Financial statements should be clear and recently-produced. All documents for hiring purposes should also be clear and filed, such as non-compete agreements and IP contracts. shutterstock_252909271

Evaluate Funding Options

There are a wide range of investors available to tech startups: venture capital, angels, accelerators, crowdsourcing, and the list goes on. These all have different requirements and goals, so make sure you factor this into your exist as well.

Got questions about succession planning? Contact our office at info@lawesq.net

Preparing for Your First Estate Planning Meeting

February 4, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

Although your estate planning attorney can help you walk through the basics of your plans for the future, it’s also a good idea to be knowledgeable about how you can make the most of this first meeting. Read on to learn more about what you can do in advance to capitalize on this important planning opportunity. shutterstock_150136205

Put Together Your Assets/Liabilities List

It’s difficult to accomplish estate planning if you don’t know where you stand, so make the effort to clarify all of your assets as well as any debts.

Evaluate Personal Belongings 

For sentimental or other reasons, there may be things you want to leave behind to specific people. Knowing this in advance gives you the best chance to walk through what you want to leave behind to particular individuals.

Identify Potential Personal Representatives

You need to be able to count on someone else to help carry out your wishes once you pass away, and the selection of this person is an important step in your estate planning. It might be a good opportunity to have a discussion with this person before you have your estate planning meeting, which is why you should walk through your thought process long before you meeting with your estate planning attorney.

You likely need to identify someone to make medical decisions on your behalf as well as financial decisions. This could be the same person. Having a general idea before your meeting allows you to start the thought process early and then get the advice of an attorney.

Setting up an estate planning meeting as soon as possible is in your best interests, particularly if you have not broached any planning documents in the past. Contact our office today to learn more about how we can help you at info@lawesq.net.

Tech Company Top Succession Planning Tips

February 3, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

It’s not just tech companies that should pay attention to succession planning these days. In fact, increasing salary expectations, highly specialized skillsets, and lengthy searches for the ideal candidate are not isolated to the tech sector alone. With a major shift in demographics due to generational changes, a lot of companies are experiencing what’s known as a “leadership deficit”.

The good news is that with a little planning and foresight, leadership deficit doesn’t have to be a major challenge facing your tech company. shutterstock_331440044

 

First of all, don’t be afraid to break the mold when it comes to succession planning. Technology startup founders are usually the types to do it all, handling responsibilities like identifying additional markets, handling operations, leading development of strategy, and contributing to new technology. This means there are big shoes to fill when this person leaves.

Narrowing in on the skillsets you’ll need in the future, as opposed to those you used in the past, can help chart a better future for your company anyways. Beyond the start-up phase, it does not necessarily make sense to have a leader who handles everything. Keeping operational stability or attracting top talent, for example, may be more important qualities as the business evolves.

Succession planning is about more than who will replace the person at the top. Especially if the company ultimately goes public or is in a position to be acquired, management stability should be a common thread that goes throughout each of the units in the business.

Finally, don’t have a narrow scope for the pool of candidates. With the market the way it is, you should have multiple potential candidates to replace individuals in each position. This gives you some flexibility so that the unavailability of one candidate (or unrealistic salary expectations) don’t throw a wrench into your entire planning process.

Widow Forced to Get Court Order for Access to Husband’s Ipad

February 2, 2016

Filed under: Estate Planning — Neel Shah @ 9:15 am

A recent case involving ownership of an Ipad highlights how important it is to plan ahead comprehensively in terms of your estate. While many people think big picture and have beneficiaries on a life insurance policy or plans for assets like a house, it’s important to minimize all potential challenges for your spouse or other beneficiaries. shutterstock_318321200

A woman in Canada has learned this message after her husband passed away last August. Together, the couple owned an Apple computer and an Ipad. Even though the woman knows the Ipad unlock code, she does not have the password for the Apple ID. Thinking that the death certificate and will would be enough proved an unfortunate perception, since Apple refuses to give her access to the password.

According to the widow, after a lot of back and forth with the tech giant, someone told her she needed a court order. Although this is an extreme case, it does tell a cautionary tale. Having instructions for all your personal items can help to prevent your beneficiaries from headaches like this one. Set up a meeting with an experienced estate planning attorney to discuss all the items you should consider in the estate planning process so as to minimize frustration for your loved ones.

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