November, 2016 | Shah & Associates, P.C. Estate Planning & Business Law Blog
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Why Late Planning Usually Backfires for The Purposes of Asset Protection

November 30, 2016

Filed under: Asset Protection — Neel Shah @ 9:15 am

Thinking about asset protection planning after a claim has already arisen is certainly an all too common experience. In fact, it can actually make matters much worse. It is a common misconception that a judge can simply dial things back and act as though a fraudulent transfer has never happened, leaving you protected because you took late planning steps.

Anyone who assisted in what could be viewed by the courts as a fraudulent transfer, as well as the debtor could become liable for the creditors’ legal fees and the debtor can also lose any chance of getting that debt discharged in bankruptcy. Late planning can usually backfire, which is why it is definitely in your best interests to approach asset protection planning holistically well in advance.

The best way to protect yourself is to minimize the chances of a claim before they arise. If a claim does happen, the steps you have already taken to protect yourself mean that not all of your assets are exposed to creditors or other risks. While most people don’t like to think about these challenges until they happen, it is well worth your time to view asset protection planning as something of an insurance policy that gives you some protection in the event that things go wrong in the future.

Tips for Protecting Your Parents Assets from Taxes

November 29, 2016

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

It can be overwhelming and frustrating to deal with the grief process while also figuring out how to handle your parents’ estate. Thankfully there are numerous steps you can take in advance to help to maximize the money passed on to beneficiaries and minimize taxes. There are multiple different tax saving strategies that can help your older parents save money and limit the amount of taxes that are owed by their estate after they pass away.

Some of these are steps that you can take while others are steps that your parents should take with the help of an experienced financial professional. These include:

  • Selling stocks that have losses.
  • Managing IRA strategically to reduce taxes.
  • Keep stocks that have regular gains.
  • File for a disabled or elderly tax credit, if eligible to do so.
  • Claim parents as your own dependents in the event that they qualify.
  • Put money into trusts, which can help with significant assets.
  • Gift money to beneficiaries while your parents are still alive.

Ready to talk options? Set up a meeting with our NJ estate planning office today.                                                                                                                  

Getting Remarried? It’s Time to Update Your Estate Plan

November 28, 2016

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

Although there are many different things on your mind as you approach your big day and updating your estate plan may not be one of them, it should certainly be if your upcoming nuptials is not the first time you have been married or in the event that you have children from a prior relationship.

According to a Pew Research Center report, up to 40% of marriages in 2013 were a remarriage for one or both partners. It is even more common, unfortunately, to have estate planning that does not measure up. Approximately two-thirds of individuals don’t have a will in the United States at all and nearly 10% have one that is completely outdated. Out of date documents can be even more troubling in the event that you are getting remarried as this could put your former children or your new spouse in a difficult situation.

Getting remarried is the perfect opportunity to set up a consultation with an experienced estate planning attorney to protect you. Getting remarried makes it all the more important to review your existing documents and update beneficiary information and consider whether you have other estate planning strategies that are no longer useful for you.

 

January 1 Marks Phase-Out Beginning for Estate Tax in NJ

November 23, 2016

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

The New Jersey estate tax came under fire politically in this past year leading to an agreement to get rid of it entirely. Many people within the state were considering their options to move and retire elsewhere primarily because of the NJ state estate tax, a tool that many viewed as archaic and unnecessary. Some people moved to neighboring states or even established a residence in Florida half the year to avoid hefty taxes. Perhaps those days will be coming to an end very shortly and New Jersey can keep more people within the state as they live out their retirement and golden years. 

According to the New Jersey Society of CPAs, up to three-quarters of their survey pool indicated that moving to another state was a serious retirement strategy given NJ’s state estate tax. This was the leading reason for why legislators began to think about letting it go entirely. With a rising number of people eager to leave the state and avoid such a large chunk of their estate being taken, it’s likely that eventually the revenue received from the estate tax would have decreased significantly.

At present, all estates valued at more than $675,000 trigger the estate tax. That threshold will be lifted to $2 million in 2017 and then will completely disappear in 2018. Once that happens, all estates will be taxed if they exceed the federal threshold. With this phase-out, it’s a good idea to set up a meeting with your NJ estate planning lawyer today to discuss your options. You may have more flexibility as this plan is phased out and be looking for new planning opportunities to make the most of what you leave behind for heirs.

 

 

The Dangers of an Unnecessary Complicated Estate Plan

November 22, 2016

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

It’s the holiday season, and that means that everyone is out and about grabbing gifts, food for their favorite recipes, and preparing for some time off for work. As we approach the New Year, there’s also a decent chance that you’re mentally recapping 2016 and trying to get things in order for the year ahead, too. Even though most people recognize that an estate plan is a good set of tools to have, so many people put it off. While they might schedule an end-of-year review for their retirement plan savings, it’s often not as easy for people to confront their estate planning weaknesses. If this is you, putting it off only serves to hurt you or your beneficiaries. 

There’s no doubt that it’s uncomfortable to think about a situation in which you might be incapacitated or pass away. You might also think that you don’t have enough assets in your “estate” to worry about things. Consider that the only thing that could make a sudden disabling event or your death more difficult for loved ones is a lack of planning. An overcomplicated estate plan does not have to be for everyone. However, many people who suddenly have a vigor for estate planning do so because they’ve witnessed the problems of a friend or family member who didn’t take the time.

The loss of a loved one presents a unique set of emotional challenges, and it can be devastating to watch family members confused about or arguing over the intentions of the deceased. For many, it’s a wake-up call to begin their own estate planning process. What happens in this situation, all too often, is overcompensation. You think you need every single strategy or type of document to prevent your loved ones from suffering something similar.

Rather than backing yourself into a corner and planning from that perspective, it’s much more effective to meet with an estate planning attorney to discuss your unique needs. Our office is here to help you- contact us today at info@lawesq.net.

Wealth Attrition and Family Business Basics

November 21, 2016

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

It’s often been called the Holy Grail of family business succession plans: anyone currently in charge at a company expects that someone within the family will take over operations as the former owners, the parents, step down.

The reality is that it does not happen that often. Most family business owners have this as a goal and dream, but it rarely works out this way, making succession planning options all the more important for parents.

A recent study by Forbes found that although US families have better wealth attrition numbers than Europe, it’s hard for children and future generations to maintain or grow wealth the way their parents did. US families have a 60% wealth attrition rate for each generation, although the European stats show only one-third of the US rate. However, in Europe, up to 75% of family businesses with stay in the family for four or more generations. In the US, it’s rare for a company to stay within the family for even two generations. business succession lawyer NJ

This highlights why family businesses in the US need more in their succession plan than outlining which child will take over responsibilities. What happens if that child has no interest in maintaining the family business? If he or she has other plans and there’s no contingency? Businesses, and in particular family businesses, are exposed to big risks if no succession plan has been outlined, but it can also be a mistake to assume that children or other family members even want to step up to the plate with a family business.

Have a real conversation with children or other key family members about what role, if any, they’d like to play in the business in the future. It might be hard to accept that your loved ones don’t have the same passion and drive for the company, but it’s much better to know now than to expose the business or the family member to a situation that is not ideal.

There are many other options for handling a family business, such as finding in-office talent to rise up the ranks and take on leadership positions or even selling the company. In the midst of the day-t0-day management of the company, it can be hard to shift your mindset from that of dealing with what’s right in front of you and seeing the long-range vision, but it’s also important to incorporate this into your planning.

A family business requires a lot of work and dedication. If your loved ones don’t have the passion now, begin to articulate how someone else might ultimately take your place if something happens to you.

To discuss succession planning issues in greater detail, set up a meeting with a lawyer.

Why Your Choice of Entity Matters for Business Succession & Tax Purposes

November 17, 2016

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

When you start your business, it’s easy to get overwhelmed with all the decisions you have to make, but this is no excuse for overlooking the power of choosing the right entity. When it comes time to sell the business, what you chose as your entity can make a big difference. Read on to learn more about how these choices will influence you. 

  • Sole proprietor: The classification of gain or loss is important here because it depends on the nature of the assets. You may also need to factor in whether you’re passing on the business to family members or someone else and make sure there’s a training plan in place.
  • Corporate shareholders possess a capital asset- stock, meaning that when it’s sold, there’s a capital gain.
  • Partnerships and LLCs will typically report ordinary income when the business is sold in addition to capital gain

Planning for a future that seems far off is not always easy, but a business succession planning lawyer can help. There are several steps you should take to protect yourself:

  • Review your buy-sell agreement and any other business agreements
  • Consider the cash value of the business and how this might influence a sale
  • Plan for a clear transfer of ownership if you have a family business

Having these items documented well in advance and considering both the succession and tax implications for your business is critically important. Don’t make the mistake of overlooking these.

 

Why You Need an Estate Planning System

November 16, 2016

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

Once and done is a common rallying cry for online sites that promise you a template-generated will. However, it’s a big mistake to look at your estate planning in that manner. You could end up creating more hassle for yourself and for loved ones. There are many more advantages associated with an estate planning system, one that’s aligned with your individual needs and dreams. 

An estate planning system can be crafted with the help of an experienced lawyer. Working with a lawyer gives you the best possible chance to protect yourself and have the peace of mind that all aspects of your incapacity and after-death planning have been accomplished. Setting up a meeting once gets the ball rolling, but it’s your responsibility to follow-up at least on an annual basis to make sure your estate planning is in line with any life or policy changes.

Some of the most important aspects of an estate planning system include:

  • Peace of mind for a business owner to control his or her wealth/business for as long as they desire or live
  • Treat all children fairly in the passing down of assets
  • Ensure that an individual and his/her spouse have considered incapacity issues and have a plan in place to support their lifestyle as long as they live
  • Planning ahead for how a business will be passed on to future heirs or in-company talent
  • Clears up concerns about going through the probate process

Your system, and in particularly working with an attorney who undertands your unique concerns, is the only way to comprehensively address all your issues on an ongoing basis. Estate planning is not something that should be looked at once and then ignored.

Year-End Planning and Trump’s Tax Plan: What You Need to Know

November 15, 2016

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

There’s always some concern during transition years that tax planning could be going through some major changes in the near future, prompting many to evaluate their current plans. That’s certainly true this year as experts begin to speculate the real tax plan proposals of a President Trump.

Although we’ll have to wait until January and beyond to see what changes are actually pushed through, there are four key components to his current plan worthy of considering as you approach your year-end planning:

  • Business tax cuts: Although he’s proposed some hefty business tax cuts, he also plans to eliminate a lot of business deductions, too.
  • Individual cuts: In addition to getting rid of the Obamacare net investment income tax, Trump has proposed making three tax brackets in the US: 12%, 25%, and 33%.
  • Estate taxes: The president-elect has previously gone on the record saying that he wants to eliminate the estate tax completely.
  • Foreign profit taxes: Trump argues that far too many dollars are escaping the US tax system entirely and therefore supports a 10 percent repatriation tax on accumulated profits for U.S. company foreign subsidiaries.

No matter what changes do happen, it will be intelligent to have a relationship with an experienced tax and estate planning firm already established. These changes are certainly not unexpected, but it could rock the current planning opportunities and present the chance to overhaul your individual and business plans. Keeping your eye on the news and putting in a call to your estate planning lawyer for an annual review could be well worth it so that you remain poised to adapt to changes as necessary.

At Shah & Associates, we’re ready to review your current estate and tax planning and talk about next steps should the tax code change. If you haven’t yet started the process, now is the time. As always, planning ahead will be important for minimizing your tax obligations and allowing you to pass on as much as possible to beneficiaries. Contact us today to learn more about how we can help: info@lawesq.net

 

 

Entrepreneur Estate Planning Tips

November 14, 2016

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

Many entrepreneurs have one thing in common: they tend to like to do everything by themselves, at least when the company is started. Over time, however, what tends to separate the extremely successful from the barely surviving is being able to tap into other resources and surrounding the entrepreneurial journey with a team of professional advisors who help him or her implement short and long-term strategy. 

Entrepreneurs have unique estate planning needs. In addition to thinking about the future of their own assets, it’s equally important to consider the future of the business, too. Finding the right estate planning attorney can have a big impact on an entrepreneur’s ability to plan. There are five primary tools that most entrepreneurs should consider when putting together their estate and their long-term business planning. Meeting with the right lawyer can help to identify the best opportunities to move forward with estate planning while keeping the future of the company in mind as well.

The top six tools that can help an entrepreneur include:

  • A trust
  • A buy-sell agreement
  • A trust
  • Power of attorney
  • A will
  • A succession plan

In many cases, the estate planning for an entrepreneur may be infused with both individual and business plans. This is why it’s so crucial to identify an attorney who understands that and works to create a comprehensive and personalized plan for the business owner. Having to suddenly exit the business due to incapacity, for example, can raise a lot of questions for the entrepreneur about who is empowered to make medical or financial decisions for the business owner but also how the company will be handled, whether it’s a short or long-term absence.

Entrepreneurs frequently pour their heart and soul into founding and growing a company. Determining the most appropriate way to protect it is equally important. Make sure you identify an estate planning lawyer with experience helping individuals as well as business owners with estate planning and succession planning needs. The right lawyer can give you a lot of peace of mind about the future.

What Trump’s Election Means for Wealth and Tax Planning

November 10, 2016

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

Now that Trump has been elected, it’s time to look forward to see what potential implications this has from a wealth and tax planning perspective. Of course, this is all dependent on the direction things go in January when he takes office, but there’s agreement across a typically-divided Washington that the tax code needs major reform. With the support from both sides of the aisle and a Republican Congress, there’s a good chance that bipartisan tax legislation will be on the agenda in the first 100 days of a Trump presidency. NJ tax attorney

The main gist of the tax plan is to reform the code by dropping income tax rates for businesses and individuals and raising the standard deductions. Personal exemptions would be repealed and itemized deductions limited. Furthermore, Trump has shared his desire to repeal the federal estate tax. However, the least is known about how a repealed estate tax would actually get through.

It’s not just individual income taxes that are going to take a hit, either. The corporate tax rate may be dropped from 35 percent to 15 percent. The majority of corporate tax expenditures will be eliminated except for research and development credits, and Trump also supports a one-time 10 percent tax for those who keep corporate profits offshore.

No matter what the changes end up being, it’s clear that the winds of change are blowing. Everyone, whether it’s an individual planning ahead for their estate or a business owner concerned about long-term tax planning and asset protection, should be prepared for considering new strategies in the near future. Partnering with a law firm where the attorneys have extensive experience interpreting these complex issues and translating them into strategies for individuals will be more important now than ever.

 

 

Life Insurance Still Matters as Part of Your Estate Plan

November 9, 2016

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

Don’t make the mistake of assuming that life insurance is an entirely separate asset outside of your estate plan. Many people set up their life insurance policy early on in their working years and use it to think about income and mortgage payment replacements during this time. However, as your needs evolve, your life insurance policy may need to evolve as well. You may need an additional policy or you may trade in an old life term insurance policy for a universal life policy.

A full review of your estate plan should be conducted on a regular basis in order to evaluate where your life insurance policy simply is not performing the way that it needs to, to be in line with your estate planning goals. The ‘set it and forget it’ mentality often associated with a life insurance policy puts individuals at risk of making mistakes. A client might be under the impression that life insurance is totally outside of their other assets and may fail to appropriately account for this asset in the estate plan, missing opportunities to provide for your beneficiaries. If you have an underperforming or old policy that has higher administrative costs or yields lower interest rates than a current policy, there’s a good chance that you need a fresh look. Furthermore, you might get benefits from using an irrevocable life insurance trust and you should always take a look as we get closer to the end of the year, whether or not you have nonexistent or outdated beneficiary designations.

Some of the most common mistakes in this area include naming a former spouse, a deceased individual, omitting children who were born after the policy was issued, or naming a minor grandchild or child. Reach out to an experienced estate planning attorney today to talk about setting up a consultation to ensure that your life insurance is in line with the rest of your estate planning goals.

                                                                                                                            

New Study Shows That Pre-Retirees and Retirees Are Uncomfortable with Estate, Retirement & Investment Planning

November 8, 2016

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

Getting close to the point of retirement and thinking about it within the next five years should prompt discussions with these individuals about their next steps as it relates to estate planning, investing and retirement planning. It’s hard for anyone to plan for the future, but it becomes all the more important as longevity in the U.S. is increasing. This means that you not only need to think about retirement, but you need to be prepared to fund a potentially long retirement and consider how long-term care issues may also influence your situation. 

However, according to research from Hearts & Wallets, more than 5,000 adults shared that they are uncomfortable with the prospect of estate planning. A full 26% of the individuals who participated in the study said that estate planning was very difficult or somewhat difficult for them. This represents an increase of 2 percentage points since the previous years’ study asking the same question. Despite recognizing that estate planning was a worthwhile endeavor to explore, only 8% of retirees and pre-retirees admitted that they had sought help for estate planning in the previous 18 months.

Not getting help for estate planning can easily be avoided because you’re uncomfortable thinking about your own mortality or feel as though the issues don’t apply to you. However, everyone can benefit from comprehensive and aligned estate planning. Reach out to an experienced New Jersey estate planning attorney today to learn more about what’s right for you. Send us an email to info@lawesq.net to learn more.

                                                                                                                

Three Types of Powers of Attorney That You Should Be Aware of

November 7, 2016

Filed under: Power of Attorney — Neel Shah @ 9:15 am

A power of attorney refers to your written approval for someone else to act on your behalf in business, legal or private affairs. Many people overlook the benefits of a power of attorney because they assume that the primary aspect of estate planning is to handle things after you pass away. However, this could be a major mistake as incapacity or disability can happen at any point during your life and not having someone to step in and manage your affairs can create further confusion and problems.NJ estate planning lawyer

 

There are three primary types of power of attorney, including:
• Durable power of attorney, which allows another individual the authority to manage financial transactions on your behalf. This allows you to appoint someone else to manage all of your financial affairs if necessary.
• A healthcare power of attorney that enables you to allow someone else to oversee your medical care and make healthcare decisions on your behalf if you are unable to do so.
• A springing power of attorney. Much like a durable power of attorney, this allows you to appoint someone else to handle your financial affairs and this can only happen when there has been a triggering event such as your incapacitation.
To learn more about various powers of attorney, reach out to the offices of an experienced New Jersey estate planning attorney today.

Estate Planning and Long-Term Care Go Hand in Hand

November 3, 2016

Filed under: Long Term Care — Neel Shah @ 9:11 am

There’s no doubt that estate planning is an important part of your looking ahead in your own life and even to after what happens when you pass away, but it’s important consider how you incorporate long-term care planning, too. 5

People in America are living longer than ever, and this means that traditional approaches to estate planning and retirement planning no longer cut it. Wanting to pass on assets to your loved ones is a worthwhile goal, but so is setting aside the time to ensure that you have taken care of your own future as well.

Long-term care planning involves multiple components such as thinking about your next steps if something were to happen to you, including safety nets like a long-term care insurance policy and a long-term Medicaid plan. Trying to deal with these concerns in the heat of the moment when a problem has already appeared is extremely difficult. It can also limit your options in the moment. Although no one wants to think about the potential for a disabling event or a cognitive decline, recognizing that the statistics show that at some point you’ll be dealing with this is the best way to approach the situation from a planning perspective.

Long-term care may be short term or it may involve a more in-depth situation like being in a nursing home. The only way to plan ahead is to think about whether the goals you have line up with your plans as they are now. It might be hard to look that far into the future and yet that’s a worthy goal in order to protect you and your loved ones.

Don’t Forget the Founder’s Role in Business Succession Planning

November 2, 2016

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

Without a proper business succession plan, the very future of the company is in question. The entire business could even tank due to a lack of a proper succession plan. Without some guiding documents in place, new owners and family members may be stepping in to a very complex situation and may end up in conflict with one another. It’s important to meet with an attorney who has extensive experience in the realm of business succession planning to start with to ensure a comprehensive approach towards protecting individuals and the interests of the business. 

Although to some extent certainty and clarity should be incorporated into your estate plan, the owner might assume risks in order to help grow the business. The owner may even have a concept in mind for when he or she will elect to leave the business. However, there are so many different events that can disrupt this plan. If you have not planned for some adaptability in the business succession plan, all the hard work can go up in smoke.

One key aspect to remember in any business succession plan is the transition of the owner. How will he or she maintain an operational role or compensation during the succession process? If the clients intend to remain with the business because of their connection to the owner, this transition period could lead to a lack of trust. Any buyer will want to be able to minimize the potential impact of fleeing or unhappy clients. One way to address this is by using an earn-out structure for the owner’s exit.

If you have more questions about the business succession planning process, reach out to an experienced lawyer today.

 

 

 

 

Why Worrying About Asset Protection Planning is Worth It

November 1, 2016

Filed under: Asset Protection Planning — Neel Shah @ 9:15 am

In today’s busy world it’s easy to overlook the numerous responsibilities that you have on your plate. Thinking about estate planning, running a business, managing your family, and dealing with all of the details associated with day-to-day life in the US can be overwhelming. That being said, you have worked so hard to establish your assets and your growing wealth. 

In the event that you ignore these, you could find yourself in big trouble down the road if you do not engage in the process of asset protection planning. One of the most important things you can do is to set up a meeting with an experienced asset protection planning attorney.

Without a plan in place, you expose yourself to risks associated with a divorce, lawsuit, or creditors coming after you. In the blink of an eye, all of your assets may be exposed immediately in just one unfortunate event. If you take some time to continue the planning process with a lawyer is important. 

You have put a lot of effort into protecting your family and building your own personal legacy. You should be concerned about protecting it, too. There are many different strategies available to you that can help you accomplish estate and asset protection planning goals at the same time. You should not hesitate to reach out to a lawyer when you find yourself in this situation.