December, 2018 | Shah & Associates, P.C. Estate Planning & Business Law Blog
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Use Tax Planning to Reduce What You Owe

December 12, 2018

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

As we approach the end of the year, it’s a good opportunity to engage in the process of tax planning by speaking with your accountant and other retirement planning professionals. 

Tax planning can be instrumental in helping to reduce the total amount of money that you owe on your taxes. The prospect of reviewing your income taxes can be overwhelming for many, and this is especially true after the overhauled tax law that came into being towards the end of last year.

Now is an appropriate time to verify that you have considered all possible aspects of updating your financial and tax plan. First of all, review your withholding decision and update your W-4 if needed.

You can use line six on your W-4 to state an extra amount that you would like withheld from your account before year end. You can submit an updated W-4 in the future if you want to take that extra withholding out in the future.

You can use a calculator on the IRS website to identify where and whether or not your withholding decision has been appropriate based on your individual and family circumstance. Furthermore, discuss the estimates of your 2018 and 2019 income tax situation to avoid unwelcome bills from the IRS about balances that are due. Maximizing contributions to your available retirement plans is a common strategy used before the end of the year.

Additional contributions can be made for those people age 50 years or older and taxpayers can always explore their flexible spending account and figure out how to use these funds before the end of the year occurs. The new tax law doubled the standard deduction with more than 90% of tax payers now claiming that standard deduction, it will be important to discuss the tax planning options and how this affects you with your accountant and estate planning professional.

Yes, Your 18-Year-Old Needs Estate Planning

December 11, 2018

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

As a parent, it can be hard enough to look ahead to the future and consider that your child could be moving out of the house to go to college, join the military or take on a new job. But part of the estate planning process does consider when your child reaches the age of 18, since he or she will be officially a legal adult at that point in time. teen-estate-planning

This means that 18 is also the recommended age for the creation of an estate plan with basic documents like advanced directives and a power of attorney. Since your child will be named as a legal adult at age 18, as a parent you are no longer equipped to make decisions on behalf of your child unless your child has granted you that ability.

Using tools like a health care proxy which can enable you to make medical decisions on behalf of your loved one or a power of attorney to assist with financial and legal decisions in the event that your teenager becomes incapacitated, are both important.

Unfortunately, everyone is at risk of accidents, diseases and sudden illnesses that could rob even a teenager of mental and physical health. If your teenage son or daughter does not have a healthcare proxy or a power of attorney, you could be at risk of having to go through the additional frustration and expense of a guardianship proceeding to enable a judge to appoint a legal guardian to make decisions on behalf of your teenager.

These guardianship proceedings are also frequently invasive to privacy and can be one additional hurdle that you don’t wish to go through after dealing with the process of your teenage son or daughter suffering through an accident or serious illness. For this reason, you need to contemplate the prospect of estate planning that can be done with the help of an experienced and knowledgeable lawyer.

IRS Announces New Gift Tax for 2019 Estate Tax Limits

December 10, 2018

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

The IRS recently announced their 2019 details about gift tax and estate tax limits. The official limits for 2019 increased the individual estate and gift tax exemption to $11.4 million per person up from $11.18 million in 2018.

This means that you are eligible to pass on up to $11.4 million to beneficiaries and heirs without paying any federal, estate or gift tax. This also means that a married couple can pass on as much as $22.8 million with appropriate shielding strategies recommended by an estate planning attorney. The annual gift exclusion will stay the same at $15,000. 

These numbers represent numerous planning opportunities for the wealthy and even if you don’t currently have a taxable estate, you’ll still need an estate plan. Scheduling a consultation with an experienced estate attorney is important because the affluent must still continue to plan around the estate tax.

Advanced strategies might be required for someone who is unfamiliar with the estate tax laws or who has recently come into a large amount of money. In all of these situations, a consultation with an experienced estate planning attorney can make a big difference.

What is the Role of a Will Executor in NJ?

December 5, 2018

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

Are you trying to decide who to appoint as your will executor in New Jersey? This important decision could have ripple effects for your entire family, and deciding who to instill in this role is well worth taking some time.

Your NJ estate planning lawyer can help you determine the role that a will executor will have in the management of your estate. probate-NJ

The tasks that must be carried out by an executor are important and include:

  • Collecting and managing all assets, including liquid and illiquid ones
  • Filing appropriate tax returns for the estate
  • Pay taxes and debts
  • Distributing any remaining assets as directed by the deceased

The executor is key in probating the will. This is the process by which the will is admitted to court. The determination by the court that the will is legal is important because it empowers the executor to move on with his or her duties.

The executor also takes legal title for estate assets, and this means that an accounting might be required. Running a business, managing a securities portfolio, or liquidating assets are all steps that might be taken by an executor depending on the complexity of the estate itself.

It’s recommended that you choose someone who is familiar and comfortable with financial and tax matters since this is a key task carried out by the executor. Taxes typically have to be paid in advance of other debts, but getting the assistance of a probate lawyer is helpful in ensuring that each step taken by the executor is the proper one for the situation at hand.

 

What Is Bunching of Charitable Contributions?

December 4, 2018

Filed under: Charitable Giving — Neel Shah @ 9:15 am

Since the new tax laws in place doubled the standard deduction to $12,000 for single tax payers and $24,000 for those married filing jointly, this means that you need to understand how this affects your itemized deduction planning.

There are changes that repeal or limit many itemized deductions, such that in 2018, 90% of taxpayers will be using the standard deduction. For anyone who is contemplating the standard deduction rather than itemizing, consider putting all of your charitable contributions across alternate years if this will enable you to itemize in a future year but take the standard deduction one year. 

One other avenue to pursue if you wish to consider this option is to contribute to a donor advised fund, making distributions to that charitable organization over the course of time.

This is most appropriate if you do not want to give the money to charity all at one time. Annual exclusion gifts should also be considered as end of year options.

For those who want to minimize their exposure to estate taxes, remember that you can gift up to $15,000 to an unlimited number of people every single year without decreasing your lifetime estate tax exclusion or paying gift tax.

If you spread this out over the course of multiple years, such as you would with your charitable contributions, now is a good time to talk to an experienced estate planning lawyer about how this will affect your future planning and needs.

The support of an estate planning attorney can help you to stay on top of all necessary estate planning changes and tax law updates that might affect you and your loved ones. Appropriate tax planning should always be done in conjunction with the support of an accountant and an estate planning professional.

 

Do Beneficiary Designations Really Matter After Your Second Marriage?

December 3, 2018

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

Your estate planning documents certainly need to be updated after you get married for a second or third time, but have you overlooked this common mistake of failing to update your beneficiary designations. 

Beneficiary designations outline how the property will pass to people on items such as your life insurance policy, your IRA and certain brokerage accounts. If you do not know this information or have not updated it in a long time, there’s a good chance that your previous spouse or another person who is no longer relevant or alive is the person named as your beneficiary. No matter what you have listed in your will, the information included on these beneficiary designations supersedes that.

This means that if you have painstakingly detailed what you hope to happen to these property items when you pass away, the beneficiary designations filed with the company, regardless of how old they are or irrelevant, will still be followed to the letter by the company. This is why you need to protect yourself by regularly updating your beneficiary designations.

It’s also a good idea to consider contingency beneficiaries. Contingency beneficiaries are those who are entitled to receive the assets inside these products if the original beneficiary passes away. Most people forget about the facts that someone who is listed as their beneficiary, even a child, might pass away before them and make the difficult situation of no one receiving these benefits or further confusion and problems. Schedule a consultation with an experienced estate planning lawyer if you are ready to talk about your options with regard to effective primary and contingent beneficiary estate planning and how to regularly evaluate and remind yourself about updating the beneficiary designation forms.