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Back To School Tips: Important Documents for Parents of New College Students

August 22, 2014

Filed under: Estate Planning,Estate Planning for Children,Planning for Minors,Power of Attorney — Tags: — Neel Shah @ 5:41 pm

There’s no doubt that your mind is already pretty preoccupied with many different lists of supplies, last-minute shopping, and packing with your new college student. But it’s critical that you think about whether getting your adult child’s signature on two key estate planning documents is a good step. These two documents are a health care proxy and durable power of attorney.

So why, in the midst of everything else, should you be concerned with estate planning? In the majority of states, parent will not have the authority to determine health care decisions for children once those children have turned 18. This is true even if the parents are paying tuition or claiming those individuals as dependents on their tax returns. If the child were involved in an accident, for example, or became disabled, a parent might have to get court approval in order to act on behalf of his or her child.

Having both of the above-mentioned documents in place before your child goes off to college can give you a sense of peace and confidence that you will be able to act on behalf of your child in a worst-case scenario. Consider adding these crucial documents to your safebox at home today. In the event of an emergency, you can focus on caring for your child. Contact us today at 732-521-9455 or info@lawesq.net.

Back To School Tips: Important Documents for Parents of New College Students

 

 

 

 

 

 

 

 

 

Photo Credit: campaigner.com

Our version of TMZ: Estate Planning Blunders & The Famous People Who Committed Them

November 28, 2013

Filed under: Distribution of Assets,Estate Planning,Estate Taxes,Planning for Minors — Neel Shah @ 9:00 am

Famous people are like us in many ways. They are born, they pay taxes, they make estate planning blunders, and they die. A recent article discussed several of the more common estate planning mistakes and the famous people who committed them.

English: US Congressional picture of Sonny Bono

English: US Congressional picture of Sonny Bono (Photo credit: Wikipedia)

Failing to Plan

Perhaps the worst estate planning blunder is failing to create an estate plan. When entertainer and Congressmen “Sonny” Bono died unexpectedly in a 1998 skiing accident, he left no estate plan. Therefore, his wife had to petition the court to administer his estate and continue his business ventures.

Failing to Seek a Professional

If anyone should be able to draft his own will without incident, it would be a former Chief Justice of the United States Supreme Court. However, even United States Supreme Court Justice Warren E. Burger couldn’t get it right. Burger drafted his own will, which contained simple errors, failed to address important things, and cost his family $450,000 in taxes.

Failure to Update

Importantly, a person’s estate plan should grow and change with him or her. Sometimes an out-of-date estate plan is worse than having no estate plan at all. When Actor Heath Ledger died at a young age, he had a will prepared. However, the will was drafted before the birth of his daughter, Matilda, and therefore left nothing to her.

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529 Plans Benefit Grandparents and Grandchildren

October 30, 2013

Filed under: Estate Planning,Estate Planning for Children,Planning for Minors — Neel Shah @ 9:00 am

As a recent article explains, a majority of wealthier investors prefer to transfer money to their grandchildren through 529 college savings plans. In part, 529 college savings plans are popular because they allow the grandparents to reduce the value of their taxable estate, while also maintaining control of the funds removed from the estate.

A person can open a 529 College Savings Plan for each of his or her grandchildren. The grandparents can then transfer up to the current annual gift tax exemption amount to each account, tax-free. Not only will the 529 account grow tax-free, but any withdrawals made by the grandchildren will be tax-free, as well.

English: A grandfather teaching his little gra...

(Photo credit: Wikipedia)

Importantly, the donors to the account are the ones who determine how the assets will be distributed. For example, if a grandparent unexpectedly has a stay in an emergency room and requires the money, he or she can take the assets back. If this happens, however, any investment gains would be taxed to the grandparents when the assets are withdrawn. This penalty tax, however, is only ten percent. Many donors attempt to “frontload” the 529 account so that they can make a lump sum gift of $65,000, tax free.

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Thanks Gramps! Planning Gifts to Grandchildren

October 29, 2013

Filed under: Beneficiaries,Estate Planning,Estate Planning for Children,Planning for Minors — Neel Shah @ 9:00 am

Often, grandparents who have extra money wish to assist their grandchildren financially. A recent article discusses three ways through which grandparents can give to their grandchildren.

Grandparents with a child

Grandparents with a child (Photo credit: Nestlé)

Write a Check

Many grandparents simply write checks to their grandchildren without thinking twice about it. Under current tax rules, a person can give as much as $14,000 per recipient per year, without tax consequences. If you would like to give an individual grandchild more than $14,000, consider using another vehicle to avoid tax consequences. Finally, remember that this type of gift is often calculated into a giver’s estate for the calculation of whether a person is eligible for means-tested government programs such as Medicaid.

Invest in a College Savings Plan

If you want to assist your children with paying for a college education, consider a 529 account rather than simply writing a check. With a 529, you can be certain that the money is spent exactly how you would like it to be spent. Additionally, 529 accounts offer important tax benefits that will not have any impact on your grandchild’s ability to apply for means-tested financial aid.

Use a Gift Trust

Finally, you can transfer money to your grandchild through a gift trust. A gift trust is an account that you set up where you or a named individual serves as the trustee. The trustee can direct the timing and use of any distributions made from the trust.

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Planning With a Baby on Board

October 3, 2013

Filed under: Beneficiaries,Estate Planning for Children,Guardianship,Planning for Minors,Trusts,Wills — Neel Shah @ 1:19 pm

The birth or adoption of a new child is a frenzied and joyous time in the parents’ lives. Understandably, estate planning is often the last thing on the minds of expectant parents. However, as a recent article explains, certain parts of estate planning are essential for a growing family. Expectant parents should consider at least the following two questions, and plan accordingly before it is too late.

Children, Baby new born

Children, Baby new born (Photo credit: Wikipedia)

Who Would You Trust to Care For Your Children?

Should the unthinkable happen and neither you nor your partner are able to care for your children, it is important that you have a plan in place. If you do not designate a guardian for your children, or the guardian you have designated declines to serve, the court will select the person who will care for your children. This may or may not be the person that you would have chosen.

Do You Have Life Insurance?

Life insurance is an important part of the estate of many parents. Life insurance provides a guaranteed sum of money that can finance the care of your spouse and children. For extra protection, you can designate that if you and your spouse pass on before your children reach the age of majority, the money will be kept in trust and distributed only by a designated trustee. You can further designate that, should you die after your children reach the age of majority, they can simply receive the sum outright or in installments at various ages such as 21, 25, and 30.  Yet another popular option is to allow the money to stay in trust forever to maximize asset protection, while ensuring financial needs are met.

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How To Choose The Right Guardian For Your Children

June 7, 2012

Filed under: Estate Planning,Guardianship,Planning for Minors — Neel Shah @ 1:26 pm

Who should raise your children if for some reason you and your spouse are unable to do so? It’s not an easy question to answer, but if you have young children, it is a topic you most certainly should address in your estate plan. Otherwise, a court will decide, and their decision will probably not be the same as the one you would have made, and may not even be in the best interests of your children.

Some of the most important issues to consider when choosing a guardian include:

  • Does the prospective guardian have a genuine interest in your children’s well-being?
  • Does the prospective guardian share your values?
  • Can he or she handle the role physically and emotionally? What about financially, if you cannot provide him or her with enough assets to raise your children?
  • Does the prospective guardian already have children of his or her own? Will he or she be able to make enough time to adequately care for and look after your children?
  • Where does the prospective guardian live? Would that be a good fit for your children? Would having to move far away make an already stressful situation for your children even more so?
  • Is it essential that all your children share the same guardian? Most parents say yes, but in some circumstances, such as when your children are of significantly different ages, naming more than one guardian is an option.
  • Should you choose one person to act as personal guardian and another to manage the financial arrangements for your children-that is, name a second person to act as Custodian or Trustee?

In certain situations, such as when the best surrogate parent for your children is not necessarily the best person to handle financial matters, this option is worth considering.

  • Perhaps most important of all, have you spoken to the prospective guardian about taking on such a responsibility, and does he or she seem readily willing to do so?

What if you and your child’s other parent cannot agree?
It goes without saying that you and your child’s other parent should name the same guardian for your children. But what if you are divorced, or for whatever reason you and your spouse cannot agree on the most suitable guardian? Naming different guardians will lead to a battle in court should you and the children’s other parent pass away while your children are still minors. The decision over guardianship will then be in the judge’s hands.

Part of the solution to this situation is to leave a Letter of Explanation, outlining your reasons for choice of guardian. It is important to have an experienced attorney assist you in the drafting of such a letter, but here are the basics of what should be included:

  • Who the children would prefer, that is, the relationship between the children and the prospective guardian
  • Why your choice of guardian will best meet the children’s needs, particularly with regard to providing stability and proper care
  • The values and moral fitness of the prospective guardian
  • The physical and financial ability of the prospective guardian to raise your children

We have helped many couples select the ideal guardian for their children and designed wills or other planning documents to ensure their wishes are carried out. We welcome the opportunity to do the same for you.

What do you need to address for your family?

October 11, 2009

Filed under: Asset Protection Planning,Business Planning,Business Succession Planning,Non-Citizen Planning,Planning for Minors,Trusts,Wills — Neel Shah @ 4:18 pm

Your goal may be making sure your children & spouse are financially secure and to protect your assets from those who may ‘attack’ them. Perhaps you want to ensure your property and business is secure in the event of the following: death, divorce, a partner developing a debilitating disability and/or creditor’s attacks. Or it may be as simple as naming a guardian for your minor children. Most probably, your goals and needs are a combination of the above, plus other circumstances unique to you.

There’s no such thing as a ‘one-size-fits-all’ estate plan or a ‘cookie-cutter’ simple will. Different goals and unique circumstances requirepersonal attention and customized plans. Here are examples of client estate planning needs we’ve addressed in the recent past:

• An IT Professional and his business partner needed a comprehensive Buy-Sell agreement which ensured that in the event of either of their untimely deaths, the business can continue to run, but the deceased partner’s family would be paid a fair market value for his share of the business. As you can see both the family and the business needs are addressed.

• A married couple with substantial real estate investmentswanted to ensure that their personal home and assets wouldn’t be lost to a tenant, a lender or other litigant who sues them as a result of liabilities arising from their investments. We were able to implement an Asset Protection Plan which shields their family assets from liabilities than can arise from their investments. Most importantly, they also named a Guardian for their minor children in the event neither of them is around.

• One of our clients is a Physician who is married. Her husband is anon citizen. Her concern was saving money in Estate Taxes and what would occur if she died and her husband survived her, still not an American citizen. We implemented a plan, consisting of Wills and Trusts for each, that will save hundreds of thousands of dollars. Also addressed was the potential negative tax impact facing her husband upon her death as a result of his Resident Alien status. They also chose to create a Pet Trust for their dog.

Your customized plan should address your individual goals and needs. We can work together to put into effect a plan for your asset and income protection that will allow you to keep intact the Estate that you have spent a lifetime creating.

What Happens If I Die Without a Will?

April 13, 2009

Filed under: Estate Planning,Planning for Minors,Probate,Wills — Neel Shah @ 4:19 pm

Last Will & Testament (commonly referred to as simply a Will) is a document that disposes of your property at the time of your death.

A common misconception is that Wills and proper Estate Planning are only necessary for the wealthy. This is not true. Whether your estate is large or small, it is beneficial to have a properly drawn Will. Not having the Will properly drafted and executed can cause delays, great expense and possibly force the Will to be interpreted through the courts.
If an individual dies without a Will there are certain consequences that may occur. Consider the following:

  • If you have not named a guardian for you minor children (as you would in a Will) , if both parents die, the courts or a social worker may have the temporary & final decision as to who should act as guardian for your minor children, not you or your family.
  • Without a Will naming an Executor, the court will appoint an Administrator for your estate who may not know your intentions.
  • After the administrator of your estate has distributed your assets in accordance with state law, your spouse may not have enough funds to live comfortably.
  • Without a Will you cannot leave personal items such as a family heirloom, specific jewelry, artwork, etc. to a particular individual such as a nephew, cousin, or family friend.

When creating a Will, it is also important to execute a Living Willand Power of Attorney. These 2 documents are also essential to any basic Estate Plan.

A Living Will (also known as a Health Care Proxy or Advanced Health Care Directive) allows an individual to appoint someone to make all health care decisions on their behalf in the event they are unable to understand and appreciate the nature and consequences of the health care decisions. You may also provide specific instructions as to your intentions.

Power of Attorney allows an individual to designate an agent to conduct all business and financial decisions such as purchasing, improving, maintaining any real or personal property, banking, or any lawful business transactions. It can be Springing (takes effect only upon disability or incapacity) or Durable (effective immediately & remains effective upon disability or incapacity). Not having one of these in place can result in required costly court proceedings.

A minor mistake in drafting and executing your estate plan may invalidate your good intentions & your lifetime of hard work & savings. A little advanced planning can ensure your family’s goals are accomplished.