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Busting Common Trust Myths

September 25, 2014

Filed under: Estate Planning — Tags: , , — Neel Shah @ 2:13 pm

Used properly, a trust can be the right tool for managing or transferring your assets. Here are three common myths about trusts to help you get the truth.

Busting Common Trust Myths

(Photo Credit: mythbustersreviewusa.blogspot.com)

Trusts Are Too Complicated

Some believe that trusts take too much work in order to get the most out of them. Assets have to be moved into the trust, usually using a formal designation of ownership from one or more people into the trust. If assets are not precisely retitled, surviving family members might have to go through probate anyways. Avoiding probate is one common reason to use a trust. The bottom line is that trusts don’t have to be that complicated if you structure them properly under the guidance of an experienced attorney.

Only Rich People Need Them

Even if you’re of limited means, there could be benefits to using a trust. Avoiding probate by paying the upfront costs to hire an estate planning attorney to draft your trust could be well worth the payoff in the long run. Trusts can make it much easier for your beneficiaries to receive the assets you’d like them to have.

You Don’t Need a Trust Until Death

A trust developed during your life can outline your plans for handling your affairs if you were to become incapacitated. There are big long term advantages to setting up a trust that works for you while you are still alive.

Interesting in putting together a trust? Call us at 732-521-9455 or through email at info@lawesq.net to begin.

Do I Need a Trust?

August 5, 2014

Filed under: Estate Planning,Estate Taxes,Income Tax Planning,Probate,Trusts — Tags: , , , , — Neel Shah @ 3:32 am

As trusts have gotten more popular and evolved in type to appeal to a lot of people, so now you might be under the impression that you must have a trust. While it’s not for everyone, there are so many trusts out there that it’s very likely you could find one that will help you to meet your goals, including to protect your assets and minimize taxes.

Do I Need a Trust?

Photo Credit: epilawg.com

Major liquid assets, setting up care for a child with special needs, and a variety of real estate ownership are a few of the reasons that people might initially turn to trusts. If you’re a resident of a state with a high state estate tax, income tax or probate costs, you’re likely to be concerned about the hit of taxes, too. This refers to situations where a federal estate tax is factored into your asset value, but an additional taxable event occurs at the state level. Without proper planning, you could find that the value of the assets you have worked so hard to build is extremely vulnerable to these taxes and costs.

Contact our offices today to learn more about how these trusts can help you. Send us a message at info@lawesq.net or call us 732-521-9455.

How Did Shelly Sterling Control the Clippers Sale Decision?

July 23, 2014

Filed under: Asset Protection,Asset Protection Planning,Trusts — Tags: , , — Neel Shah @ 5:09 pm

The Los Angeles Clippers sale recently seemed to go ahead just the way that most players, fans, and the NBA commission wanted it, leading to an agreement that sold the team to former Microsoft CEO Steve Ballmer for $2 billion. The control behind the sale, however, went to Donald Sterling’s wife, Shelly, causing many to wonder just how she managed it.

How Did Shelly Sterling Control the Clippers Sale Decision
(Photo Credit: wallerz.net)

Shelly made her move with a boilerplate provision included in the Sterling family trust, which maintained ownership over the Sterling’s interest in the Clippers. Since both Shelly and Donald were co-trustees holding equal authority over that trust, she was eligible to make the decision based on another standard trust provision regarding mental competency.

Shelly had already had Donald evaluated for mental competency. Under the trust’s guidelines, if either Shelly or Donald were found by two qualified physicians to have “an inability to conduct business affairs in a reasonable and normal manner”, that individual could be removed as co-trustee. As a result, Shelly would have become the sole trustee with the decision making power and authority to sell or manage the business how she saw fit and that is her strategy.

Whether planning for your family’s assets or for those of an NBA team owner, when in generating trusts’ planning attorneys may recommend that provisions like the one above are put into the language for the protection of both individuals. If not included, the co-trustee (or business partner, as it may be) could be exposed to serious risk in the event of some form of incapacity. If not planned at all, it could all be left up to a court to decide. Get more details about trust planning today by contacting us at info@lawesq.net or at 732-521-9455.

When to Think About Charitable Remainder Unitrust Alternatives

July 18, 2014

Filed under: Charitable Giving,Income Tax Planning,Taxes,Trusts — Tags: , , , — Neel Shah @ 4:40 pm

For many individuals approaching estate planning, charitable giving is going to factor into the equation somehow. The most popular way of passing on assets currently is through a charitable remainder unitrust, but it’s not necessarily the best option for everyone, although last year nearly $90 billion was held in U.S. trusts of this type.

When to Think About Charitable Remainder Unitrust Alternatives
(Photo Credit: lifehealthpro.com)

Here are some of the most common reasons that you might want to use something other than this trust vehicle for your charitable giving:

  • Tax Savings Today: You want maximize your current tax deduction. A charitable lead trust could be a better alternative for this situation, since you get an immediate federal income tax deduction when the gift is made. The tax deduction equals the present value of the future income stream.
  • You want the gift to begin now: Under a charitable lead trust, the client will typically gift the assets directly to a charitable trust. That trust then makes regular payments for a specific number of years or for life. Under a remainder trust, though, the charity doesn’t get anything until the trust’s term is up.
  • You want to see regular payouts: This is there’s a difference between a charitable remainder annuity trust and a unitrust. The annuity trust guarantees equal payouts throughout the length of the term (such as every year), which gives the person setting up the trust confidence that payments are being made at regular intervals.

When it comes to charitable giving, you have options. Contact us today to learn more via email info@lawesq.net or 732-521-9455 to get started.

For The Ladies: Special Estate Planning Considerations for Women

July 17, 2014

Filed under: Estate Planning,Trusts,Wills — Tags: , , , — Neel Shah @ 4:33 pm

For the most part, financial planning and estate planning tools are very similar for men and for women, but there are several facts that result in special planning considerations for women as well. The root of these considerations is that in later years, women may face their own set of challenges.

For The Ladies Special Estate Planning Considerations for Women
(Photo Credit: businesshangouts.net)

To start with, women tend to live longer than men do. A woman may overlook the fact that odds are in her favor for outliving her spouse. In fact, according to the Census Bureau, nearly 40 percent of women over the age of 65 are widowed. That longevity may also lead to higher medical bills. When your financial future is built on a husband’s pension or Social Security benefits, the woman can face major challenges as a widow.

Women are also much more likely to provide care to children and elderly parents. Many women tend to take on this role for older parents, which can be emotionally challenging and a financial adjustments.

Women looking at estate planning should seriously consider where their income will come from in the future and what, if any, benefits they will be eligible for. If women are looking at caring for their own elderly parents, it’s also worth a look into the parent’s planning to see whether they have made plans for long-term care or factored in the financial aspects already.

A little advance work can go a long way in helping women live long and comfortable lives. To learn more about estate planning, email info@lawesq.net or contact us via phone at 732-521-9455 to get started.

Common Reasons A Will Might Not Hold Up In Court

July 14, 2014

Filed under: Last Will & Testament,Living Will,Trusts,Wills — Tags: , , , , — Neel Shah @ 3:38 pm

Especially if you have taken it upon yourself to write your will, it’s important to know that you have opened your heirs up to the risk of having your will contested in court later on. Here are three of the most common mistakes that result in a contested will.

Common Reasons A Will Might Not Hold Up In Court
(Photo Credit: 8gr.org)

Disinheriting Family Members Sans Explicit Instructions

The law tends to treat the distribution of assets relatively fairly when there are questions about intention or mistakes in the handling of the will. So, if you’re stipulating that you want to leave an individual out altogether, you need to make sure those instructions are crystal clear. You want to have this written by an attorney to reduce that chances that you have given such an individual room to argue in court.

Using Biased Witnesses During Your Will Signing

In many circumstances, you need to sign your will in front of witnesses in order for it to be valid. These witnesses may later be called I court to state that they were present and to discuss whether the person signing the will (you) had the mental capacity to sign such a document without any undue influence or pressure from other parties.

Potentially Lacking Mental Capacity to Sign the Will

One of the reasons that heirs (or those excluded) will contest a will is under the ground that you did not have the mental capacity to understand what you were doing. You must understand what property you own, your overall plan for passing on property, and who you closest family members are. Furthermore, a Living Trust, which preserves privacy, may be an option for those with a stronger likelihood of a contest in their future.

To learn more about wills and estate planning documents, contact our professionals at 732-521-9455 or info@lawesq.net.

Time for New Jersey Residents to Reconsider the DING Trust

June 3, 2014

Filed under: Trusts — Tags: — Neel Shah @ 1:20 pm

In light of today’s federal and state income tax environment, those living in high income tax states, like New Jersey, are always looking for options to understand and mitigate risk exposure. In the event that you are influenced by a state income tax, the hit can be substantial. Knowing how to use current strategies is highly valuable for anyone in this situation.

Time for New Jersey Residents to Reconsider the DING Trust
(Photo Credit: irs.com)

The IRS has recently made it a little easier to mitigate such risks through the use of a DING Trust, which stands for Delaware Incomplete Non-Grantor trust. In a DING trust, a person can transfer assets are produce high levels of income into a trust. This transfer doesn’t trigger federal or state gift taxes but it also minimizes the exposure to state income tax. The purpose of such a trust is to transfer these assets into a bucket in a state without trust income taxes, like Alaska, Nevada, and Delaware.

This particular kind of trust is best used with someone who maintains high levels of income generating portfolios. For New Jersey individuals in this situation, it’s important to note than an investment portfolio held inside a DING trust is exempt under the state and local income tax so long as the trustee is not a resident of the state of New Jersey. Alongside other estate planning strategies to reduce the overall taxable estate, the DING trust is most appealing to New Jersey residents concerned about the influence of the state income tax. To get started with DING trust planning, contact us through email at info@lawesq.net or contact us via phone at 732-521-9455 to get started.

Special Planning for Second Marriages: Lessons Learned From Casey Kasem

May 27, 2014

Filed under: Blended Families,Family Limited Partnerships — Tags: , , , — Neel Shah @ 12:29 pm

The recent news hoopla over Casey Kasem illustrates an important lesson for planning your own estate: things may change when you throw a second marriage into the mix, calling for a re-evaluation of your plans. There are many things that should be addressed in estate planning where a second marriage has occurred. Doing so will help prevent problems and lay the groundwork for plans that actually carry out your wishes rather than spark legal battles among family members.

Special Planning for Second Marriages Lessons Learned From Casey Kasem
(Photo Credit: mediaconfidential.blogspot.com)

Medical directives, powers of attorney, and even decisions about burial planning should all be considered in your estate plan if you are involved in a second or third marriage. This avoids conflict between family members that can make the grieving process even more difficult.

When it comes to passing down assets, this is especially complex in a second marriage. Who should get the money? Should it be split between children? Does it go to the first wife in one lump sum and the remainder is split among the children? There’s a lot of tension that can arise if you don’t think about the answers to these questions well in advance. Conflicts tend to crop up especially when a non-parent spouse is receiving assets that children feel entitled to in one sense or another. The more clarity there is in your planning, the better. Once you’ve met with an estate planning professional, it’s important that you in some sense communicate what you have outlined to family member stakeholders. To learn more about estate planning techniques for second and third marriages, email us at info@lawesq.net or contact us via phone at 732-521-9455

Do You Have a Digital Fortune?

May 8, 2014

Filed under: Estate Planning,Trusts,Wills — Tags: , , , — Neel Shah @ 4:37 am

The estate planning landscape is changing, and it’s because our approach to determining assets is changing, too. According to a survey by McAfee, Americans believe they own an average of about $54,000 in digital assets. Curious about a digital asset? What about your big ITunes collection? Downloaded resources and books on your Kindle? What about Paypal? Bitcoins? Or even more sentimental accounts, like a genealogy archive that’s helped you to identify relatives?

Do You Have a Digital Fortune
(Photo Credit: mariopartylegacy.com)

Getting access to these materials can be difficult after a family member passes away. Your email account materials might be deleted before family members can even access the material and in the meantime, your accounts could be exposed to online theft risk.

This is where a Digital Estate Plan steps in. It will help your will executor carry out your wishes in the distribution of your assets. This can be a complex process, since many of the sites mentioned about base their service agreements on federal laws. Nevertheless, it’s an important exercise to gather up an inventory of material you might like your family to be able to access if something happens to you. At the least, your family will be aware of the information’s existence. Login information and passwords should also be included with this material.

Make sure you’re up to date with estate planning laws and trends by working with an experienced attorney. Reach out to us to get started at info@lawesq.net or contact us via phone at 732-521-9455.

Put Your Trust in a Trust

May 6, 2014

Filed under: Estate Taxes,Last Will & Testament,Trusts — Tags: , , , — Neel Shah @ 4:27 am

Now is a great time to evaluate how using a trust can help you achieve your financial goals. The federal gift tax and estate tax laws give big incentives for using trusts in estate planning. In the pasts, trusts have been used mostly to transfer gifts to children while limiting estate taxes on wealth, but there are numerous other benefits.

Put Your Trust in a Trust
(Photo Credit: marketo.com)

An appropriately funded trust can help ensure that your assets are protected and available in the event that you become incapacitated. When you pass away, that same trust can be used to pass on assets to your beneficiaries. You can also protect your legacy by keeping your assets away from any of the heir’s creditors, too.

There are probate savings and privacy reasons that a trust can benefit you, too. There are potentially large fees for going through probate and your probate records will also be public. Putting your assets into a revocable trust instead can keep them from having to go through probate at death- therefore protecting you and your family’s privacy.

Finally, trusts can be a good tool when you live in a state that has an estate tax. Some states levy estate taxes that are rather substantial, but trust planning is one way to cut down on how many estate taxes will be levied on your death. This can also be a good tool for those who have real estate located in a state that imposes estate taxes.

For the Furry Ones in Your Life: Estate Planning With Pets in Mind

April 25, 2014

Filed under: Estate Planning,Estate Planning for Attorney,Estate Planning For Business Owners,Estate Planning for Children — Tags: , , , , — Neel Shah @ 8:10 am

Although many people have heard about the traditional aspects of estate planning, like a will, it’s all too often forgotten that you may have others you need to include in your plans. The majority of houses across the country have pets inside, and it’s worth considering what you’d like to happen to your animals if something happens to you. Pets are treated as personal property, so it’s crucial that you do a little research about where you’d like them to go.

For the Furry Ones in Your Life Estate Planning With Pets in Mind
(Photo Credit: the-hunting-dog.com)

A pet trust, for example, can outline the type of care your animals will receive after you pass away. With a funded pet trust, you can rest assured that your animals will be taken care of no matter what. This trend is expanding in use across the estate planning industry. A first step in your pet plan is to write a description of all animals, including any distinguishing characteristics. This helps to avoid copycat pets or mistakes receiving care that you intended for your own animals. Microchip numbers, too, should be included for identity verification.

You can work with an estate planning professional to determine the cost of care for your animal. Factor in vet care, routine medications, any special supplements, pet insurance, and food, multiplied by the life expectancy of your pet. Talking this over with any family members can be helpful for establishing those who may want to care for your animals, too. Have questions about pet trusts or other planning tools? Send us an email at info@lawesq.net or contact us via phone at 732-521-9455.

EZ Legal Services: Shortcut or Risk?

April 21, 2014

Filed under: Legacy Planning — Tags: , , , , , , , , , , , , — Neel Shah @ 6:10 pm

Despite the marketing that’s attempting to penetrate just about everywhere these days, there’s a lesson to be learned from online programs that make estate planning seem so easy. And the lesson isn’t that you can save money and time by putting it together yourself. Up front, you may very well save some money and time. Just don’t be surprised when those “plans” don’t hold up in court. Just ask the family of Ann Aldrich.

stables.com
(Photo Credit: staples.com)

Aldrich used one of these easy programs to put her will together back in 2004. In the will, neither of her two nieces were actually mentioned. Jump to the present and both those nieces were able to capitalize on their aunt’s poor planning. The Florida Supreme Court recently ruled in favor of the nieces because the will was missing the important residuary clause, allowing all money acquired by the aunt after 2004 to be distributed through intestacy (the same laws that govern property distribution for those who pass away without a will at all).

Aldrich’s will included statements leaving everything to her sister and then her brother. Since the sister died first, the brother argued that he was entitled to everything. Since the “oh so easy” legal form only accounted for listed items, nieces were able to argue their rights to assets not specifically outlined in the will. Although Aldrich’s intentions appear rather clear, her documentation was missing something that an estate planning attorney would have picked up at first glance. Unfortunately, this meant that her wishes were not carried out as she planned. This situation was entirely preventable with a little bit of planning. If you’d like to ensure that your estate planning documents carry out your wishes clearly, set up a consultation by calling 732-521-9455 or emailing info@lawesq.net

Showdown: Wills vs Trusts

April 15, 2014

Filed under: Trusts,Wills — Tags: , , , , , , , , , , , , , , , , — Neel Shah @ 4:13 pm

Depending on who you talk to, your estate planning specialist might recommend wills over trusts or trusts over wills. Let’s walk through some of the differences between these two planning tools to see if one might be a better fit for your needs.

Showdown Wills vs Trusts
(Photo Credit: blogs.dallasobserver.com)

If you are planning to use a will as your primary tool, bear in mind that your assets must first go through the probate process in order to be eventually received by your beneficiaries. Some states have lengthy and cumbersome probate processes, meaning that it could take your beneficiaries a while to actually receive the assets. Probate is also very public, meaning that details about your financial situation will be shared in a less-private forum. If you’re concerned about this, a trust might be a better option.

In comparison, trusts tend to pass by the court system for the majority of the administrative process. Since these are privacy documents, there’s less public scrutiny into your finances or your plans, and some clients prefer this confidential approach. Unlike wills, which become active on your death, a trust can be rendered effective immediately. Additionally, trusts can also be used for incapacity planning, adding another layer to their usefulness.

Both wills and trusts can do tax planning for credit shelter trusts. The bottom line is that it depends on your needs. If you are not concerned about the red tape of the probate process, there are still advantages (especially regarding privacy) for the establishment of a trust. We work with clients to create a customized plan for you since we recognize that each client is unique. To talk more about the kinds of trusts we can help you establish or to begin generation of your will, contact us today at 732-521-9455 or through e-mail at info@lawesq.net

Loop Hole or Opportunity? High State Tax Residents Use Nevada and Delaware Trusts to Avoid Tax.

April 11, 2014

Filed under: Taxes — Tags: , , , , , , , , , , — Neel Shah @ 4:07 pm

Today’s high net worth individuals are deeply sensitive to the risks they face with state income taxes. Since state income taxes can be such a burden for a wealthy person, more individuals are transferring billions of dollars’ worth of assets to trusts in states without tax, like Alaska, Nevada, and Delaware.

While these moves are currently quite legal, they are getting attention from officials in places like New York. New York officials have recognized a $150 million a year loss from avoiding taxes using out of state trusts. Wise wealth planners are clued in to these kinds of strategies, recognizing that many clients are concerned about the negative hit their assets will take when subject to such taxes. Wealth planners report that more clients are asking for assistance in protecting their money wherever possible, and out of state trusts are proving to be a vibrant market with many opportunities.

Loop Hole or Opportunity High State Tax Residents Use Nevada and Delaware Trusts to Avoid Tax
(Photo Credit: localsmile.com)

Although these transfers are happening at the individual level, they seem to mirror corporation behavior, too. Companies like Google have moved across national borders in order to cut down on the high taxes they are forced to pay if they stay in the U.S. Likewise, some people who want to sell their companies move shares out of home states and into out-of-state trusts to protect gains from state income taxes.

Estate attorneys that are in the know look at every aspect of a client’s portfolio to find the best ways to promote growth and protect from risk. Any client with a substantial portfolio might want to consider this strategy to cut down on the high state taxes that would otherwise be paid. Clients have been successful and satisfied with moving assets across the spectrum from several hundred thousand all the way up to hundreds of millions.

Nevada and Delaware have been engaged in a decades-long battle to get business from wealthy Americans through trusts. Part of the strategy for getting this business is by writing laws that make it simpler to transfer property across several generations and reduce the risk that assets will be attacked by creditors. As a result, Nevada has no state income tax and Delaware doesn’t place a tax on any out-of-state beneficiaries.

One of the most popular strategies is to use a Non-Grantor Trust, known as NING (Nevada Non-Grantor Trust) and DING (Delaware Non-Grantor Trust). Wealthy individuals who live in high-tax states can make the best of friendly policies in other states without the fear of violating any state or federal laws. In fact, a growing number of individuals are moving the assets just far enough outside their control so that they aren’t responsible for state income tax while also protecting them from being hit with a 40 percent gift tax. Most of these trusts are private, so there’s no clear data yet about just how many people are taking advantage of these incredible trust opportunities, but planners and attorneys are both reporting higher numbers of clients getting on board.

Risky Do-It-Yourself: Wills

April 9, 2014

Filed under: Wills — Tags: , , , , , , , , , , , , , — Neel Shah @ 2:39 pm

Software or online programs to help you plan your estate are popping up everywhere, but that doesn’t mean they are the best choice for your needs. Many of these programs lead you to believe that generating your will is easier than it truly is. Heirs might find out too late that your self-created will doesn’t really match up with your state laws or even your own intent.

rightscale.com
  (Photo Credit: rightscale.com)

When it comes to estate planning, intent is everything. Too often, the wishes of an individual don’t come across clearly in self-generated wills. Many modern court cases have focused on the determination of the testator’s intent, but judges are hesitant to cross certain lines to clear up confusion. As a result, your heirs may discover that your wishes aren’t carried out as you planned at all. Simply put, doing your will on your own can have big consequences.

Consider the Estate of George Zeevering. Last fall, a Pennsylvania appellate court was evaluating an unclear DIY will. Since the testator had not worked with a lawyer to generate the document, which was incomplete, it was difficult to determine the true intentions of Mr. Zeevering. In one aspect of the case, property had already been titled in the names of a son and a decedent as joint tenants. Mr. Zeevering stated that “the failure of this will to provide any distribution” to his daughters was done on purpose.

The case got sticky when the residuary and residuary estate totaled over $200,000 after debt payments were made. There was no provision within the DIY will for what should happen to those assets. In the end, the court determined that when a will doesn’t provide for the disposal of an entire estate and fails to include a residuary clause, the residuary estate must be divided under intestacy laws.

This case is but one example of where estate planning on your own can go wrong. Although it may not have been Mr. Zeevering’s intention to distribute the remainder of his estate under intestacy laws, that’s what happened. Despite his wishes, the law overrides an incomplete or improper will. While online and computer programs argue that wills and estate planning documents are easily done on your own, that minimizes the true complexity of document generation and estate laws.

Estate planning can be very complicated for an individual but it’s easily done under the guidance of an estate planning attorney. An added benefit of using a legal professional “in the know” is that he or she is clued into state and federal laws about estate planning, which always have the potential to change. An estate planning attorney is an excellent resource for all your questions as well as giving you the peace of mind that your estate will be carried out in the manner you wish. Cutting corners with a do it yourself tool is your choice, but do so at your own risk. If you want the assurance of totality and legality, contact an estate planning professional today.