Study Finds Younger Workers Are Less Prepared for Retirement

A recent research study indicates that generation X does not have the same amount of retirement preparedness as baby boomers. This is especially concerning given that Gen X members will have to rely more on their own savings when it comes to retirement security overall.

The Employee Benefit Research Institute found that Gen X families were less likely to have defined benefit plans than baby boomer families did at the same ages. Furthermore, Gen X families were less likely to own a home which was a potential source of retirement security for many.

The study looked at the millennial generation and how it compares to Gen X at a similar point in their lives. Creating a comprehensive retirement plan and incorporating this as part of your evaluation of your estate plan is very important for protecting your interests.

Many people think primarily about reaching a target number when it comes to retirement planning, but this could also influence the assets that you leave behind to your loved ones. It is therefore important to consider the big picture and the possibility of outside and unexpected costs, such as those associated with long term care. Working directly with an estate planning lawyer will give you the opportunity to evaluate all of these key issues and determine the most appropriate way forward.

Who Depends on Your Income?

One of the most important questions to be considered as you broach the estate planning process is to evaluate those people who are reliant on your income. If you are currently the primary breadwinner for your family, your sudden disability or death could present significant problems to your loved ones.

Thinking about these possibilities and taking proactive steps to protect your loved ones can go a long way towards enabling them to make quick decisions and to care for these important aspects after you pass away.

With your income gone life could change in an instant for your dependents with no solution in place. In addition to constructing a comprehensive estate plan that passes on your assets to your loved ones, you also need to think about protecting against loss of life.

This is typically done using life insurance which allows your chosen beneficiaries to receive these assets outside of the probate process and much more easily. This can provide for immediate financial support for your family members so that they can make the decisions most important to them. With so many different things to think about in the wake of your loss, you can make things easier for your family members by contemplating the creation of an estate plan that incorporates additional support through the vehicle of life insurance.

What are the Most Common Probate Problems?

When you pass away, there is a good chance that at least part of your estate will enter probate in your state. With estate planning, you can remove as many assets from your probate estate as possible, but only when you have carefully considered all assets and liabilities and followed through with retitling things into the name of trusts, among other strategies.

But this might prompt you to ask, why avoid probate in the first place? The truth is that any number of problems can pop up as your loved ones attempt to navigate the probate process, all of which can take time, energy, and money from your family members during time when they are already coping with grief. This is why most people who recognize the challenges of probate will sit down with an estate planning lawyer to walk through their options for making things easier for loved ones.

While probate problems can be very specific to your assets and your own estate, here are some of the most common ones that you might want to prevent with proper planning:

  • No one wants to be the executor, or loved ones argue about who will serve in this role, leading to additional family conflict
  • Dispute over the value of the estate or the executor being unable to find certain assets
  • Division of asset concerns where people receive equal shares of something and are not able to agree on what to do with that asset
  • Someone challenges the validity of the will entirely, slowing down probate and possibly increasing conflict between beneficiaries

Being proactive about these concerns can help you create an estate plan that addresses these issues and makes it easier for your loved ones to move through the probate process.

How Does a New Owner Get Access to Real Estate with Transfer on Death?

Someone who inherits real estate through a transfer on death deed should find it relatively simple to have ownership transferred to them after the original owner passes away.

A short sworn statement usually needs to be filed by the transfer on death beneficiary in addition to submitting a death certificate copy for the public land record office. This indicates that the property changed hands, the time that it changed hands and the new owner.

The affidavit typically needs to include the property, the date of the previous owner’s death and the name of the new owner. You will want to check directly with lawyers in your area to determine whether there are any other requirements because affidavits for different states can be slightly different. If you wish to explore other options for passing your assets outside of a transfer on death deed, one of the best ways to do this is to look through all of the strategies available to you by working with an estate planning lawyer.

An estate planning attorney is a knowledgeable partner in the estate planning process who can help you with every aspect of your plan from beginning to end and help you to understand the options available to you while you are still alive to create comprehensive strategies for those you love.

Are You Setup for Retirement Failure or Success?

If the past two years have handed down several lessons, at least one of them is that it helps to overprepare in the face of possible uncertainty. retirement-planning-estate-couple-together

Planning ahead for retirement means proactively thinking about the kind of lifestyle you want to achieve once you stop working full time, but you can’t afford to neglect the important issues around taxes.

If the vast majority of your retirement savings are in 401(k)s or IRAs, you might have a significant problem when it comes to taxes in the future. There is a good possibility in future years that when the Tax Cuts and Jobs Act of 2017 expires after 2025, your tax liability situation could be changed. You also need to think about the possible tax impacts of what might happen if you pass away first and your spouse inherits your tax deferred accounts.

There can also be significant tax implications for children who might need to withdraw money sooner than you intended from these tax deferred accounts. Having a comprehensive estate planning strategy that encompasses all of these key issues and prepares you for what to expect can be extremely important for your next steps. Set up a time to speak with an experienced lawyer today to craft a custom retirement and estate plan that work together and support you well into the future.

Will You Owe Estate Taxes?

Estate taxes can be a complicated subject especially as they are often a discussion in public policy. Approximately 0.2% of US adults who passed away in recent years owed estate taxes. In 2022, the estate tax is only triggered by those people who have an estate with assets in excess of $12.06 million.

Estate taxes will be charged on the fair market value of a person’s assets when they pass away if their estate is larger than this amount. This is why many people take an opportunity to consider all of their different assets by creating an inventory list and discussing their planning options with an estate planning lawyer.

For calculating estate taxes, this begins with totaling the fair market value of assets like insurance, securities, real estate, annuities and business interests to determine the gross estate. Not all assets are included in a gross estate, such as life insurance policy proceeds so make sure to subtract those. There are also allowable deductions for items excluded from estate taxes, such as funeral expenses, state administration taxes, property that passes directly to surviving spouses and more.

Then consider the value of lifetime taxable gifts to your taxable estate beginning with any gifts made in 1977 and subtract the estate tax base. As you can see, it can be very complicated to figure out if your estate qualifies for estate taxes and how much it could really impact the value of everything inside. Even if you do not have enough assets inside your estate to trigger the estate tax, it can be valuable to work with a knowledgeable estate planning attorney to create a customized plan.

Waiting To Retire Could Be Better for Your Brain

New research from the Max Planck Institute for Demographic Research indicates that putting off retirement until a later age could slow down your rate of cognitive decline.

The research found that staying in your full time role until at least age 67 can help to protect you against cognitive impairment such as that caused by Alzheimer’s. Researchers looked at data pulled from the United States from more than 20,000

Americans between the ages of 55 and 75. The study indicates that there may be unintended consequences but positive ones of postponed retirement. You might also be able to pad your retirement accounts and develop passive income strains by staying in the labor market longer than you intended.

These important considerations should all be woven into the strategic plan for your estate plan and your retirement plan. The support of an experienced and dedicated lawyer can help you to identify your next steps and how to use your goal and legacy plans to accomplish your individual strategies and plans.

The support of an experienced lawyer is instrumental in helping you answer these important questions and to craft a custom holistic estate plan.

Everyone Should Redo Their Financial Plan

The spread of the Omicron variant of Covid-19 is prompting many financial professionals to reach out to their clients to update those clients’ financial plans. It is very important for everyone to identify gaps in their current financial plan and to develop a strategy for the oncoming uncertainty.

It is a great time to think about your goals and life priorities and ensure that you have the documents and financial strategies in place to help you achieve them. Many people have paused creating or updating their plans because there is so much swirling uncertainty as it relates to how the Omicron variant or future strains of the virus will impact the economy.

However, it is very important to keep your plan updated on a regular basis because of this uncertainty so that you don’t leave yourself or your family members in unnecessary difficult situations. Having a conversation with an experienced and dedicated estate planning lawyer is one important step in this process and the beginning of a new year is a great opportunity to reflect back and ensure that your personal goals will be accomplished with the creation or updating of this current plan.

Do not hesitate to reach out to our New Jersey estate planning law office to learn more about how to analyze your existing estate plans and to adapt them for the future. Since no one knows what the future holds, you can ease your concerns about making things simple for your loved ones with the creation of an estate plan aligned with your needs.

What Is a Dynasty Trust?

If you are looking to transfer wealth through multiple generations you might consider using a tool known as a dynasty trust. This is a strategy to transfer wealth from one generation to another without the assets being negatively impacted by GST, estate or gift taxes.

These tax benefits apply so long as the assets stay in the trust and comply with relevant state laws. Furthermore, a dynasty trust offers other benefits making it a popular choice for those doing their estate planning. Primarily, it can protect assets placed inside the trust from divorcing spouses or creditors.

Other strategies available to accomplish similar goals include the use of an irrevocable life insurance trust which then transfers the assets free of the trust upon death. For these more advanced estate planning strategies you’ll want to partner with an experienced and knowledgeable estate planning lawyer.

The support of an attorney can be instrumental in helping you to accomplish your personal goals and assisting you with all aspects of your overall planning. Schedule a consultation today with an estate planning lawyer to learn a bit more about how this applies to you.      

Which States Don’t Charge a State Income Tax?

As you get older and plan ahead for retirement, it’s important to think about all the financial implications of the decisions that you make. For example, where will you live? This is important not just to choose how to be around family or the opportunities available with part time jobs for retirees in the area.

One of the biggest considerations for many people approaching retirement is whether or not the state taxes income at all. There are 9 states that have no income tax. In 2021 they are Wyoming, Washington, Texas, Tennessee, South Dakota, New Hampshire, Nevada, Florida and Alaska. There are also 28 other states around the country that have exemptions or credits to help taxpayers avoid paying taxes on social security at the state level.

They include Alabama, Arizona, Arkansas, California, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Mississippi, Michigan, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia, Wisconsin, and Washington DC. When making a retirement plan don’t forget to include the benefits of working directly with an estate planning lawyer.

What Is the Purpose of a Charitable Trust?

In discussing and researching options for your own estate planning, you may come across multiple options and strategies that can help you accomplish your goals. This can be further cemented by talking with a knowledgeable estate planning lawyer about your next steps, and you might hear the term charitable trust as part of this planning process.

At its most basic level, a charitable trust holds assets inside and distributes them to charities. How the assets will be managed and invest will depend on what you have specified in the trust. You can also use the terms of the trust to determine how it will make donations. Tax advantages are available to those creating a charitable trust but other forms of trust management may be more appropriate for you based on the individual goals you intend to accomplish.

One of the biggest reasons to use a charitable trust is to establish a long term plan for charitable giving. When you establish a charitable trust for these purposes, you can continue to make gifts over a long period. The trust is completely separate from you when established for charity. Any assets held inside the trust are owned by the trust and the trust requires management and pays taxes just as any other legally recognized entity would. To ensure this is the right fit for your estate planning strategy, schedule a time to speak with a lawyer.

 

Study Show Few Employees in America Are Confident in Their Retirement

Do you have a solid retirement or estate plan? If not, you could be exposed to unnecessary challenges in the future or put your loved ones in a difficult situation.

Only 24% of US workers reported that they were very confident they’ll be able to retire in the lifestyle they want, according to a new study from the Trans America Center for Retirement Studies.

Demographic segments also have multiple implications for how people feel about retirement. In total, just under 35% of workers who have a household income of over $100,000, for example, are very confident about their future retirement, but that number drops all the way down to 14% for household incomes between $50,000 and $99,999.

Urban workers are more likely than rural and suburban workers to feel confident in their retirement abilities and those with full time positions are more confident that they’ll be able to retire at the age and lifestyle level they want. It becomes extremely important to consult with a knowledgeable estate planning lawyer about your individual goals and how they connect to your retirement strategy.

The support of a lawyer is instrumental in giving you the help to navigate through this process and increase your chances of a comprehensive planning strategy that adopts your retirement and estate planning goals.

 

What Is Succession Planning with GRATs?

The gap between what your current business is worth during the process of completing your estate and succession planning and what it could be worth in the future when you pass away should be considered as part of your overall planning process.

Many people choose to address this financial gap using a tool known as an irrevocable life insurance trust. When an irrevocable life insurance trust is structured correctly the benefits in that insurance policy do not pass through probate and can be available to your beneficiaries immediately. This can provide valuable cash reserves for the payment of estate taxes or other concerns.

You might also wish to retain a source of income for yourself while passing your business assets onto your children, and you might be able to use a tool known as a grantor retained annuity trust to accomplish this.

If assets inside grow during the course of the trust, the appreciation is not subject to estate taxes if you’ve done your planning properly. This can be a very beneficial and powerful tool for passing on a business that is growing rapidly. As with all things related to business succession planning and estate planning it is important to have the support of an experienced lawyer to guide you through the process. Schedule a consultation with a dedicated lawyer today to learn more.

 

Signs of Alzheimers in Loved Ones

If you notice that a loved one has started to show signs of dementia, this is important from a care perspective a legal perspective. The sooner you can get them necessary help, the better you’ll understand treatment options as well as some of the things you can expect if the disease progresses.

Likewise, there are key planning steps that must be taken in the early stages of Alzheimers to protect that loved one’s needs and wishes. If the disease progresses and they are no longer able to speak up for themselves or be seen as legally competent to make their own decisions, this can create a cluster of legal issues around guardianship and their estate planning.

Although there are so many things to think about when you realize that a loved one has dementia, don’t let the planning fall by the wayside. If you suspect that you’ve seen signs of early dementia, this detection process is important because you can get a diagnosis and begin exploring treatment options sooner rather than later.

Here are some of the key symptoms that your family member might have dementia. As always, get these reviewed by a medical professional to confirm any diagnosis:

  • Memory loss that makes you concerned about their safety or is seen as a disruption to their everyday life
  • Your loved one has difficulty completing basic tasks or suffers from forgetting things often
  • Trouble understanding relationships
  • Confusion related to place or time

If your loved one is beginning to experience these issues, you want to take them seriously and decide to move forward with getting a healthcare professional’s insight as soon as possible.

If you need assistance with planning after someone in your family has been diagnosed with dementia, time is of the essence. Contact a dedicated estate planning lawyer now to learn more.

When Should You Consider Using a Charitable Lead Annuity Trust?

If you experience an income or financial surge this year like a bonus, a sale of crypto currency, or appreciated option exercises, you may wish to use a charitable lead annuity trust strategy to respond to it. There are three primary situations that should trigger you to think about a grantor CLAT.

They include:

  • You have a very high tax bracket due to your income
  • A low interest rate environment exists
  • You have a long period of time to allow your money to grow without touching it

Whether you’re paying significant taxes on crypto farming, receiving RSUs taxed as ordinary income or exercised start up equity that has appreciated highly, there are tax benefits you can tap into through a CLAT. The first is the ability to create return arbitrage and second is to shift your current income into long term capital gains.

The major downside of using a grantor CLAT is that you will not have immediate access to the capital. You will need to plan for the capital to set aside for at least 20 years and you do remain responsible for the income inside the trust in that interim period.

To determine whether or not a grantor CLAT is the most appropriate tool for you to create in 2021 or early 2022, you should schedule a consultation with an experienced and knowledgeable lawyer to discuss your next steps.

 

New Study Shows Reverse Mortgages Could Improve Wealth and Reduce Risk for Retirees

Retirees have many important considerations when it comes to elder law and their estate planning. One financial option that is advertised to many retirees is a reverse mortgage.

A new study completed by the Finance of America Reverse publNew Study Shows Reverse Mortgages Could Improve Wealth and Reduce Risk for Retireesished in the Journal of Financial Planning found that reverse mortgages when used properly can help appropriately mitigate risks for millions of retirees when they are properly educated about how to use them. The biggest benefit for reverse mortgages, the study found, applied to those people with $100,000 to $1.5 million in investable assets.

A reverse mortgage with a coordinated withdrawal strategy could help decrease the possibility for retirees to run out of money while also improving their gains over time. There are many important considerations for those people who are thinking about using reverse mortgages or other strategies in their older years.

A reverse mortgage is not the right choice for everybody, however. It depends on your specific situation and your needs, which should always be discussed with your financial team. 

You must think about your retirement drawdown strategy, other assets you have access to, and what you hope to pass on to your loved ones. In all of these circumstances, the support of an experienced team of financial professionals including an estate planning lawyer can be instrumental in supporting you.

In Which States Do People Pay the Highest Estate Taxes?

Estate taxes don’t apply for the vast majority of estates in the United States, however, there are 17 locations with their own inheritance and estate taxes. A report from the Internal Revenue Service reveals tax data from the year 2020 showing that over 1200 taxpayers ended up owing estate taxes to the tune of $9.3 billion after state death tax deductions and allowable deductions.

Verifying that you have a taxable estate should prompt you to contact an experienced and knowledgeable estate planning lawyer. There are many different strategies that you can use to minimize your estate planning and tax obligations at the time that you pass away, but it does require advance work with the support of an experienced and knowledgeable lawyer.

New Jersey came in at number 11 on the top 15 list with 92 people who had gross estates of over $2 billion total and a net estate tax of $142.8 million. If you haven’t yet taken advantage of estate planning strategies, schedule a consultation with a lawyer now.

With many possible changes on the horizon with federal estate tax rules and limits, you’ll want to be in touch with a legal team who can keep you informed about these issues and help you navigate many any required changes to your plan. With so many aspects to think about, a lawyer’s insight can help cut through some of the confusion and allow you to create a custom plan for your family’s needs.

 

Does My Executor Need to Keep a Detailed Log of Assets?

Who you choose to serve as an executor and the information at preplanning you do for them can make a big difference on how easy it is for them to handle probate.

Executors, also known as personal representatives, have important responsibilities that all must be handled with care. The first of these is to begin by gathering information. It is very important for a personal representative or an executor to keep a detailed log of all assets. This is often overlooked but a clearly detailed record of every item or asset that is to be distributed is especially important if there is no will in place.

This also ensures that nothing is unaccounted for or misplaced. Representatives, creditors, attorneys and even beneficiaries can ask for information about what was included in the estate so keeping a thorough log can help to prevent any issues later on in the process.

Before distributing anything, make sure that you sit down and complete this detailed log, you will thank yourself later when it becomes much easier for you to reflect back on this information and show how you have clearly approached each part of the process. The support of an experienced attorney is instrumental in guiding you through these phases

 

What is Premature Asset Division in Probate?

An executor or personal representative is responsible for handling many aspects of probate, including the distribution of assets once other administration issues have been managed. However, prematurely passing on these assets to beneficiaries can come with consequences.

It might seem easier or even a good way to make beneficiaries happy by making those distributions right away, this can be illegal and can expose you to personal liability. It’s much better to make a comprehensive list of all the assets and then hold them until probate can be completed.

At the early stages of probate, you don’t know about all the possible legal creditors, either. This means someone could come forward with a legitimate claim once you’ve already liquidated or given an asset to someone else. This does not delete the creditor’s right to recover, which can create a very complex situation.  You don’t want to have to go back to that family member and ask for the item back.

Another reason to wait to make any transfers is that not all assets are probate assets. Some technically do not fall under the guidance of the will, such as retirement accounts or those placed in trusts. If those accidentally get lumped in with probate assets, this could create unnecessary confusion as well as personal liability.

If you’re newly appointed as an executor, even if the deceased person left great instructions for you, you might still want to hire an experienced probate lawyer to assist you with the many tasks required to close out probate. Even if you have a decent handle on all that is involved, it’s helpful to know that you’re on track and to feel confidence about the order in which you accomplish things.

Haven’t yet created your own estate? Contact an estate planning lawyer now to learn more about creating a personal plan.

Company Owners Need Individual and Business Estate Plans

Many sad stories about celebrities highlight the importance of estate planning. Many of them leave behind complex assets and high value items. Without estate planning, this leaves their loved ones coping with probate problems for months or even years.

A similar situation applies to those entrepreneurs who don’t look at their personal and professional estate planning as worthy of effort. Consider the estate of Tony Hsieh, Zappos CEO, who passed away suddenly in a fire at age 46. With an expected net worth in the hundreds of millions of dollars, his family was shocked to learn that he passed away without a personal estate plan.

It’s believed that over 60% of Americans don’t have an estate plan at all. Without a personal estate plan, your loved ones might struggle to receive the assets that you intended them to have. As a company owner, however, you can’t ignore the related challenges with your business.

Your business requires considerations and questions like:

  • What happens if I become disabled or unable to make decisions within the business for a period of time?
  • Are there any other owners or key employees who need to be included in the planning process?
  • What existing documents do we already have in place with a succession plan?
  • Do we have insurance policies in place on key employees to allow us to hire new help and weather the storm if they were to suddenly exit?
  • What does the future of my business look like?

Most business owners want to know how their company will expand and grow in the coming years. It’s equally as important to have the support of an experienced business succession lawyer to guide you through the process and help you figure out answers to the questions above.

If you need help defining what your succession plan is and the key people involved in that process, now is the right time to document and implement that plan.

Reach out to our office today to learn more about estate planning, business planning, and how to make sure these work together.