Most people know in the back of their minds that it makes sense to save ahead of their retirement. However, a new study shows that short-term thinking, a lack of access to appropriate retirement programs and general inertial all contribute to the fact that many people do not engage in the estate planning process as soon as they should.
For many people, working longer and staying in the workforce past age 65 have been the common approaches towards addressing retirement strategies.
A new book from economist Richard Thaler explains why people so often fail to save for retirement and societal changes including the lack of employer managed retirement plans are involved as well. A defined contribution retirement savings plan on its own will fail to overcome behavioral barriers and lead to less than optimal outcomes when it comes to retirement savings.
Bearing in mind that most people have limited awareness regarding financial and retirement issues to begin with, without an outside professional to help them guide through the process they are more likely to ignore the option overall and fail to engage in retirement planning until it is too late to make that much of a difference in their bottom line. The same goes for estate planning.
Many people put it off and do not realize the power of estate planning until they wish to take steps to protect their loved ones or until they have a loved one who fails to do estate planning and then puts the entire family in the spotlight of dealing with the issues. Consulting with a knowledgeable New Jersey estate planning attorney is strongly recommended if you wish to talk about how your retirement and estate planning can work together.
Estate planning goes beyond just planning for taxes; you need to have specific goals for your estate plan, such as whether or not you want to encourage your children to be entrepreneurs and carry on a family business, how you may be able to support your grandchildren with regards to educational goals and whether or not there are specific charities you would like to support.
Answering these questions may be difficult because many people find it challenging to contemplate their own mortality. However, this can help you to frame your estate plan and even to practice your first meeting with an experienced estate planning attorney in New Jersey. It can also generate valuable discussion opportunities among family members who are in different generations.
If you find that it is difficult to find such discussions, you may schedule a consultation with an estate planning lawyer first and walk through the different ways that your goals can be articulated to your loved ones. One of the best ways to bring up your estate planning options to your loved ones is to talk about your legacy.
As a legacy, you will want to pass on your personal property and other assets to loved ones and other entities. But your legacy also helps to ensure that the philanthropic approach and general approach towards hard work or saving over the course of your life can be passed down to future generations. No matter the reason, these are all well worth discussing and considering in your estate planning’s goal setting stage.
The majority of estate plans are drafted by attorneys and this is primarily done because many people are not aware of their rights and responsibilities and may make mistakes in using online forms or do-it-yourself services. Many people also avoid the estate planning process because they do not want to contemplate their own chances of disability or death. This is a necessary component of approaching estate planning.
The good news is that you may have already started the process even if you are not aware of it. If you have designated beneficiaries on your life insurance policy or on your retirement accounts, you’ve already started the ball rolling with the estate planning process. Most people are under the impression that they simply shouldn’t engage in estate planning if they do not have an estate large enough to trigger the federal estate tax payment.
This is not true because there are a variety of different issues such as who will take over for you if you become incapacitated and unable to manage your financial or health care decisions, as well as the distribution of your personal property, that should be incorporated in an estate plan regardless of the value of the various assets you own. Talking to an attorney allows you to formalize your goals and to learn more about the ways that you may have overlooked potential estate planning issues.
Everyone can benefit from the services provided by an experienced estate planning attorney, because even without having significant assets or millions of dollars that would trigger the federal estate tax payment, you can still learn more about how to protect your family and your loved ones if something were to happen to you.
If you are thinking ahead about how you can support your minor children, you need to consider more than just the money.
Do you know what would happen to your minor children if you were to pass away unexpectedly? This is a difficult topic to think about, but it is also a crucial estate planning decision that is well worth making. The answer may seem obvious, depending on your individual situation.
If you and your partner were both to pass away, then the juvenile courts or domestic relations courts will get involved if you do not name a guardian for the minor child. However, if only one parent is lost, then the surviving parent would simply assume custody.
If the surviving parent is unfit, estranged or otherwise uninvolved, the answer could be more complex and it may require the appointment of a guardian on your child’s behalf. No matter what you choose, it is well worth having a conversation with an estate planning lawyer, who can walk you through various options available to you and help you find the right solution for your needs.
It might seem like you’re still just beginning the fourth quarter but it is still a good opportunity to consider your 2017 tax return. Wanting to get ahead over the fall can make things easier for you after the busy holidays. You may even be able to make your New Year a happier one with a reduced tax burden or a larger refund.
Looking ahead to 2018, businesses and individuals need to be aware of the potential for late tax legislation and prepare for any of the responsibilities and requirements that could come with tax reform being a major priority for the current presidential administration. Tax planning opportunity should always be discussed with your team of advisors including your financial professional and your estate planning lawyer. Delaying income till 2018 and accelerating your deductions this year is one of the best ways to minimize your 2017 tax bill. This is particularly true if tax reform causes tax rates to go down in the next year.
Accelerating your deductions into 2017 and pushing income into 2018 could lead to a permanent tax benefit if the tax rates are indeed lowered.
You may also be able to request, for example, getting your year-end bonus later if it is standard practice at your company. If you are a freelance employee, you could also postpone billing. By doing so you may be able to claim larger credits, deductions and tax breaks for 2017 that are phased out over varying levels of adjusted gross income. This could include higher education tax credits, deductions for student loans interest and child tax credits. Some individuals may find that it is better to accelerate income into 2017 and this should be discussed directly with your financial professional.
Last week I was privileged to present at a National Symposium in Los Angeles as part of WealthCounsel & ElderCounsel, which is an elite network of Estate Planning and Elder Law practitioners from across the country. Needless to say, it was a humbling experience to be considered an expert on something amongst a group of my colleagues and peers.
But it didn’t take long for my head to shrink back down to normal size, because the very next day, upon returning from California, I was tested for my yellow belt in Tae Kwon Do (for those that don’t know – this is only 1 step “up” from being a beginner). Suddenly instead of being the expert in the front of the room, I was now the novice, this time being judged by the experts. Also a humbling experience.
The point is, you can easily be an expert in one thing and a novice in another. When I need instruction on my forms & self-defense skills, I turn to the Masters. When it comes to estate planning, if you are not an expert, you should seek the advice of one. You ‘don’t know’ what you ‘don’t know’.
If you would like to learn more about the things you may not know regarding estate planning, please consider joining us for our free workshop coming up on Thursday, Oct. 26th at 10am in our In Office Classroom. You can email us at Seminars@LawEsq.net to RSVP or request more details.
We hope you can join us, but if not, you can also use this link below to schedule a brief call. And don’t forget to check out this past week’s articles.
If you find yourself overwhelmed and with some anxiety after receiving a large inheritance, you’re not alone. This can be a stressful situation for many people because the influx in assets could be the biggest sum of money that they’ve ever had to be individually responsible for. There are some things you must consider in order to put those assets to work as effectively as possible.
The first is to set aside a cash cushion for emergencies. In addition, you’ll also want to think about the benefits of estate planning. There’s a good chance that the inheritance you just received is due at least in portion to well-prepared estate planning and now is a great time to ensure that these assets continue on if something were to happen to you before these assets can be used.
If you have not yet put together a trust or a will, now is the appropriate time to do so. If you already do have estate planning, receiving a large inheritance should encourage you to review these materials with a fine-tooth comb to ensure that you have articulated what will happen to these assets if you were to suddenly pass away. You may wish to schedule a consultation with an estate planning attorney to discuss things such as guardianship, wills versus trust, maintaining separate property and powers of attorney. Having the insight provided by an experienced lawyer can help you to figure out the next steps that you should take to protect yourself as well as to make the most of the inheritance you have just received.
The tax code reform framework on the table in DC does have some important ramifications for art related businesses and art collectors. The new nine-page proposal promises bigger paychecks, more jobs and a more fair tax system; however, it proposes eliminating many of the itemized deductions and lobbying groups have already become involved.
It would lower the highest individual income tax rate to 35% from where it currently sits at 39.6%. This could have ramifications for how art collectors approach their estate planning. As of right now, collectors who have taxable estates must plan to address the estate tax on their art which is an illiquid asset. Elimination of the estate tax could alter this dynamic and motivate individuals to reconsider where will their artwork go after they pass away. The tax reform proposal, however, does not address how the tax code will manage inherited assets that have appreciated in value.
Under current law, a child who inherits something that has grown in value since the time it was purchased, would be responsible for paying a stepped-up basis of the current value, such that capital gains taxes are levied on the profit from a higher basis. The proposal also does not address whether tax rates for capital gains on art would be maintained. Taxpayers may opt to categorize the profit from selling a piece of art as ordinary income or capital gains. The highest income tax bracket currently sits at nearly 40% versus the capital gains tax of 28%.
The right lawyer can help you if you need assistance with your estate planning for an art collection.
As you tackle the subject of estate planning, you may have questions about what happens to excess money if you have already considered all the needs of your unique loved ones. After you have taken the necessary steps to minimize taxes and maximize the value of the assets you’re passing on to your loved ones, you will also want to contemplate what will happen to the remaining assets.
Giving things away to charity is a worthwhile philanthropic goal and one that should be considered carefully with the help of a knowledgeable estate planning attorney. The manner in which you pass on assets to charities requires careful consideration of the intersection of your philanthropic goals and tax issues. By choosing to pass on certain assets to charities instead of others, you may maximize your tax benefits while also ensuring that the charity receives as much as possible of the assets you have carved out and set aside in your estate plan.
Your community may play an important role in your individual life and you can use your estate planning documents to further articulate what you want your legacy to be after you have passed away. Scheduling a consultation with an experienced estate planning attorney in your area allows you to walk through the various opportunities available to you and select one that is in line with your individual and community based goals.
After you’ve put together your ancillary documents, your power of attorney, your trusts and your will, you might assume that you’re prepared for anything. While having a comprehensively prepared estate plan is a crucial first step, you need to ensure that you finalize this process of protecting your interests. You need to ensure that all relevant team members are aware of the role they play and their responsibility. You should certainly advise those closest to you and your trusted professionals such as your CPA or your estate planning lawyer about the plan you have in place.
Depending on the relationship you maintain with the beneficiaries and their age, you may want to provide additional details and copies of associated documents. But it is always a good idea to provide directions, detailing the initial steps that should be taken after you pass away. After this first conversation, you may want to create a blueprint of critical information for the individual who will organize your affairs such as:
- A list of important people to contact.
- Your personal balance sheets.
- A list of contact details for your estate beneficiaries.
- Copies of retirement asset, annuity and life insurance policy beneficiary designations.
- Individual instructions regarding your children, your business affairs and your funeral and burial desires.
- A digital asset inventory.
All of these steps can help to clarify things for your loved ones and make things easier if you were to suddenly and unexpectedly pass away.
The right lawyer is a big asset when planning your estate- consider scheduling a meeting now to learn more.
It makes sense that any digital assets that contain money or something of value should be considered in your digital estate plan. However, with a growing number of accounts and assets online these days, it’s all too easy to downplay digital assets. In addition to your tangible assets, the sentimental value of and the potential financial value associated with your digital assets makes them well worth including.
A new study out of Australia found that people are most likely to own emails, banking records and social media accounts but they may also have domain names, online businesses, bitcoins, iTunes accounts and medical records online that should be incorporated into a comprehensive digital estate plan.
Online service providers will have different rules and strategies associated with how to deal with the deceased user’s account and will typically close them automatically after an individual has passed away. This may not be in your best interests or something that you desire, which makes it all the more important to review these policies now and have a stipulated plan for addressing them. Consulting with an estate planning attorney can help to clarify the most important issues involved in your digital estate and how you should approach the subject overall.
Don’t forget about how all your documents should work together- for example, your beneficiaries on your retirement policies need to be updated because this will be looked at instead of what you list on your will. In addition to reviewing your will on a minimum of an annual basis, you’ll also want to take a look at your beneficiary forms requested by any of your bank, brokerage, retirement, and life insurance accounts to make sure they reflect what you’ve got in your plan.
Parents may try their best to treat children equally. However, a new research study shows that they may have a favorite and it will play out in multiple ways. The Journal of Consumer Psychology shows what may parents choose which child to give a $25 bond gift to. Fathers were most likely to choose their sons and a majority of mothers selected their daughters.
Scientists say that this is because parents are more likely to identify significantly with their same gender child. Parents spend more money on a child of the same sex as themselves. This is true when it comes to savings bonds, cash allowances, back to school supplies and estate planning.
Research out of Rutgers Business School, State University of New York Oneonta and the University of Minnesota’s Carlson School of Management found that consumers tend to favor investing in children who are the same sex as them because they are more likely to identify with those children. Have you thought about which of your children would benefit from receiving your assets and the most appropriate way to transfer these on? To minimize tax consequences and to ensure everyone is cared for? Consult with an estate planning attorney today.
There are ten key questions that you should consider in the process of thinking about giving away money as part of your estate.
Consulting with a knowledgeable estate planning lawyer can help you get half the way towards protecting your interests and ensuring that you’ve considered all potential outcomes. These questions include:
- Have you already appointed someone to make medical decisions on your behalf and have you told them what you would want?
- Can you afford to give away your money now? You may be able to take advantage of the annual gift tax exclusion rather than waiting till you pass away.
- Do you have the appropriate beneficiary listed on your life insurance and retirement account?
- Do you have a will?
- Are you worrying about federal estate taxes unnecessarily?
- Should you maintain your Roth IRA for your heirs?
- Does your state impose an inheritance or estate tax?
- Are the charities you support running properly?
- Have you talked to your adult children about your intentions with your estate?
- Could you donate appreciated assets to save even more on your taxes?
These are just a sampling of the questions that you should walk through before scheduling a consultation with a knowledgeable estate planning attorney.
The Treasury Department is currently evaluating a proposed regulation that could change how wealthy business owners are eligible to pass on businesses to their children or other heirs. individuals are currently able to discount valuations of stakes in a family owned business to minimize the taxes due upon transfer.
A 40% levy could be applied to estate values greater than $5.49 million. The proposed rule under section 2704 of the Tax Code could eliminate these business valuation discounts and therefore, a critical tax planning strategy that has been referenced by many people who own businesses and are extremely wealthy. According to Treasury Secretary, the IRS and the Treasury believe that these regulations should be completely withdrawn and believe that the rule is unworkable.
The primary aim under the previous presidential administration that created the rule was to prevent people who had a great deal of wealth to put marketable securities into their company much like a limited partnership and then transfer those securities at a discounted valuation. The IRS interpreted this as gaming the systems. As a business owner, you’ll likely have concerns about protecting not just your individual interests, but your business interests, too. Having an estate and transition plan for both is important.
If you have further questions about how to protect your business assets and to do so legally, contact a New Jersey estate planning lawyer today.
Most estate planning conversations with a lawyer have to do with the trusts that are set up upon each individual’s death, their attitudes or self-sustaining care towards the end of the life and the distribution of their assets.
However, you should never neglect the softer side of your estate planning including your care of your pets, and other important topics like your attitude towards getting care in a facility or in your home. Some people may choose to stay at home towards the end of their life and would be uncomfortable placed in a hospital.
One of the crucial aspects of approaching estate planning at this level has to do with naming someone as a trustee, guardian, executor or establishment of power of attorney is a statement that you trust that individual to do what is best in various situations. Such a designated agent may struggle to make these decisions if you have not had a comprehensive conversation about what you intend to accomplish towards the end of your life and certain things that you do and do not want to be taken into consideration should problems emerge.
Consulting with an experienced estate planning attorney can open your eyes to the various issues often encountered by people at this level of estate planning. Both the procedural and the softer side of your needs need to be evaluated.
There are two major types of durable powers of attorney that can be essential for estate planning purposes. They should always be executed as part of a comprehensive estate plan that has put together by a knowledgeable attorney.
First of all, you may use a durable power of attorney for asset management which gives an empowered agent the authority to make financial and legal decisions on behalf of the principal.
You might instead choose to or in conjunction with also use a durable power of attorney for health care. This gives the designated agent the opportunity to make healthcare decisions on behalf of the principal. It is necessary to have a conversation with your designated agents about the importance of these documents and that person’s responsibility to act in your stead, if necessary.
Many people may opt to select the same agent for both documents but you can choose different people if you wish. These legal documents should be prepared well in advance before the principal individual starts facing challenges with various areas of their life. Having a conversation with the potential agents can also ensure that the agent is indeed interested in serving in such a capacity in a durable power of attorney. This can give you peace of mind for you and your family because of the protection provided for you, your heirs and the assets that you have worked so hard to develop and save.
Leaving behind sizeable cash assets, gifting or transferring this type of wealth to family members is part of your estate plan and could be subjective to significant taxes if you are not careful. However, if you transfer real estate investments of similar value, this could lead to significant discounts.
Real estate investments in which the investor transfers less than 50% of the assets means that the lack of voting rights or control can be considered when identifying the value for tax purposes.
This could lead to lower taxes because of discounts on the overall value. When evaluating potential transfers of assets, it is necessary to find an accounting professional in addition to an experienced estate planning attorney who can tell you more about how the different decisions you make will influence your future and the future of those you leave the assets to. The possibilities for discounts greater than what you might have expected to pay, identifying the best assets to transfer and the overall potential tax liability can all be discussed directly with professionals.
Even if you are a 100% owner of a property, you could be eligible to receive a discount if you give less than a 50% interest to any one individual. Doing this with your children maybe one common method to help minimize the potential taxes. You should never attempt to develop these strategies on your own and should instead consult with a knowledgeable estate planning and financial professional to assist you with a meaningful set of tactics.
Financial and estate planning advice is intended to apply to everyone but the strategies and tactics used maybe differentiated based on the gender and age of the person asking the questions.
The reality is that all statistics point to women longer than men and facing more significant issues when it comes to ensuring that the assets that they have saved will last throughout their expected lifetime, especially with the potential for a nursing home stay. Some of the challenges facing women also include earning less over the course of their careers largely from taking time off to be caregivers to elderly relatives or children. Furthermore, the basic gender pay gap puts women at a disadvantage for being able to save as much as their male counterparts.
The Bureau of Labor Statistics does show some promising information from 2015 that the gender pay gap is narrowing, however, women still only earn 83% of what men earn. This can translate to long-term challenges such as being able to save less for retirement, lesser social security benefits, and smaller pensions overall.
Women also face the additional problem of being more likely to live alone in their older years due to death or divorce of a spouse or by choice. Therefore, it is critical that women take individual responsibility for their financial decisions and crafting an estate plan that works for them specifically. Financial advisors, estate planning attorneys, and other experienced professionals should be leveraged in order to accomplish the necessary goals.
If the joint owner on a piece of property passes away, other individual owners may have questions about removing their name and whether or not such property goes through probate. Joint ownership property provides rights of survivorship benefits, meaning that the property does not need to go through the probate process.
One of the major advantages of this type of ownership is that the property belongs to the surviving joint owners upon death and the ownership will transfer to the surviving joint owner or owners regardless of the estate plan put in place by the individual who passed away. At the moment of death, the surviving joint owner gets the decedent’s interest in the property immediately but the county involved does need to be notified of the death in order to have the title cleared.
You do this by recording what is known as a surviving joint tenant affidavit and an experienced estate administration attorney can help you with this process. The affidavit is extremely technical and should include critical information so that it successfully removes the decedent’s name and clears the title.
The preparation can be very complicated and should be left to an experienced attorney. Although sample forms may be obtained online to get a general idea of the basic information included in this process, it is recommended that you schedule a consultation with a knowledgeable estate planning attorney who can help you walk you through the official legal steps.