What Happens to a Beneficiary’s Share of the Estate If the Beneficiary Passes Away?

If parents create wills naming contingent beneficiaries as their two adult children, there is always the possibility that the adult children will pass away before the parents.

This can have implications for the contingent beneficiary’s share. Language of the created will impacts what happens with each beneficiary’s share. Some wills allow the surviving sibling to receive the entire estate with the remainder getting divided among any living children.

However, the more common strategy for accomplishing these planning goals is to use a per stirpes. This language in a will means that if a child passes away before the testator and this child has surviving descendants, that pre-deceased child’s share goes to the descendants.

If your assets are inside a trust or life insurance policy, then the naming of a contingent beneficiary ensures that there’s a plan to pass on those assets to someone else. Make sure you review your contingent beneficiaries and backup plans on a regular basis.

You can always discuss the specifics of your estate planning strategy directly with your lawyer to verify that this covers your intended goals and plans. If you don’t yet have a plan for what to do with your backup beneficiaries, an estate planning lawyer can give you the support you need.

Most Americans Today Have an Estate Plan That Is Outdated; is Yours?

When is the last time you really sat down and reviewed your estate plan? It’s probably been awhile. If anything has changed in your life since the last time you made this plan, now is a great time to review. Whether you’ve adopted, had grandchildren, had a change in marital status, or simply accumulated more possessions, you need a plan.

Most people have not updated their estate plan recently and may not have even considered some of the important questions about what would happen to them, their medical care, their children or their property if something happens to them. If you are unable to make decisions at a future point in time, you may need those estate planning documents to be in place for your family members to make important and quick decisions.

Many people get overwhelmed by estate planning or assume they don’t need it and these are big mistakes that could block you from getting the important benefits of the estate planning process. It’s a good idea to instead consult with a knowledgeable lawyer to discuss the opportunities available with estate planning. You can start by writing down what is most important to you and if you have any specific requests around what you want to happen to certain pieces of property.

Likewise, if you and your spouse can agree on who would be responsible for taking care of your minor children, it is vital to document this in at least a basic will. The support of a lawyer can go a long way for answering many of your most common questions and helping you to understand the next steps available to you. If you haven’t updated your plans in several years, it is now the perfect opportunity to schedule a consultation. If you’ve never created a plan at all, there is no time like the present. Reach out to a knowledgeable estate planning lawyer today to learn more.

 

How Does Location Affect Your Vacation Home Planning?

If you are holding title to a piece of real estate property that you intend to pass on to your loved ones and it’s in a different location, you’ll need to think carefully about how this location could impact your planning options. One of the best ways to approach this strategy overall is to schedule a consultation with an experienced and knowledgeable estate planning lawyer. Your estate planning lawyer can help you consider all of the different aspects of your planning concerns and craft an individualized plan that helps to accomplish your goals. Nj-vacation-home-estate-planning

You want to be careful if you hold title to a vacation home in a different state other than your primary home. If you own tangible property like a piece of real estate and what is known as ancillary estate or a second location, the executors of your will might have to open a second probate proceeding. You might think about placing that property inside an LLC or a trust which could help prevent having to open a second probate. 

There are many different strategies available to you when it comes to making a plan for your estate and for vacation homes but you need to start by considering the opportunities of working directly with an estate planning lawyer who is very knowledgeable about your concerns. The support of an attorney can help you avoid catastrophic mistakes that could make it more difficult for your loved ones to receive this property.

What is NJ Will Probate?

If you are a family member, beneficiary, or appointed executor, you might have questions about how that probate is handled when a loved one passes away. Understanding the NJ will probate process can make things easier for all the people mentioned above to understand what goes into this and some of the common pitfalls that can happen. NJ-last-will-and-testament

The one person who has the biggest responsibility in a NJ probate is the executor. This person has the job of probating an existing will, in which the existence of a will is used to determine validity of that legal document. The authenticity process begins when the will is submitted to the County Surrogate for the county in which the deceased person lived. An original copy of the will must be submitted for that process to work.

When the person who created the will streamlined their estate plan and when the executor is familiar with their role, probate will be much easier for beneficiaries. The executor also has the option of getting the help of a probate lawyer in NJ to help them with all the estate-related tasks.

An executor cannot start probating a will until ten days has passed from the decedent’s death. A certified copy of the death certificate, information about names and addresses of next of kin, and an original copy of that will should all be brought to court to start probate. Once received and approved, the executor receives their letters authorizing them to act in the capacity of executor.

The executor will eventually pass on remaining assets to beneficiaries, but has several important tasks before then, including notifying creditors about the estate and reviewing any claims submitted by them. After debts and taxes have been paid, the probate is concluded by distributing remaining assets to those named in the will or next of kin if no will is available.

Have you named an executor for your NJ estate yet? If not, now is the perfect time of year to create or updated your estate plans.

What Happens If My Spouse and I Are Retiring at Different Times?

It is very important to get on the same page as your spouse when you’re thinking about retirement and estate planning goals. This may be the only way for you to protect your interests and to avoid unfortunate conversations or challenges in the future.

Although most couples know that retirement is important and assume they are on the same page, research has shown that many of them are thinking about things differently. This can be very problematic when you only realize this as you get closer to retirement. In fact 34% of couples disagree on whether or not they are spenders or savers, and 8/10 couples anticipate and desire living a comfortable retirement life but nearly half of them disagree on the age that they will retire at. Have a conversation with your spouse about when you intend to retire.

This can occur for several different reasons, such as age differences or one person may not be ready to retire. It can be advantageous to accrue more substantial benefits to your social security and save more and can even get a trial run for retirement when one couple plans to retire first. Retirement is a difficult transition and you need to have open and honest conversations with your spouse about it as well as adjust any estate and retirement plans to ensure you have accounted for any differences in your strategies.

In these circumstances, you deserve to have a lawyer walk you through the process so you have a clarity on what you have to anticipate and can help you move forward effectively.

 

What Happens If My Power of Attorney Agent Just Doesn’t Act?

The selection of a power of attorney agent is an important one because this person is responsible for acting on your behalf and in your best interests, but what happens if the power of attorney agent doesn’t act at all? Sometimes an agent might be unable to handle decisions for you because they are sick themselves.

In other cases, they do not want to handle the decisions. If an agent does take the action, however, they have to act in your best interests and in line with the power of attorney for property that was drafted by you. It’s always a good idea to speak with your power of attorney agent when you begin to craft this document to make sure they clearly understand their responsibilities and what is expected of them.

This is also a good opportunity if your power of attorney agent to voice their concerns over disinterest in acting. It can be difficult to be named as someone else’s power of attorney agent when you’re unclear of this role or do not realize what it entails until you are appointed. At that point the agent is put in a difficult situation of trying to act in the best interests of their loved one.

Make sure that you schedule a time to speak with a dedicated estate planning lawyer to think carefully about who you should name as your power of attorney agent and to schedule a separate time with that agent to walk through the potential responsibilities and expectations.

 

Are We Facing a Long Term Care Crisis?

The cost of long term care is a top concern for plenty of retirees, but new research shows that we could be facing a potential crisis in the U.S. when it comes to providing it.

The oldest of the baby boomers will starting turning 80 in 2025, more people will need support for their healthcare concerns. Since most people have not planned for the possibility of long term care, this is likely to have the biggest impact on the adult children of those baby boomers.

Being a caregiver comes with many challenges. Most adult children have working lives and families of their own, and depending on their loved one’s caregiving requirements, this can be challenging. Most are not prepared and don’t have the time or the healthcare training needed to help with advanced situations. But family members are often a stopgap method of giving long term care support when a loved one cannot afford a nursing home yet.

Longevity has increased, but outside of Medicaid, there’s no real system in place to help people plan for and pay for long term care. Since it can be so expensive for a person to use assisted living, adult day care, or nursing home facilities, these costs can rack up quickly. For an older married couple, one person’s need for long term can drastically draw down retirement resources when it’s too late to continue contributing to them.

What happens if you don’t have a plan for your own long term care? Now is a good time to look over your existing plans and create a strategy for paying for it just in case. This might include moving other assets now or discussing legal spenddown strategies with your elder lawyer in NJ. Don’t neglect these important tasks if you want to cover your bases and protect your family.

Special Planning For Small Business Owners

Neel Shah is a practicing estate planning attorney as well as a certified financial planner(r).  He has conducted over 3000 corporate business and real estate transactions throughout his career and is the author planning for business owners (available on Amazon).

Estate planning for business owners is especially important, but also a delicate endeavor. Business owners are often what is labeled as “asset rich, but cash poor.”

This is because of the illiquid nature of a small business, which can create problems when a business owner has passed away or become incapacitated there’s a need for liquidity.

Further, how are shares to be transferred of a business when the business owner passes away? Should they go to a spouse in which case the widow with a widower- may become partners with the small business owner’s business partner? Or should they go to the adult children? What if one adult child is involved in the business and others are not? Or what if there are no adult children and they are all minors? Business succession planning is paramount for these scenarios.

There are unique opportunities for business owners to take advantage of tax saving strategies beyond traditional IRAs. Business owners may decide to incorporate some combination of 401(k)s, solo 401(k)s, defined benefit plans, cash balance plans, and/or other retirement planning which can greatly reduce income tax liability.

One way to create liquidity is to use life insurance. In fact, business owners can and should evaluate life insurance needs on a regular basis-both for liquidity needs for the family, as well as in a succession planning/buy sell agreement type scenario.

If you’d like to discuss your estate planning needs further use the link below to schedule a call!

https://calendly.com/jmotz-3/15-minute-intro-call-1

What Are the Four Fiduciaries for a Proper New Jersey Estate?

When you create an estate plan, you’re probably starting with a frame of you and your beneficiaries as the core people involved. However, this is not the full scope of everyone involved in your estate planning process.

There are four fiduciaries responsible with the entire estate planning process and they are known as an agent, an executor, a trustee, and a health care representative. An agent under a power of attorney makes financial decisions on behalf of the person who created this document. This is usually a spouse or child but can be different persons based on whether or not there is a business at stake.

A trustee’s primary role is to invest trust assets and to make distributions in accordance with the terms of the trust document. Usually a friend or family member is selected to serve in this role. A health care representative is the appointed legal agent to make medical decisions if the principal is unable to do so. These may be end of life decisions but it is not limited to end of life decisions.

All four of these people can play an important role in the estate planning process. They might play various roles in your estate plan at different times but all four of them should be considered important components of your overall planning strategy. Schedule a time to meet with an experienced estate planning lawyer to talk about your next steps.

It’s My First Estate Planning Meeting; What Do I Bring?

If this is the first time you’ll be sitting down with your estate planning lawyer, there’s no doubt you’ll have some questions about what you need to think about or bring with you to that initial meeting.

If your lawyer does not already have a questionnaire prepared for you to fill out in advance of this meeting, you can do your own due diligence by documenting a few key things that are likely to come up during the meeting.

Use this checklist to get organized before your very first meeting with your estate planning team so that you will be able to discuss options and planning strategies if you’re ready to go to that step by hiring the attorney:

  • Family information such as names, addresses, dates of birth, and any specific details about who would like to receive what in your plan
  • Information about any of your retirement assets, such as with company they are with and how much is in those accounts, as well as copies of any beneficiary forms
  • Details for any non-retirement assets, such as your bank account locations and any forms you’ve filed with them
  • Previous details regarding any documents you’ve created with another lawyer, such as an active power of attorney form
  • A list of all the tangible personal property you own that you want to be included in your estate and any initial thoughts over who you want to receive what
  • Details about real estate and businesses, if applicable for your situation

In general, you want to give your estate planning lawyer a holistic perspective on what your estate looks like. You don’t need to have all the details organized by the time you meet with them, as you will surely think of other things after the fact, but this will help you get the process started as effectively as possible so that you can see a good perspective on your own estate.

Have You Thought Through Your Final Arrangements and Documented it for Your Next of Kin?

One of the hardest parts of dealing with the loss of a loved is being asked to make decisions and make financial commitments about final arrangements. Unfortunately, however, this is also one of the first decisions that comes up when a loved one passes away. You can minimize the possibility of challenges with this by having a consultation with an estate planning attorney well in advance and talking through your options.

The support of a lawyer can help you to clarify your wishes when it comes to final arrangements and you can make things much easier for your loved ones during this challenging time to be able to act quickly and follow through on those wishes that you have. The endless options can be overwhelming to confront when dealing with the loss of a loved so by putting this in writing and making it easy for your loved ones to find after you pass away, you won’t leave your family to guess.

You can create a declaration of disposition of last remains to help give these important instructions to your family members quickly. This is very important if cremation is desired because otherwise some funeral homes or next of kin might have to petition the county’s district court for permission to cremate remains depending on your location. You can make this much easier on your family by giving them exact instructions so that they do not have to deal with the additional confusion.

Why Accounting, Communication, and Transparency Are So Important for Trustees

Being appointed as a trustee of a trust has important ramifications for not just the trustee but also for other family members who are entitled to receive distributions from the trust. Trustees have to be able to account for all of their actions as well as providing regular accounting to beneficiaries. At a minimum level this should be done once per year.

Furthermore, beneficiaries are also entitled to copies of the trust document. Meeting with the beneficiaries once a year is an option available to trustees but it is one that can be very beneficial should you choose to do so. The support of an estate planning attorney is strongly recommended as you move forward.

An estate planning attorney can help you understand the role that you are taking on as a trustee. When it comes to working as a trustee, you want to minimize the potential for conflict and confusion but you also should err on the side of more disclosure rather than less. Improper transparency can leave beneficiaries to wonder what you are doing and can also prompt them to file lawsuits.

Communication with beneficiaries should be regular and clear but you are not entitled to tell them every single detail of what you are doing on a daily basis. If you have questions about administering a trust, schedule a consultation with a lawyer.

Can Your Financial Institution Impose Restrictions on Your Accounts and Beneficiary Plans?

Using a financial power of attorney is one way to ensure that there’s someone else to step in and manage your assets if you become unable to do so, but be aware of not just the state’s rules about creating a power of attorney but your own financial institution’s policies around this.

Financial institutions can use contracts to limit your beneficiary naming and other strategies. The terms of your contract with your financial institution should be reviewed. This can be a beneficiary agreement, in your bank account signature card, or online. It is the document you would have signed when you opened it up. Your bank has the ability to determine how you style your financial accounts and how you name beneficiaries. This means that if you are not aware of a restriction because you didn’t read through the fine print when you opened the account, someone else could end up getting the assets inside those bank accounts. Since you won’t be around to deal with this situation, you want to have the clarity on what can be expected and the common pitfalls associated with it. An example of this can happen when you discuss things with your estate planning attorney and want to make sure that all of your children in equal shares receive your assets. If you fail to name contingent beneficiaries on your bank account form, for example, because this isn’t provided as an option, this can cause conflicts when it comes time to transfer those assets. Make sure that you gather any and all documents, such as account agreements with your banks and use these to schedule a consultation with your estate planning lawyer.

Does Everyone Have to Agree on the Distributions Plan for Stocks in an Account?

If you’ve been appointed as an estate executor in New Jersey, you have many different duties to fulfill. These must be handled with the utmost ethical awareness as other beneficiaries could accuse you of skirting or breaking the law. It can be very difficult when any type of conflict emerges in the process of estate administration especially if you are the executor and you are simply trying to close things out effectively. If not every party who is a beneficiary to the estate agrees with the plans that you have made, this can cause additional problems.

Executors in New Jersey need to file a refunding bond and release signed by every beneficiary upon paying a beneficiary his or her share of the estate. This needs to be filed directly with the county surrogate. This document requires a beneficiary to pay any part of unpaid debts owed by the estate if there are no other assets to pay them but it also discharges the executor of their duties.

The executor who is unable to get this document must then get an order of discharge from the probate court. Furthermore, the beneficiary share can be paid into the court if the executor applies for this directly. The accounting provided by that executor then gets audited by the surrogate’s office which charges a fee.

As you can see, this can be very complex and can add additional layers to the process of completing your estate administration in New Jersey. You may want to hire an experienced probate lawyer to guide you through this process and to minimize the possibility of conflicts with others.

How to Use Life Insurance to Pay Estate Taxes

When you’ve done your estate planning homework, you’ve laid a roadmap for your loved ones to take action quickly if and when something happens to you. This can ease a lot of concerns in the most difficult moments of their grief but it’s important for you to think about how all of your estate planning strategies work together.

Life insurance should be a component of your estate planning because it can help provide immediate liquidity in the event of your death and can be relatively simply transferred compared to some other assets inside probate that might be liquidated. Life insurance can also provide a way to pay for estate taxes.

A person who has a taxable estate above $11.7 million federally for an individual in 2021, allows for those payments to be made in the timeframe required of 9 months after death. There are many conversations happening right now about whether or not the estate exemption will be reduced which will make it even more important for people to consider the opportunities with appropriate planning.

Life insurance can be used to supplement your existing insurance plans when you’ve worked with the right lawyer.

When you find yourself in these difficult situations the insight of an experienced estate planning lawyer can go a long way towards answering your questions. For further information about how life insurance can be used as part of your overall plan, sit down with an estate planning attorney in your area to walk through the different scenarios and to craft a custom strategy for your needs.

 

Marathons & Markets

Lately, we’ve seen a meaningful uptick in market volatility fueled by economic instability here and abroad. From Chinese real estate woes threatening to disrupt their economy, to political wrangling in Washington that will continue to ripple through our own, there’s no escaping that the headlines have near-term market impacts around the world. But if the ups and downs have you worrying, don’t forget—you’ve trained for this!

Click here to download

 

 

Broad Versus Specific Language in Powers of Attorney: What to Know

You can create a general power of attorney which enables your financial power of attorney agent to make most decisions and financial transactions on your behalf or you might choose to name specific circumstances instead. Your individual considerations and concerns will come into play when consulting with an estate planning attorney about this important decision. 

You might choose to use broad language to give your agent all powers to manage your financial affairs in most cases but some powers are only given if they are specifically mentioned. It is worth specifically mentioning, for example, the power to designate beneficiaries of your insurance policies, the power to make gifts of your property or money and the power to change any community property agreements. Furthermore, some powers cannot be given to an agent, such as the power to update or create a will for you or the power to vote in public elections. 

You need to consult with an experienced attorney if you do not yet have a power of attorney document and want to create one to appoint someone else to take over and handle these important decisions for you if you become unable to do so. The support of a lawyer can help you identify a structure to this power of attorney document that meets your unique needs.       

How to Avoid the Financial Pitfalls of Being a Caregiver

Common Caregiver Pitfalls

It takes a special type of heart and selflessness to be a caregiver for a loved one but sometimes the best intentions can backfire. Most often it’s going to be the adult child or spouse that will act as the caregiver. But there may be other interested parties in the circumstances, such as siblings or stepchildren, with different motivations-nefarious or not.

One of the pitfalls I see with caregivers is the commingling of assets. It’s common for the caregiver to pay for groceries, or pay out-of-pocket for certain expenses for a loved one with the expectation that it will all balance out in the end. However, when it’s time to reconcile, everyone may not be on the same page and the caregiver may be out of this money.

We often see caregivers give up jobs or careers to care for a loved one. This may be an active decision made by the caregiver because of the belief that the loved one will take care of them. However, when there’s not clear communication to this regard, the caregiver can find themselves in a financially difficult situation if the family member being cared for as had a change of heart, or if other beneficiaries of the potential estate dispute the value of the services, or any renumeration at all.

Sometimes taking on the responsibility as a caregiver may bestow upon the caregiver a heightened standard. Are the investments be managed properly? Is the cash flow being tracked? Are the proper safeguards in place in the event of a fraud/theft? If the caregiver hasn’t put these things in place, will the caregiver face liability? Often the answer is no, but despite not facing potential legal liability there may still be a negative impact on relationships with other family members.

Neel’s Gift as the ‘Indian’ Cowboy

My parents moved to the US in 1973, I was born in 1975. For some reason, whether it was by omission or intentional – I didn’t learn English.

Imagine showing up for your first day of school, in the country in which you were born – having (a) avidly watched Sesame Street daily & (b) being fascinated with being an American cowboy , only to be placed in an ESL (English as a Second Language) class. 🙄

To be totally honest, I don’t remember what I felt at the time. I really don’t have distinct memories so I don’t think I was traumatized or set back in life anyway. What did happen was something beautiful. And last week, about 40 years later, I was reminded of it:

I was asked to help educate a group of Senior citizens via Zoom on Financial, Tax and Estate planning updates. All. In. Gujarati.

During the meeting, I got to look into the beautiful faces of 150 Indian-American couples who came to this country and raised the kids of my generation.

It was an honor to have spent the time to help those who have helped so many of my peers. The video is available here (https://youtu.be/xHJH7qcBKtI) in case you, or someone you know would like to see/hear it.

And as for the impact of not learning English until I started school? I guess it wasn’t too bad. Pinky and I did the same thing to our kids after all.

I can’t wait to see how they choose to give back when their time comes. Thank you Mom (Anjana) for this amazing gift!

By: Neel Shah 

What You Need to Know About Your Estate Plan and Gray Divorce

Are your financial plans tied to your spouse’s? If you’ve been married a long time, it’s impossible to ignore the possibility that your plans rely on the joint financial strategies or savings you’ve accumulated together. Which makes it that much harder to pivot if you get a divorce in your older years.

There are unique challenges that could affect your estate plan if you get divorced in your older years. Making a decision about what is most important for you should be the underlying reason why you seek out the support of an experienced family lawyer, but you might also need to visit your estate planning lawyer before and after the divorce is finalized. This is because there are many ways that your financial plan can be changed. If you get divorced you will need to update all of your existing estate plan materials. But you’ll also need to conduct a thorough evaluation of your retirement plan.

There is a good chance that any existing retirement plans and estate plans were built on the premise that you would still be with your now former spouse. In those circumstances, it can feel overwhelming to approach the prospect of updating all of your estate plans on your own.

You’ll want to make sure that all of your documents now reflect a new beneficiary including life insurance policies and retirement accounts that you might not have looked at in years. In those circumstances having a lawyer to guide you through the process and help you to avoid unfortunate surprises can be instrumental.

There are so many things to think about in the wake of a divorce and many changes that come in your life, but making sure that your estate plan still aligns with your individual goal should be a top priority.