Shah & Associates P.C.
Estate Planning & Elder Law Blog
YOUR FAMILY • YOUR BUSINESS • YOUR LEGACY
Hear Neel Shah, Managing Attorney of the Law Firm of Shah & Associates, P.C. describe the highlights of this weekly Blog Posts. For the full post, visit: https://lawesq.net/blog/
Visit us at www.LawEsq.net
Call us to request a copy of the Newsletter: 732-521-9455
When a trustee becomes incapacitated or passes away, a successor trustee takes their place. In addition to managing the duties held by the previous trustee, the successor must also demonstrate proof of a certificate of trust or affidavit regarding their power over the trust. 
The successor trustee may carry on a range of responsibilities related to the trust, such as:
Selecting a successor trustee may increase the chances that a transition between one trustee and another runs more smoothly. Choose someone you feel confident in handling the above-listed responsibilities. Individuals who are aware of the benefits of the trust and who are skilled with organization may be more likely to succeed. Both the original trustee and the successor trustee should be aware of the value of what they provide to trust management and administration.
To structure your trust properly, you should work directly with an estate planning attorney. This promotes compliance with state and federal laws and the opportunity to maximize your trust benefits with attention to detail- contact us today at info@lawesq.net to review your trust documents.
In the wake of the last recession and an increase in competition throughout many markets, businesses can do a lot for themselves by planning ahead with regard to succession. In many cases, doing this can help to mitigate the risks associated with an unclear future. 
For family-owned businesses, one of the stages of their lifecycle has to do with succession planning and to what extent, if any, children or other family members are interested and included. Recent research reveals that up to nearly one-quarter of all family businesses don’t have a succession plan already in place. Nearly half of senior business owners expressed concern in the same survey about passing on control to the next generation. This dynamic can only generate problems, one of which is known as “sticky baton syndrome”. This refers to situations where an older generation passes on management responsibilities in theory but doesn’t really let them go in practice. This means that the successors don’t get necessary experience to take over confidently when the older generation exits the business entirely. This can interrupt the flow of business or challenge its existence altogether.
Succession planning is a process that should be approached with careful thought. Communicate with a business succession planning specialist today to learn what tactics might work best for your family-owned company. To get more details about your business, reach out to us at info@lawesq.net.
When your loved one is preparing to enter a nursing home, you may do some research on your own or even consult with a financial planner regarding spending down assets. In order to qualify for Medicaid, many older couples in this situation start figuring out the most appropriate way to spend down assets. If you skip over the details, however, you might end up making two of the most common mistakes in spending down, which are spending down exempt assets and continuing to spend down after the qualification point. 
Some items are exempted from being counted towards your asset amounts in Medicaid, but if you aren’t clear on the state laws governing this, you might make the mistake of liquidating those that would have been exempted anyways. Pulling funds from an exempted asset may be unnecessary and could jeopardize the couple’s future financially. Don’t spend down without know what’s exempt and non-exempt. Check with a professional to determine which of your assets are protected.
The second big mistake couples make is continuing to spend down their resources past the point of qualification. Don’t rely on information that comes from a source other than your elder law specialist- misinformation can be very misleading and costly. Determining qualification is a complex calculation that factors in shelter costs, assets, incomes, nursing home expenses, and other details. It should only be handled by an expert who can provide the best possible guidance regarding the qualification point. Don’t let the elder law complexities overwhelm you- schedule an appointment with an elder law specialist by contacting Shah & Associates at 732-521-9455.
During the State of the Union address, Obama suggested a proposal to end the “step-up” provision for capital gains taxes. Although this would require the approval of Congress, there are major ramifications for estate planning if this were ever implemented. This kind of proposal would eradicate a big tax benefit linked to inheritances. 
While the current system allows for a step-up in basis for those assets passed on to others, Obama’s suggestion was to tax the capital gains for the decedent instead. In short, this would make it more complicated to protect assets from taxes. Insight from attorneys in the estate planning arena would become even more important for asset protection purposes. Although it’s just a suggestion at this time, the possible red tape and research required for this to work seems overwhelming. Just one illustration of the problems that would unfold has to do with tracing the original cost associated with every piece of property, stock, and valuable.
Bear in mind that if accepted, Obama’s plan does have some benefits in place for married couples. Couples would be eligible to pass on investment assets up to $200,000 without having to worry about capitals gains tax. If the couple wishes to pass on a home to one of their children, up to $500,000 can pass before triggering a capital gains taxable event. Even with these provisions to help, however, the step-up elimination would increase the financial burden felt by heirs.
Proposals regarding and changes to tax laws are complex. If you need help understanding the possible impact for your planning, contact an estate planning expert today at info@lawesq.net.
Susan Schneider, the widow of Robin Williams, is taking the children from Williams’ prior marriage to court, arguing that they have been removing property from the home she shared with him. According to Schneider, memorabilia, jewelry, and other items have been taken from the home. She wants the court to exclude these items even if Williams had wanted the three children to have them. 
Williams had put together a trust, the provisions of which outlined that the children should have the memorabilia, entertainment industry awards, and other personal items. According to Schneider, his wife of just a few years, the fact that he intended for her to stay in the family home limits what the children should have access to. She believes that the children may be entitled to personal items that were located at a separate family home. The children and Schneider also disagree about items located in storage.
Even seemingly well-organized estates can lack the proper detail to limit heirs contesting who should get what after a person passes away. One possible option to help clarify provisions of your wishes is to put together a personal property memorandum alongside the estate plan so that you can delineate exactly who receives what property. In the case of estate planning, more details are better than less. To get started on your details today, contact us at info@lawesq.net.
Hear Neel Shah, Managing Attorney of the Law Firm of Shah & Associates, P.C. describe the highlights of this weekly Blog Posts. For the full post, visit: https://lawesq.net/blog/
Visit us at www.LawEsq.net
Call us to request a copy of the Newsletter: 732-521-9455
Hear Neel Shah, Managing Attorney of the Law Firm of Shah & Associates, P.C. describe the highlights of this weekly Blog Posts.
Visit us at www.LawEsq.net
Call us to request a copy of the Newsletter: 732-521-9455 or email Info@LawEsq.net
Hear Neel Shah, Managing Attorney of the Law Firm of Shah & Associates, P.C. describe the highlights of this weekly Blog Posts.
Call us to request a copy of the Newsletter: 732-521-9455 or email Info@LawEsq.net
We have so much for which to be thankful this year. Managing attorney Neel Shah recorded this quick video with his wife, Pinky Shah of NJ Mortgage LLC to express our gratitude To our family at home and our families in the office.
If you have decided to use a trust to pass on your assets, this can be an exciting decision that gives you peace of mind about the firmness of your plans. If you don’t ensure that the trust is properly funded, however, it’s unlikely that your trust is going to carry out the plans that you intended.
If you already have assets inside the trust, make sure that you set up reminders to continuously review your materials and always have unfunded or new assets titled into the trust’s name. Don’t ever assume that these changes have been made, since the ownership of verification falls squarely on your shoulders. Keep copies of documents that confirm your changes so that you are always clear on what’s been taken care of already. If values have also changed, ensure that is updated as well.
If an asset that you used to own has now passed onto someone else through a sale or closure, make sure it’s removed from your funding portfolio. This makes it easier on your family members in the future and the trust executor so that they are not searching for assets that are no longer present. To review your funding in your living trusts, get in touch with us through email at info@lawesq.net or over the phone 732-521-9455
If you are married but do not have any children to pass down your assets to, look at estate planning as your opportunity to do something unique and special with your plans. There is nothing wrong with not having children, and it actually gives you a chance to give back in other, meaningful ways.
There may be other people, outside of immediate children, who could benefit from your estate. This can include nieces and nephews, grandchildren, siblings, or even pets. Take some time to consider any special people in your life who might benefit from such a gift. If you have lost a child, you might even consider putting together a scholarship foundation or other organization that can carry on that child’s legacy in your absence.
You may also want at least some of your assets being passed down to charity. Have a conversation with your spouse about the causes you care about the most and how you’d like to see funds distributed. Your giving can really help nonprofits that are in vital need of donations.
Leaving a legacy is one of the biggest benefits to putting your estate plan together, whether you have children or not. If you’re ready to talk over your options, contact us at info@lawesq.net or over the phone 732-521-9455
If you’ve already looked into getting one, you know that Section 529 savings plans are able to accumulate earnings without federal income tax (and in many cases, state income tax). Once the beneficiary of the account reaches the age where he or she is going to college, that individual can take out withdrawals tax-free to pay for college expenses.
For the most part, relatives set up 529 plans, but no family relationship is actually required. Another little-known fact about these is that most of them will accept larger lump sum payments. Making these larger payments into a 529 plan can be beneficial for your estate planning because they are treated by the IRS as “completed gifts”. Likewise, they also fit into the yearly gift tax exclusion ($14,000). If you decided to spread your lump sum over several years, you could benefit from this gift tax exclusion every single year that you’re making a contribution.
This is a great tool for grandparents who want to help support their grandchildren’s future, because you can be making contributions for numerous grandchildren over several years. As an added bonus, 529 accounts can be a bit flexible, like if you need to change account beneficiaries without facing any penalties. Contact our offices today to learn more about estate planning tools and options to minimize taxes and pass on your legacy. Call us at 732-5521-9455.
Many Americans may be unaware of what an irrevocable life insurance trust (“ILIT”) is, let alone the benefits it may provide to them.
Typically, life insurance policy proceeds are not subject to income taxation. However, they are included in the calculation of a person’s gross taxable estate. This is where the ILIT comes in. If a person puts their life insurance policy into an ILIT, the proceeds of the policy are kept out of his or her taxable estate. The proceeds will therefore be available to his or her heirs free of income and estate tax.
Additionally, ILITs are a great way to provide cash to help pay for the taxes that will be levied on your estate. Beneficiaries of your ILIT can use some of the proceeds to pay the taxes owed on your estate. By doing this, your actual estate is kept in tact. This strategy is especially beneficial to those whose estate consists largely of illiquid assets such as a business or real estate. Through setting up an ILIT, you can ensure that your family will not have to sell the illiquid assets in your estate in order to satisfy the estate taxes.
Call us at 732-521-9455 or email at info@LawEsq.net to discuss the right way to own your life insurance.
It was recently discovered that the IRS finally took action on investigations of managers in small insurance companies. This has spiraled into the usage of “promoter audits” of such managers, leading in some cases to subpoenas demanding information about captive insurance companies.
The majority of the subpoenas are interested in details about the risk pools and how claims are paid and premiums are calculated, but they are also asking for marketing materials. These materials may be used to determine whether the captive was being used properly or whether it was simply being used to avoid taxes. There are some situations where captives just don’t work well, but there are other situations in which captives fill an important need.
If you’re using a captive insurance company or if you’re thinking about knowing one, risk management is crucial for structuring and reviewing. Knowing what to expect and knowing where the risks are gives you some insight into whether the captive is the appropriate vehicle for you. You should always talk to experienced tax attorneys when you’re using a captive or other complex strategy to help you manage risk. If you believe that you are being investigated or if you would like to discuss the opportunities of using a captive insurance company, reach out to our offices. Request an appointment through email at info@lawesq.net or over the phone 732-521-9455.
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Art collectors are celebrating a recent decision handed down from a US Appeals Court which could help to minimize taxes. The court agree that shared ownership in a highly-valued blue chip art collection, which can also be noted as a “fractional interest” enabled one family a critical tax break in the settling of an estate.
The Texas family involved had collected Picassos, Jackson Pollock pieces, and art by Paul Cezanne. The family used a grantor-retained income trust where partial ownership of the art was handed down to each one of their three children. The idea is that shared ownership interest limits the opportunity to sell or transfer the works since this would also require agreement from each child.
The court ruling determined that the deficiency lay with the IRS commissioner’s failure to properly use the discount for restricted ownership in this case, although an earlier tax court had argued that the family was only entitled to a 10 percent discount.
If you have a substantial art collection and are concerned about how it will be passed down to beneficiaries, talking to an estate planning expert could be in your best interest. Contact our offices today to learn about trusts or other vehicles that might work best for you. Request an appointment via email at info@lawesq.net or over the phone 732-521-945
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There are positive aspects to attempting your estate planning on your own, but there are just as many downsides. Those downsides can cost you big time, whether you have many different kinds of assets and business interests or whether you believe that your estate is simpler.
More complex situations should always be addressed with an experienced estate and tax planning attorney. Appreciated property, families with children who have special needs, family-owned businesses, and blended families are but a few examples of where DIY estate planning can go so wrong.
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More sophisticated planning strategies, like the use of trusts, are outside the realm of possibility for someone completing their estate planning documents. Furthermore, new legislation (and sometimes, increasingly complicated legislation) means it’s vital to contact a professional to ensure you understand the opportunities and liabilities correctly. Laws are always changing, but template forms and DIY strategies are not as up to date on these strategies as an “in the know” estate planning firm will be.
Going DIY could mean that what you set up for plans after your death doesn’t actually hold because the wording, structure, or legal applicability is incorrect. Trust the experience and training of an estate planning firm that has helped individuals and families address needs across the spectrum. Call us at 732-521-9455 or through email at info@lawesq.net to begin.
Joan Rivers was heralded as a stellar performer, but she also left behind a legacy as an incredible businesswoman. Her estate included income, collectibles, and real estate that was estimated in value between $150 million and $250 million. She left behind detailed instructions for her assets after her death, which is rare in a society when many celebrity deaths highlight the weaknesses of their estate plans.
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Looking at her careful planning, there are a few key lessons: be prepared for the unexpected, outline plans for pets, and correctly title the assets. Joan Rivers was also masterful in giving her family a brief overview of the estate plans to help improve clarity and reduce the possibility of arguments. Rivers made use of family trusts to reduce the tax burden for her beneficiaries and titled her assets
appropriately to allow for the smooth transition of business assets. This act alone helped to diminish her capital gains taxes.
Regardless of the size of your estate, proper planning allows you to pass on assets to your heirs in the most efficient manner while minimizing the tax liability. Contact our offices today for a consultation for your business and personal needs through email at info@lawesq.net or contact us via phone at 732-521-9455.
This past June, an important ruling from the Supreme Court found that an inherited IRA is not protected as retirement funds. If a beneficiary of inherited IRA funds files for bankruptcy, the funds they inherited could be subject to creditor claims.
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This new finding highlights the value of a trust. If the inherited IRA funds were received by a beneficiary though a trust, this would help to protect those funds so that they could be used in the manner desired by the person setting up
the beneficiaries. One such example is the use of a Standalone Retirement Trust, where inherited funds flow to a third-party trust after the retirement plan owner passes away. While the beneficiary still retains access to the funds, the fact that he or she didn’t create the trust allows quite a bit of protection for the beneficiary.
There are some states where laws on the books do protect inherited retirement accounts from creditors, but it’s always wise to consult with an estate planning attorney to discuss best structures for passing down assets. To learn more about your options, send us an email at info@lawesq.net or contact us via phone at 732-521-9455 to get started.
New rules for your 401(k) could actually end up benefitting you. If you have saved after tax money in your 401(k) retirement account, it can be rolled over to a Roth IRA. While in the Roth IRA, your money will grow on a tax free basis instead of a tax deferred basis. You’ll avoid having to pay pro rata taxes on your distribution, too.
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This new change creates an opportunity for planning. Prior to this new rule, advisors had to use complex planning tools to address client concerns. Taxpayers were required to roll over their entire 401(k) and use outside funds at the time to manage the 20% income tax withholding amount. The new rule, however, gives people without the cash on hand to replace dollars that were already withheld through a distribution.
In order to capitalize on this new rule, it’s important to understand that the distributions must be scheduled at the same time or they will be treated as separate, causing the mix of pre-tax and post-tax dollars. While the official rules begin on January 1, 2015, taxpayers can make use of them now since the rules were issued on September 18, 2014. In the past the IRS has allowed taxpayer relief based on a “reasonable interpretation” standard.
To learn more about the best strategies for your 401(k) and other retirement accounts, contact our offices for a personalized consultation. Request an appointment via email at info@lawesq.net or over the phone 732-521-9455.