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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.

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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.

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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.

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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.

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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.

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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.

 

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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.       

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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.       

 

 

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Understanding a Charitable Remainder Trust

Some individuals or families wish to leave behind a significant donation at the time that they pass away. A charitable remainder trust is one estate planning tool to help you do this. You’ll want to consult with an estate planning lawyer to decide whether or not this is the right instrument for you.

There are several different steps involved in the creation of a trust like this. The first is to meet with your lawyer to discuss your intentions and to ensure this is the appropriate step.

You will also want to make sure that your chosen charity is approved by the IRS. You can then transfer the assets that you intend to go to that charity into the trust and appoint the charity as the trustee of the trust. This gives the charity the power to invest or manage the property inside. Within the trust provisions created by your estate planning lawyer, there should be an explanation about who is to receive income from the property of the trust. This can be you, as the creator of the trust or someone else that you choose.

You may want to receive income payments for the rest of your life or for a predetermined number of years and you can discuss the various advantages and disadvantage of this with your estate planning lawyer. Any property remaining in the trust at the time you pass away will then be transferred to the charity. If you would like to discuss creating a charitable remainder trust, schedule a consultation with an estate planning lawyer today.

 

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Should You Create a Trust to Handle Estate Planning for Stocks?

Creating an estate plan requires a holistic view of what you intend to accomplish and will require your consideration and thought. It is usually best done with the help of an experienced estate planning lawyer when you start the process.

One of the first things you will do is to create an overview or a list of all of your assets. You might find that an asset inside your estate are your shares of stock and there are a couple of different ways that you can handle this as part of your estate planning strategy. Your lawyer will sit down with you to discuss which of these makes the most sense. One option is to create a trust to hold the shares of stocks. Extra caution must be taken before transferring any title to a trust if the company in question is an S corporation.

The S selection could accidentally be destroyed in this process with invalid planning which could have significant tax consequences for the company. It is vital to get guidance from a knowledgeable attorney before creating any estate plan that has S corporation stock inside of it. There are benefits, however, to using a trust for the purposes of stock estate planning. The biggest is that ownership will transfer efficiently and smoothly after you pass away without requiring the oversight of the probate court. This is why you’ll want to discuss all of the options with your estate planning strategy with the help of an experienced attorney. You will be able to cover all of your bases and have a better perspective on what to expect.

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Why Should I Hire an Attorney to Help Me with My Will?

Creating your own will is a common interest for many people who have had this on their to-do list for some time and are concerned about how to best protect their interests and cross this off their checklist.

Creating a DIY will is an alternative to hiring an experienced lawyer but it also comes with its own risks. A lawyer can provide instrumental insight in the process of creating your estate plan, including a will. Furthermore, your lawyer will be familiar with state and federal requirements as well as common reasons for which wills are challenged. A will challenge can slow down the administration of your estate when one or more beneficiaries believes that the will is invalid.

Your lawyer will help you match the document created with your planning intentions to create a plan that’s aligned with your future. This helps you know that if something happens to you, your loved ones are taken care of because of this advanced planning. A lawyer can also introduce you to estate planning strategies you might not have known about, too.

Having the support of a lawyer to create this document in the first place can decrease the chances of a successful will challenge and ensure that you have considered all of the most important aspects of your estate plan. A lawyer can also review your will with you on a regular basis to ensure that it’s in line with your individual goals as well as state and local requirements. You can make things much easier for your loved ones by having a will drafted by a knowledgeable attorney.

 

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What To Know About Investing for Income in Retirement

If you are a few decades away from retirement, now is the time to evaluate your current savings strategy and to evaluate the need to make any adjustment. Investments can serve as an important source of income in retirement especially when retirees can tap into investments that pay dividends.

The primary purpose of using dividends is that you can get a source of income without having to reduce the balance of the account or withdraw from the account. You may shift from a growth oriented investment approach to investing for income as you get closer to retirement and you won’t need to devote your complete portfolio to this kind of investment. But it’s a good opportunity to reevaluate where you’re at and how close you are to where you want to go. 

Most retirees benefit from having income producing assets to support pension payment, social security and other sources of income. There are many different ways to develop income producing assets but these can include: 

  • Dividend stocks
  • Rental property investments
  • Real estate crowdfunding
  • Private equity
  • Passive income streams developed as a business

The more you think through all of these options the better you can provide a cushion for the most important years of your retirement. Passive income streams can be an excellent source of money for retirees but many of these need to be started years in advance of your actual retirement amount to support you, such as creating an online business. For more information about how all of these different streams of income can come together in retirement and how this can affect your personal savings plan as well as your legacy, set up a time to meet with a lawyer.       

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What Are Tenants in Common?

Tenancy in common is a formal arrangement in which two or more individuals have ownership rights in a property or a piece of land. Each person who owns a portion of tenancy in common could own a different percentage of the total property or an equal percentage. This property type can also be residential. Tenants in common are eligible to bequeath their share of the property to anyone when they pass away.

Tenancy in common is also a distinct concept from joint tenancy. This is especially when it comes to the degree of ownership that each tenant maintains and survivorship rights. You can create a tenancy in common appointment at any point in time and members of the agreement are eligible to borrow against or independently sell their portion of ownership. Tenancy in common and joint tenancy have a few important differences. In a joint tenancy, tenants will get equal shares of a property with the same deed at the same point in time. In tenancy in common, a change in members doesn’t break an agreement. However, with joint tenancy the agreement is broken if any of the members decide to sell their interests.

Additionally, certain states name joint tenancy as default property ownership for married couples, whereas others would use the tenancy in common ownership model. This is why it is so important to set aside time to speak with an experienced lawyer about your unique situation and how you wish to leave property behind.       

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How Will Social Security Benefits Impact Your Retirement?

Social Security benefits are an important form of fixed but recurring income for most retirees. There are many important details that you should consider in terms of incorporating these as part of your retirement plan and in conjunction with your estate planning strategy. Individuals in the United States can currently start receiving Social Security benefits at 62 years old.

However, the longer you can delay your retirement benefits will significantly increase your benefits. Waiting until the full retirement age of 70 will put you in the best position financially if you can survive until that point without those benefits. Each person’s situation is different so you need to be sure to consider the specifics of your situation and to discuss this with your financial professional. Selecting the benefits to work will help you make the right decisions and some of the most important factors to consider include your life expectancy, whether or not you have health insurance through an employer sponsored plan and any employment status. 

For example, if you plan to continue working you might want to delay benefits since you’ll have another source of income. However, it’s also important to note that many people end up retiring earlier than they expected so you’ll want to have a backup plan of what to do in the event that you need to make an exit from the workforce sooner rather than later. For more questions about how to create a comprehensive estate plan that addresses all of your needs, schedule a time to speak with an experienced lawyer.       

 

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Using Life Insurance for Greater Liquidity as An Estate Gift

 

Do you have a life insurance policy to support your loved ones if something happened to you? Without one, you’re leaving them exposed to risk. Many people use life insurance as one vehicle to pass on assets to their families.

Leaving behind assets to your loved ones is a common goal for anyone creating their estate plan but when you don’t think carefully about the tax environment or the methods available to you to leave behind assets, you could leave your family members facing unnecessary problems.

Life insurance might assist in the payment of estate taxes. This is because for those people who have a taxable estate above $11.7 million federally in 2021, life insurance can be an important way to provide instant liquidity to pay that tax.

Those taxes are due 9 months after death, however, if a life insurance policy in question was owned by the deceased, this can also give family members immediate proceeds to help pay for other expenses, such as being reimbursed for funeral costs. There are several different ways that you can use life insurance as part of your bigger estate plan but you need to be prepared to consult with an experienced attorney to walk through your options and get a better understanding of what to expect and how to avoid some of the most common mistakes made in using a life insurance policy. You can help support your loved ones by working with a lawyer well in advance.

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Does My Executor Need to Use an Attorney for the Estate?

You are probably doing your own due diligence to ensure that your chosen fiduciary, also known as an executor or personal representative, has everything they need to make probate simple. However, there are some circumstances when it might also make sense for this fiduciary to get the support of an experienced attorney.

This can be especially helpful in the event that your loved ones do not tend to get along and in cases in which you believe that someone may challenge the estate itself or the executor’s actions. It might make sense to you how you have organized your probate related property and your estate plan but that’s of no use if your executor cannot figure it out on your own. Most states do not require an attorney to represent the estate but some executors choose to do this as additional peace of mind and confidence. The executor has the responsibility to hire an attorney to represent the decedent’s estate so you might wish to discuss this with your chosen executor so that they know they have this option.

Executors can also be held liable in the even that something goes wrong, so when an executor selects an attorney to guide them through this process, it is often so that they feel more comfortable taking on this role and handling the process in the appropriate order. The help of a lawyer is instrumental in assisting an executor or personal representative with covering all of tehri duties cohesively.

Haven’t made your plan yet or can’t figure out who to name as executor? Contact a dedicated lawyer for assistance with your planning process from beginning to end.

 

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How to Educate Your Executor About Limiting Their Liability

One of the most important aspects of serving as an executor or personal representative is the duty of loyalty. There is a high level of trust associated with someone serving as a fiduciary and the more that you can do on your own estate plan to make them feel comfortable about this role but also clear about this level of responsibility, the easier it will be for them to step into this position in the future.

You might educate them about the specific liability rules in your state and give them action steps to make them feel more comfortable of serving in this position. Here are some dos for limiting executor liability:

  • Keep accurate and clear records
  • Inform beneficiaries about the amount and nature of their interest in the trust or estate
  • Keep control of all trust or estate property
  • Segregate trust and estate property from any other property
  • Exercise reasonable skill and care to make trust property productive, such as making it income generating
  • Supervise the activities of all agents

When someone is not familiar with what it takes to serve as a personal representative or an executor, they can find themselves in over their head. They might even need to hire an experienced probate administration lawyer to assist them with this process which can cut down on the overall funds available in the estate. If you want to avoid this situation, make sure that your executor feels confident about serving in this position. Speak to a lawyer about your next steps if you have not yet named an executor for your future.

 

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How Is an Estate Guardian Different from a Minor Guardian?

In the event of incapacity or death, you probably have estate planning strategies in place to help you and your loved ones adjust. Many people think about the estate planning process as the process of planning for people. You are planning for the people that you leave behind, and some of the most important people to think about are your children.

This means thinking carefully about whether or not you need a minor guardian. If you and the other surviving parent are no longer able to care for your child because of a sudden accident or death, that child will still need a guardian and you have the ability to name the person you want to serve as guardian through the court. There are two different types of guardians to evaluate as part of your estate planning. The first is the guardian of the person and the second is the guardian of the estate. The personal guardian is the individual who is responsible for taking care of day to day needs like shelter, clothing, food and medical care. The guardian of the estate, however, is responsible for managing the property and the money of the person who needs a guardian.

These individual roles are very important and should be evaluated carefully with you and the other parent should you both be on the same page about what will happen to your child. Having these conversations now is not easy but can be important to reduce the stress and frustration in the future. Do not hesitate to get help from an experienced and knowledgeable lawyer right now.

 

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What to Consider a Safe Withdrawal Rate in Retirement

The concept of a safe withdrawal rate is important for thinking about your retirement. Knowing how much you might need to take each year to adjust for inflation and other unexpected costs will help you avoid financial challenges down the road. How do you know what’s enough to support you possibly for years to come?

The difficulty with determining a safe withdrawal rate is that there are so many factors that can influence what safe looks like for you. For example, the basic recommendation for retirement withdrawals is to take no more than 4% of the investment total value every year. The primary basis of this that proves problematic is that a retiree’s financial situation needs remain much the same for many years or even decades for this to be a safe approach.

A more cautious approach is to look at a 3% withdrawal rate which gives you a good starting point to consider what’s most important and unique to you. After you have thought about an appropriate withdrawal rate, look back at your portfolio to evaluate your living costs.

Can you make additional changes to your retirement, such as delaying your social security retirement age, continuing to work part time in retirement or reducing your expected retirement expenses? There are many other components that go into thinking about your retirement planning, such as longevity, health care costs, and your estate planning goals. All of these should be completed when thinking about your holistic estate planning and retirement planning strategy.        

 

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If a New Jersey Home Is Sold from a Trust, What Happens to Taxes?

What happens when a home inside a trust is sold?

Someone who serves in the role of trustee is responsible for administration of a trust. Sometimes this can be for a loved one who recently passed away. Knowing what to do in this situation could be very complicated if you were not involved in the original estate planning.

Typically, assets that are transferred into an irrevocable trust will be considered a completed gift and not included in the estate for estate tax purposes, meaning that there would not immediately be a step up in basis for the fair market value of that home based on the death of the deceased. However, irrevocable trusts may be drafted so that the settlor of the trust retains certain powers and rights saying that gifts to the trust are incomplete.

This is why it is so important to understand how to appropriately use a trust in your estate planning strategies. If you are a trustee currently serving in this role, you may also wish to get help from an experienced and knowledgeable probate lawyer.

A probate lawyer can help you navigate the process of closing out estate administration. If you want to avoid these questions and the possible confusion for your loved ones in the future, set aside time to speak with an estate planning lawyer today about creating your own plan.