Laura Pennington | Shah & Associates, P.C. Estate Planning & Elder Law Blog

July 27, 2021July 27, 2021

Is Now a Good Time to Sell Your Business?

There’s a lot that goes into deciding it’s time for your next chapter when you own a business. You want to know what’s going to happen to it and the key people involved in that transition. This is documented in a business succession plan.

Selling your business requires a comprehensive business succession plan ideally created by an experienced business succession planning lawyer. After an extremely challenging 2020, many business owners might be thinking about making an exit because of the surge of buyers in the market and the possibility of increasing taxes. This has, for some, created the perfect storm for creating your business succession plan and executing it sooner rather than later.

One recent industry report shows that the pace of recovery has varied among sectors and companies but US business deal value and volume overall are up from 2020. Demand among buyers continue throughout the pandemic but there were very few businesses for sale on the market.

Many of those that were negatively impacted by the pandemic were waiting for opportunities to recover before selling. However, pent up consumer demand has meant that many of them have been able to bounce back faster than expected. This can create the perfect opportunity for you to determine what’s next in your business succession plan.

Even if you determine that now is not the right time to execute on a business succession plan, creating this document and the strategies to support a full transition to other company owners can benefit you by making it that much easier if and when a faster transition is required.

July 21, 2021

Putting Together an Estate Plan for Beneficiaries Who Suffer from Addictions

The addiction epidemic has touched many families throughout the country and it is certainly worth considering if you have loved ones that you wish to leave assets behind to but are concerned about the risks. Unfortunately, many families today have to deal with the pain and challenges of a loved one suffering from addiction, whether it’s alcohol, drugs or other substances.

Leaving an inheritance to a person with a past or present addiction requires careful consideration from the support of an experienced estate planning attorney. Outright amounts can be detrimental and destructive whereas disinheriting them entirely could block them from getting the support that they need to battle their addiction.

Your professional advisors as well as your estate planning attorney should all be consulted when talking about estate planning for someone with addiction. A trust is one of the most valuable and helpful tools for accomplishing your goals. Setting up a trust to hold particular assets for the benefit of a beneficiary with an addiction could help support their overall recovery.

A trust protects the beneficiary from their creditors and from themselves. It provides specific directions for a trustee who manages the assets inside the account to determine when and how distributions are made to the beneficiary. A trust could provide for basic needs, such as food, shelter, and medical care.

The trustee can also be instructed to make those payments on behalf of the beneficiary rather than giving the funds to the beneficiary. Furthermore, your trust can outline provisions for counselling, treatment, and rehabilitation if needed. Schedule a consultation with an estate planning lawyer today to learn more.

July 20, 2021July 20, 2021

New Study Shows What Is Most Likely to Impact a Positive Retirement

A new study has found that contributing to society and having a purpose are key to enjoying life in retirement. This study completed by Age Wave and Edwin Jones shows that the pandemic has influenced the funding and timing of many people’s retirement, often shifting plans they might have had in place for decades.

The study also shows what Americans entering retirement feel are the most important aspects of all elements of comprehensive retirement planning, including those that are not financial. The study indicates that there are four pillars of the new retirement. Family is, of course, at the top of the list. The second pillar is purpose which many respondents derived from their friends and family.

Doing social good is another pillar of the retirement since 86% of all adults and nearly 90% of retirees say that retirees should have more opportunities to put their knowledge and talents to use to benefit society in general and their direct communities.

Retirees said they wanted to volunteer at least three hours per week, which is over 4 times higher than the actual retiree volunteer rate over recent years. The final pillar is about seeing planning for retirement as being more than saving for a retirement. Many of the retirees who were involved in the study said they wish they had done a better job in planning for financial and non-financial aspects of their retirement.

July 19, 2021

If I Don’t Want to Serve as an Executor, Do I Have to Take the Role?

Some family members are surprised when they learn that they have been named as a loved one’s executor. An executor has the responsibility of carrying out probate administration when named in a will or when appointed by the court. Many people do not realize that they have the opportunity to turn down this role if they don’t wish to serve in it.

Since there’s a lot of responsibility involved in keeping track of all the tasks of an executor, make sure it’s the right fit for you before you automatically accept.

If you are concerned about potential family conflict or what it would mean for you to take on the role of estate executor, you may wish to consult with an attorney in your area first to determine if this is an appropriate fit for you as well as the possible pros and cons. You are by no means obligated to serve in this role but do consider that if you are named and decline the role, another person will have to take on this responsibility.

If this is the same individual with whom you have conflict, you may wind up in the same boat to begin with. An executor has a fiduciary responsibility to carry out the deceased’s wishes as documented in the will or to manage the process of intestate succession which applies when a person doesn’t have a will. In either of these circumstances, you get the right to decide if this is something you wish to proceed with.

Ready to talk about setting up your own will and naming an executor? Schedule a time to meet with an estate planning lawyer now.

July 14, 2021July 10, 2021

What Is a Directed Trust?

When thinking about your family wealth management there are many different options available to you. Consulting with an experienced asset protection planning attorney can help you to decide which of these tactics is most appropriate for you. A directed trust could be an option if you are contemplating establishing a family trust. Directed trusts have been in existence for many years but were not recognized in the law until 1986 when the state of Delaware adopted the first legislation.

Other states have also created directed trust statutes including South Dakota, Nevada, Illinois, and Alaska but it’s important to remember that you do not need to live in one of these states to take advantage of a directed trust. Turning over wealth to a corporate trustee is one of the leading concerns for families creating trusts.

Directed trusts give a way to set up a trust to transition into a fiduciary relationship instead. The way these work is that an individual is appointed either as a firm or as a sole advisor who directs the trustee on a certain aspect of trust administration, such as distributions to beneficiaries or investment management.

This means that you can take advantage of the experience, longevity and stability of a known corporate trustee but place responsibility for specific decisions with another firm or individual. Corporate fiduciaries often have extensive experience in managing investments for trusts and in exercising discretionary powers for beneficiary distribution. In all of these circumstances a directed trust might be the perfect way for you to accomplish your individual estate planning goals.

July 13, 2021July 10, 2021

Does a New Jersey Power of Attorney Agent Get Paid?

The principal creator of the power of attorney document sets the terms for the relationship. If the document has not been drafted, the principal is eligible to name the compensation, provide a flexible term, or specify that the agent is not to receive any compensation at all for serving in this role. The support of an experienced New Jersey estate planning lawyer can help to answer many of these questions and ensure that the paperwork is completed appropriately.

Flexible terms include statements, such as reasonable, meaning that the power of attorney agent is eligible to be paid and this is in distinction to a specified hourly rate form of compensation. Far too many people ask the question of whether or not a power of attorney agent can get paid after the fact. After the power of attorney document has been signed, this is the first source of evidence to identify whether or not the power of attorney principal created a strategy.

An agent is not entitled to a fee without the appropriate court’s approval if the principal has not specifically stated compensation for a power of attorney agent. Courts are eligible to use their discretion to award a reasonable compensation but they are not required to do so. Schedule a consultation with an experienced New Jersey estate planning lawyer to learn more about how this could affect you.

July 12, 2021July 10, 2021

What Is Proving a Will?

There are many different terms you may hear in connection with the estate planning process and one of these is proving a will. This means that a witness to the will itself gives testimony to a state government official that they indeed did see the signing of the will. This might be done with the clerk of the probate court, the clerk of the surrogate’s court or the register of wills.

It can be difficult to locate witnesses if the original will was signed many years ago. This is because that person may no longer be able to give testimony, might have moved away or be deceased. The will can be accepted without being proved in some states if all interested heirs and parties give consent. If the witnesses are not available in other states, the will can be proved by the testimony of two persons who did not witness the will signing directly but can identify the decedent’s signature. These people are known as non-subscribing witnesses.

When thinking about getting witnesses to see the signing of your will, make sure you think carefully about people who will be relatively easy to locate in the event that something happens to you sooner rather than later. For more information about creating your own estate plan, schedule a consultation with an estate planning lawyer today.

July 7, 2021

What Are Fair Executor Fees for New Jersey Executors?

There are two primary sources that contribute to executor fees in New Jersey: corpus commissions and income commissions. Corpus includes every asset received by the executor at the time of the decedent’s death. The executor is therefore entitled to a charge on a percentage basis associated with the size of the estate.

For estates up to $200,000 in value this fee allowed is 5%. For the amounts between $200,000 and $1 million, that fee is 3.5% and for amounts $1 million up that fee is 2%. Income commission is associated with income generated by the estate. A New Jersey executor is eligible to receive 6% of all income received per NJSA 3(b):18-13.

Executors can also charge at least 1/5th of the 1% of the trust corpus each year as corpus commission for an estate that lasts longer than one year. It can be beneficial to retain the services of an experienced estate planning lawyer when crafting your own estate so that you can understand how an executor’s fees could influence the overall value inside the estate.

If you have a specific opinion on how you want your executor to get paid, you need to discuss this with your estate planning lawyer as you put together a plan for your will. The more clarity you bring to the situation, the easier it will be for your executor to go into this role understanding your intentions. When an executor knows your plans for them to get paid as well as the tasks associated with closing out probate, all of the tasks are likely to be completed effectively and efficiently.

July 6, 2021

Is Your Estate Plan Portable Enough?

There was a time in the past where people would have settled down and stayed in mostly the same location for the majority of their adult life, but that time has passed and the need for portability is now. With a mobile world people are changing jobs and even homes more than ever. Your estate plan, if you move from one state to another, is not as portable as you might expect.

Many people are under the impression that estate planning begins and ends in meeting with an estate planning lawyer to discuss basics, such as your will. It is certainly true that this is the cornerstone of a strong financial and estate plan but it must be updated or amended when any major life changes occur, including moving to a new location. Laws relating to probate and wills are not federal so each state has their own set of laws that will address what is or isn’t a valid will, trust, power of attorney or other estate planning documents.

While portions of your estate plan could be portable because a will that was validly executed and is recognized in another jurisdiction can be recognized in your new state, you’ll want to verify this as soon as you move to your new location. This is a good opportunity to discuss any other changes in your life that would warrant an update in your estate planning strategy. Finding the right attorney to help you execute on initial versions and updates to your estate planning strategy can help you heirs avoid unfortunate and unnecessary complications in the future.

July 2, 2021

What Are the Most Important Retirement Milestones to Keep in Mind?

Every kind of retirement benefit will have a separate eligibility age and your age can play a big role in how much you will be able to get from social security and what you’d need to do to avoid retirement account penalties. Consider these important ages in your retirement plan to make sure that you are aware of these milestones.

They include:

Medicare eligibility starts at age 65
At age 62 you can start to receive social security payments, although some people wait longer
Attempt to max out your retirement accounts younger than age 49
Leverage the benefits associated with catch up contributions starting at age 50
Contact your 401(k) company as your withdrawal age might be 55
Retirement age for your IRA is 59 and a half
Full retirement age for social security is age 67 for younger generations, although it is 66 for most baby boomers
You may be able to maximize what you take from social security payments if you delay claiming these until age 70

Having a team of financial professionals including an estate planning lawyer can help you to accomplish many of the most important goals and ensure that you are on track for a solid retirement. If you are curious about how to match your retirement with your estate planning intentions, speak to an estate planning attorney today.

July 1, 2021

What Is the Federal Lifetime Exclusion?

In the United States, you are eligible to tap into something called a federal lifetime exclusion which is a specific dollar amount specified by the IRS that can help to minimize your estate tax liability when a person passes away. The vast majority of people will use their federal lifetime exclusion at death; however, you are also eligible to make large gifts during your lifetime to exercise this federal exemption. This amount was doubled in 2017 by President Trump to $11.7 million per person. This, however, is not permanent so this could be reduced by as much as 50% by the end of 2025.

Although this is not yet confirmed, many people anticipate significant changes related to estate taxes and limits such as this. Many taxpayers could benefit from giving away their assets during their lifetime and one such tool to accomplish this is known as spousal lifetime access trust. Most estate planners are carefully watching what might happen with estate tax shifts so that they can inform their clients promptly.

Since federal and state changes can happen at anytime, but particularly around a major shift in the White House or Congress, it’s smart to have a relationship with an estate planning law firm so that you have resources to turn to. Ensuring that your plan aligns with your current needs is key.

You can gift assets into a trust, use most of the federal lifetime exemption during the course of your life and leverage other powerful estate planning benefits. You’ll want to work directly with an experienced attorney to accomplish this because there are many complex aspects to establishing a spousal lifetime access trust.

June 30, 2021

What Does the Concept of Incapacity Have to Do with My Living Trusts?

A person’s inability to manage their own legal, health care, financial and property decisions can lead to the authorization of someone else to serve in a representative capacity. When it comes to a trust, this individual might be known as your successor trustee. Agents under your power of attorney document for finances, legal affairs, advanced health care directives and property are eligible to make decisions on behalf of the incapacitated person.

Estate planning allows you to create the documents that determine when you are considered incapacitated as well as who will decide that you have met this definition. In many cases estate planning documents will define incapacity based on a person’s health condition or legal disability. Inability to care for their own physical health needs, shelter, clothing or food or inability to substantially manage their own financial resources are two of the most common factors to determine whether or not someone has met the term of incapacity.

In some situations certificates of incapacity issued by physicians can also be used to identify that a person has met the incapacity determination. These certificates must say that the incapacity standard in the estate planning document has been effectively satisfied in order for the statements to be legally effective. You do not want a grey area around the concept of incapacity, particularly when it empowers another person to make decisions on your behalf. For more concerns you have about the estate planning process schedule a consultation with an estate planning lawyer.

June 23, 2021

What Does It Mean to Be a Good Executor of an Estate?

Many people were prompted to write or update their wills in response to the Covid-19 pandemic, which is an important step in the estate planning process. All people will one day be asked to put those wills into effect. Those important people are known as executors or personal representatives.

These are the friends or relatives designated in a will as the final administrator of the deceased party’s estate. If you have already agreed to serve as someone’s executor, you most likely know the outlines of the various tasks that you’ll need to accomplish, including inventorying assets, closing out accounts, paying taxes, and distributing bequests.

Even when it’s relatively simple and the person in question has done all the necessary estate planning, the paperwork can be overwhelming. But this situation can become much more complicated if someone like a widow passes away and there are many assets or children involved. Being an executor is not a simple job so the tasks that you need to keep in mind in order to stay ahead of all of these responsibilities include:

Talking it over in advance with a person who has named you as an executor of their will.
Beginning the paperwork process by taking the death certificate to the probate court.
Safeguarding property, such as a person’s real estate, having the locks changed and properly secured.
Creating a system of organization.
Retaining a probate attorney.
Preparing yourself for the possibility of conflicts.
Carefully distributing personal items only after all other responsibilities, such as liabilities, taxes and creditors have been addressed.

Do you need help deciding who to appoint as the executor of your estate? Set aside time to place a call to a New Jersey estate planning attorney now to learn more.

June 21, 2021

Who Needs to Be Notified After a Loved One Passes Away?

The passing of a loved one presents unique emotional challenges related to grief as well as issues of how to handle their administrative affairs in the short term. Once someone has been appointed to handle probate, that executor will be the person responsible for closing out the estate and taking actions on behalf of the estate.

However, what happens in the days and weeks immediately following someone’s death? Who needs to be notified? How does this affect a spouse or other family member?

One of the first phone calls to make is to Social Security. This is to notify them that the family member has passed away, and you will need the loved one’s Social Security Number in order to do this effectively. While on the phone, if you’re the spouse, you might have questions about what to do with a recently-deposited Social Security check. They will notify Medicare or Medicaid, but it’s a good idea to place a separate call to Medicare as well to ensure that the person is unenrolled from any programs.

Contact all three major credit bureaus to make sure they know this person has passed away; unfortunately, some scammers use obituary info as a way to try to steal someone’s identity and open new lines of credit before the credit bureaus know about the death. You can avoid this by placing a call to all of them immediately after Social Security is informed.

When it comes to credit cards, proceed cautiously. If this was a joint account and you were not the primary account holder, the account could be closed and this could impact your credit or block you from access to finances during this very challenging time.

Did you know that for communication purposes, there is a deceased “Do Not Contact” list? You can also contact the USPS so that they do not forward or continue to deliver mail to someone who has passed away. To make sure your family member’s name shows up on the deceased do not contact list, visit this site: https://www.dmachoice.org/.

June 16, 2021

Why Is Defining Incapacity an Issue for a Springing Power of Attorney?

If you have a springing power of attorney document, this means that the document becomes active when you are incapacitated. One of the leading reasons why people choose a springing power of attorney is that it only becomes active in certain situations.

However, if your power of attorney document requires that you be incapacitated for your attorney in fact to take action, you’ll need to think about what incapacity means. You will have to define incapacity and then your doctor will have to agree that you meet that definition when the time comes.

How do you know when health changes could cause you to require help managing your finances and what if you need help before you reach the point of being incapacitated as defined by your document? But if your doctor believes that you do have capacity but your attorney or agent thinks you’re incapacitated, this can be very difficult for your attorney in fact agent to take the necessary action when you are unable to make decisions for yourself.

Set aside a time to sit down with an experienced estate planning lawyer to learn more about when and how to use a springing power of attorney or if a more general durable power of attorney might be more appropriate for your situation.

June 15, 2021

What Does It Really Cost to Be a Caregiver?

When thinking about your estate plan, you must consider what might happen to you or your loved ones if you were no longer able to care for yourself. This is an increasingly common situation as it relates to caregiving for adult children today. Emotional and financial stress can represent significant changes in their life so if the default of your elder law plan is that a family member will step in and care for you, think carefully about how this could impact them and other loved ones.

Many people have had to step back from their careers to care for elderly loved ones and while this is still likely the first choice of the person who has stepped back, wanting to provide the best for their family, it doesn’t come without stress. In fact, a recent study from Fidelity Investments found that over 60% of active caregivers said they were at least occasionally overwhelmed with financial stress.

Plenty of them had to take significant time out of their jobs with the average time out of the workforce being 20 months. Furthermore, many of them took pay cuts when they went back to work at a median of 40% of what they were making previously. Thinking ahead about your caregiving plan and how you can minimize the possible burden on your loved ones is important.

While your loved ones will likely tell you that it’s not a burden to take care of you, the more proactive you can be with your estate and elder law planning, can make it that much easier for you to reduce the stress faced by your loved ones in this already difficult situation. For more information about crafting an estate and elder law plan unique to your family’s dynamics, schedule a consultation with an estate planning attorney.

June 14, 2021

New Study Shows Women Made Significant Changes to Their Planning Post Pandemic

The pandemic has had far reaching implications for many individuals and families and that has never been more true than now as it relates to the case for women. Women face a higher likelihood of a greater life expectancy than men, meaning that issues of long-term care, health care costs, and how to afford a lengthy retirement are all top of mind.

A recent study of estate planning attorneys found that many women visited their offices to make changes to their estate plans across 2020 and 2021. In fact, nearly 90% of estate planning lawyers said that female clients had experienced significant financial repercussions due to the global pandemic. This included leaving the workforce, taking a pay cut or losing their jobs entirely.

Prolonged life expectancy became the number one estate planning issue for women and men alike in 2020 and estate planning attorneys reported that many of their female clients visited their offices to make changes to their estate plan. I

n fact, nearly 90% of estate planning lawyers who participated in a recent TD Wealth survey said that they made changes to their female clients’ estate plans, including updating wills, creating post mortem letters, updating letter of attorney documents and changing beneficiary or guardian designations. If it’s been a while since you’ve sat down with your experienced estate planning lawyer to talk through your options, schedule a consultation with an experienced lawyer today.

June 8, 2021

How Do Retirement Assets Fit into My Estate Plan?

Which assets should you plan to pass down? Which are those you should intend to live off of and how do taxes impact the equation? Thinking about all of these things together as part of your overall estate planning strategy is important and it should be discussed directly with your estate planning lawyer. Identifying your goals is the cornerstone of determining how your retirement assets fit into the bigger picture.

If you want to leave the bulk of your assets to certain beneficiaries or accomplish philanthropic and charitable goals, these are things that will need to work together or be planned for appropriately. Make sure that your accounts are titled and earmarked correctly, which can enable you to get maximum tax efficiency out of your estate plan.

You can avoid problems by carefully looking at titling, beneficiary designations and other legal documents on an annual basis to verify that all of your assets match up with your plans and expectations. You’ll want to plan for both your core assets and additional capital. Stable sources of income, such as social security payments, annuities and pensions can be supplemented by taking distributions from your taxable investments.

You’ll also want to think about how these taxable investments fit into the bigger picture of assets transfer in your estate planning. For more assistance with matching your retirement planning goals for your estate plan, set up a time to speak with an estate planning lawyer in your area.

June 4, 2021

How Is an Inherited Asset’s Cost Basis Calculated?

The vast majority of estates in the United States are not eligible for the federal estate tax but you may still be questioning how an asset will be appropriately determined as far as cost basis. Cost basis calculations for estates are different for those used for other tax purposes. In order to calculate capital gains on assets that you own, cost basis has to do with the original value of the asset for tax purposes with a few other adjustments.

When it comes to an item that you have inherited as part of someone’s estate, the cost basis is typically equal to what is known as the fair market value of the asset or the property at the time the person passed away. Fair market value relates to what the asset would command in the marketplace. If the asset has decreased in value since the date of death or the date of the transfer, the estate administrator can decide to use alternate valuation dates for the estate.

You will need to consult with an experienced estate planning attorney if there are assets inside your estate that might require more advanced planning opportunities. A consultation with an estate planning lawyer can answer many of the most common questions presented by those hoping to accomplish estate planning and to minimize concerns and problems in the future.

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Author: Laura Pennington