Author: Laura Pennington

Many people avoid the process of estate planning because they either assume they don’t need it or that it’s not affordable for them.

Plenty of people are under the impression that estate planning is only for the wealthy but this is definitely not the truth as every individual family and business owner can benefit from at least some basic estate planning. You will likely find after consulting with a local estate planning attorney that this is a relatively simple process that can be made more complex only when you need it. 

Furthermore, the costs can be tailored to fit your specific needs and benefits people of all tax brackets and salaries. One of the primary reasons to consult with an estate planning attorney is because it will make the process easier. You’ll understand that probate is a legal mechanism of transferring your property from your ownership to another person. This means that you have some important decisions to make about what property you’d like passed on and to who.

Furthermore, you’ll need to think about important people who may be installed in critical roles as a result of your estate plan. Two common examples are guardians that you may choose for your minor children and the executor of your estate who is responsible for estate administration. 

Your attorney will help you walk through what you want to happen with your estate and execute the property legal documents to achieve that. Your attorney will also determine which items should be included in the estate, if a trust should be established, how much your estate might actually be worth, and consider any insurance policies and tax related issues associated with your estate. Schedule a consultation with an estate planning lawyer today to learn more.          

 

If you have multiple children that you intend to be beneficiaries of or executors in your estate, be careful about trying to apply things equally rather than fairly. Having multiple children and leaving them each behind a stake in the house can cause more conflicts than you ever intended.

Imagine, for example, that you have six children and all of them now equally own a portion of a vacation home or original home once you pass away. This means that either all of them will need to come to terms about what happens with the property or the property will need to be sold and divided among six parties in the event that they cannot come to a conclusion. 

Furthermore, naming multiple children as executors of your estate also leaves challenges regarding unified decisions. Especially if the children you intend to install in this role have different personalities and views over how things should be handled, this can delay the administration of your estate and increase family conflict.

There is still the possibility that a fight could occur without a will in place since the state will determine who receives what property, but having multiple executors serve at the same time or attempting to divide property, like a home, equally over multiple people can create far more problems than it would ever be worth. It is better to consider consulting with an estate planning attorney about the creation of a trust to empower these unique decisions and have them all working together.      

 

Most people are familiar with the basic idea behind a will. A will allows you to accomplish a couple of different things with your estate planning strategy. Some of the most important ones include the ability to name a guardian for your minor child and to decide who will receive your assets when you pass away.

However, there are other things you can accomplish in your estate planning strategy and three crucial elements should be included in the core of every estate plan. These include who receives what when you pass away, who is responsible for executing your wishes as it relates to the administration of your estate, and who is appointed to handle your affairs if you become incapacitated while you’re still alive. 

Each of these can create unique estate planning conflicts and issues but having a plan that addresses estate planning concerns both during your life and afterwards will ensure that you have thought through these complex issues and decrease the possibility of challenges that could arise for you or your loved ones in the future. 

No one wants to find themselves in the position of not having completed appropriate estate planning documents as this could leave your loved ones in a difficult situation trying to sort out what you want. Schedule a consultation with an estate planning lawyer in your area to learn more about this process and what you can accomplish.       

 

Having a child who is critically ill is the worst nightmare for every parent. This can be even more problematic when your child is legally classified as an adult because once they turn 18, you do not have the automatic ability to make decisions for them or see their health care records.

If your child is of college-age or has turned 18 in their senior year of high school and is taken to the hospital when you were not around, the hospital legally is not able to provide you with information about their condition without proper consent. If your child is critically ill and has passed out and is unable to provide consent, this can create a medical nightmare for you and your loved ones.

Make sure that you consider the needs of the entire family when crafting a health care power of attorney and providing appropriate consent that aligns with HIPAA requirements.

An estate planning lawyer can help you create these documents based on who needs to receive what details and create these documents for your entire family including any adult children who are currently coping with a serious illness and rely on your assistance to manage it or help with their health care concerns. For more information, schedule a consultation with an estate planning lawyer.

A living trust is also referred to as a revocable trust which, as the name implies, empowers you to make decisions while you are still alive about the purpose of the trust or even its existence. This is because a revocable trust is a flexible financial structure or legal entity that empowers the person who creates it to remove, alter or change the trust assets or to amend the trust itself or alter beneficiaries at any point during their lifetime.

The very nature of a revocable trust is such that you can decide in the future that the terms or beneficiaries need to be updated. These small changes can be accomplished through small amendments, bigger changes might need to be achieved through revoking the trust altogether. 

If you wish to dissolve a revocable trust, it’s important to take the necessary steps to do so. You will need to remove all of the assets that have been transferred into it as a first step in dismantling a revocable trust you have already created. You would then want to fill out a formal revocation form to create a paper trail and written evidence of your intention to dissolve the trust. 

Sign this and get it notarized. Your local area might also require an additional step of filing that paperwork with a local probate or estate court. To make sure that you have all of the details managed in the revoking of an existing living trust, work directly with an estate planning lawyer who has experience in this field.     

Need a NJ estate planning lawyer to help you create or revoke a trust? Reach out today.

Most people choose a family member or close friend to serve as an executor or a personal representative of their estate. This means that when you pass away, this person once approved by the court will be able to handle the administration of your affairs and the closing out of your estate.

You are not obligated to choose a friend or family member to serve in this role and many people turn to other individuals or organizations. A professional, such as an accountant or attorney might be the right choice in the event that you do not find anyone in your family or current net worth to serve in this role.

An effective executor should bring certain qualities to the table, including being ethical, organized, committed to doing the best possible job, careful about protecting the best interests of the beneficiaries, and being tactful. As an executor, it is not necessary to have the expertise or skills brought to the table by an accountant or an attorney. However, it is common for personal representatives who are dealing with complex estates or those who are not familiar with all the responsibilities of serving in this role to engage in the services of these professionals to help with the management of the estate.

When retaining these professional services to assist with probate administration, payments will be made to these individuals from the estate itself. Serving as an executor does not require any professional certifications or licensure but it can be beneficial to think about the financial obligations and understanding of the person that you choose to appoint in this role.

When a durable power of attorney for health care or living will is given to you voluntarily by another person, you always maintain the ability to revoke it so long as you are legally competent. One of the easiest ways to do this is to consult directly with your estate planning lawyer. Your lawyer might recommend the creation of a written statement that formally revokes this document.

Once you have created this written statement you might need to provide it to everyone who has a copy of your durable health care power of attorney. You should provide a copy of the revocation to the former power of attorney agent and every health care provider that might have previously had dealings with your former power of attorney agent. It is recommended that you destroy all copies of a revoked durable power of attorney for health care. However, you need to follow these additional steps to ensure that all of the aspects of closing out this initial power of attorney have been addressed.

As you can see, it can be somewhat complex to revoke a power of attorney but if it is the right decision for you at this point in time, you may need the support of an estate planning lawyer to guide you through the process and ensure that you have taken care of all of the details. Bear in mind that when you revoke a power of attorney and do not establish a new one, there is no one appointed in this role to make decisions on your behalf if you are unable to do so.

Many people work their entire lives for the hope of a well-deserved and peaceful retirement. With increasing longevity and the rising costs of health care, however, it’s important to make sure not to exclude the possibility of inflation impacting your estate planning.

Your retirement funds might make sense now and your projected retirement savings could cover a good portion of your day to day living expenses, but if you have not fully incorporated the possibility of long term care expenses or the rising cost of inflation, your cost of living could spike significantly.

Consider that even a 3% increase in inflation would mean that the general cost of living can double within just 24 years. Even if you are not 24 years away from retirement, increasing longevity means that you might spend a few decades in retirement after exiting the workforce and relying on all of your retirement funds for that entire period. Health care expenses are also growing at a much faster rate than general expenses.

In fact, over half of retirees in a recent study said that they were concerned that rising health care costs and one of the biggest risks to their overall retirement security, and those risks are only expected to increase. For example, overall health care costs are anticipated to rise by 5.5% every single year over the next 10. Making a plan now and consulting with your financial and estate planning professional can help you to have a holistic approach towards your own financial future.

The majority of Americans don’t have a plan in place but estate planning is not only for wealthy individuals and business owners. A basic plan can include a power of attorney, a living will, and a will.

Fewer than one third of people living in the United States today have even one or more of these documents, according to a 2020 research survey by Caring.com. The perception of cost is one of the biggest hinderances to people scheduling a consultation with an estate planning lawyer, but in some cases, the perceived cost is much higher than the real cost.

Getting an estate plan in place requires you to do some work in advance to decide what you want to accomplish with your estate plan and to look for an attorney who offers the ability to complete all of those documents or strategies together. A standard will meets the basic needs of most people and often doesn’t cost as much as you think but this is a critical document because you will appoint who will oversee the distribution of assets and manage creditors, and you’ll name a guardian if you have minor children.

Wills can become complicated if you have advanced family dynamics, such as if you or your spouse have been married before or have a mixed family. But you’ll want to have the ability to discuss your options with an estate planning lawyer particularly if you want your loved ones to be able to avoid probate. Ask around and get recommendations for estate planning lawyer so that you have a broad reach in terms of the approach they take to your planning as well as the overall cost.

Sadly, far too many children face the loss of their elderly parents and then have to take on the complicated task of selling a parent’s home. In the event that the will states that the children will receive the proceeds from the real estate’s sale, there are two potential outcomes that could occur based on whether or not the parent had appropriate estate planning in place.

Either children are eligible to receive the full proceeds of the parent’s home with no capital gains tax responsibility or they will instead owe tens of thousands of dollars to the IRS by paying this. This inadvertent and simple mistake happens when parents add their children to the title while they are still alive. It makes sense that you want the house to be able to pass to your kids so you retitle it in their name as well as yours so that the house automatically transfers.

However, this perceived kindness can end up costing your beneficiaries thousands of dollars in unnecessary taxes. It is far better to have an estate planning strategy in place that can help you to accomplish these goals without generating massive tax liabilities. It can be very difficult to go through the process of discovering these challenges after the fact and you definitely don’t want your loved ones attempting to cope with this on their own. Make sure that you work directly with an estate planning lawyer and a financial professional to ensure that you’ve taken care of all of the details related to your estate planning so that assets like your home can pass as easily as possible to your loved ones.

 

Tax increases on local or the state level could be levied against real estate in the near future. A new CNBC millionaires’ survey identified that 43% of millionaires shared that they already pay too much in taxes. Many of those millionaires are bracing for a potential tax hike in the next year due to the new presidential administration.

The survey included 750 people who had investible assets of larger than $1 million. The wealthy expect some form of tax increases due to the new administration as well as soaring deficits and spending. Those who responded to the survey said they planned few changes in their financial strategies or investments due to potential tax increases.

However, 16% of them said that they planned to make changes to their giving or estate planning. If you are part of a high net worth couple or family, it’s a good idea to consult with an experienced tax professional in addition to an estate planning lawyer to discuss your next steps and to create a plan for potential tax increases.

No matter what changes are on the horizon, you could on your team of professionals to help you adapt and create a plan in line with state or federal changes or even shifts in your own strategy or family.

The support of a dedicated estate planning lawyer can help you navigate changes as they come and keep you abreast of important issues that arise in the state or federal planning landscape.

 

If you created an irrevocable trust in 2020, you need to ensure that certain kinds of gifts that are made to the trustee to pay premiums are kept up to date. One aspect of an irrevocable trust that this influences are known as Crummey powers or annual demand powers.

This allows gifts to qualify for the gift tax annual exclusion and this means a written notice for any 2020 gifts or gifts in future years will then need to be issued. This can be very complicated if you have transfers made to multiple trusts in addition to outright gifts made directly to heirs.

You will then have to prioritize those gifts based on the terms of the trust and the dates to determine whether or not those gifts do indeed qualify for the annual exclusion. This can get even more complicated if you use other estate planning strategies, such as a generation skipping transfer tax.

This may require you to file a gift tax return to allocate the exemption for the GST and to ensure that the trust stays exempt from GST. As you can see, these strategies can be powerful and helpful for your estate plan but only when they are appropriately drafted, organized and followed through. For more support with advanced estate planning strategies, schedule a consultation with a trusted estate planning lawyer.

 

Controversy was generated when pop singer Prince passed away without a will or any other estate plan in place. Calculations from the IRS indicated that executors of the estate undervalued the overall assets inside by approximately 50% or $80 million.

According to the IRS, Prince’s total estate is worth over $163 million. The valuation that had previously been submitted by Comerica Bank and Trust, the administrator of the estate, was just over $82 million. According to court documents, the major discrepancy here relates to the recording interests and music publishing of Prince.

This generates a federal tax liability of over $32 million, which would roughly double the tax bill associated with the previous valuation. This would also include a $6.4 million penalty on the estate if it can be shown that there was indeed a substantial undervaluation of the assets.

The six sibling heirs of Prince have been caught up in this controversy since the pop singer passed away unexpectedly in April 2016. This has led to one of the most complicated and expensive probate estates in Minnesota. You can avoid this mistake by having a will and other basic estate planning documents in place well in advance of your passing