When you create an estate plan, you’re probably starting with a frame of you and your beneficiaries as the core people involved. However, this is not the full scope of everyone involved in your estate planning process.
There are four fiduciaries responsible with the entire estate planning process and they are known as an agent, an executor, a trustee, and a health care representative. An agent under a power of attorney makes financial decisions on behalf of the person who created this document. This is usually a spouse or child but can be different persons based on whether or not there is a business at stake.
A trustee’s primary role is to invest trust assets and to make distributions in accordance with the terms of the trust document. Usually a friend or family member is selected to serve in this role. A health care representative is the appointed legal agent to make medical decisions if the principal is unable to do so. These may be end of life decisions but it is not limited to end of life decisions.
All four of these people can play an important role in the estate planning process. They might play various roles in your estate plan at different times but all four of them should be considered important components of your overall planning strategy. Schedule a time to meet with an experienced estate planning lawyer to talk about your next steps.
One important component of protecting your family is thinking about how to use life insurance beneficiaries. Beneficiaries are those people who are entitled to receive your assets if and when something happens to you. The primary purpose of purchasing a life insurance policy is to protect your loved ones and give them funds they can use immediately when you pass away.
You might name both a primary and a contingent beneficiary to do this but the decision about who to appoint in this role is not always an easy one. Think about why you have life insurance in the first place, which people rely on you financially and would have difficulty paying ongoing bills if you passed away. What family members or other individuals would need financial support that would cover costs associated with your death, such as final burial and funeral expenses.
If you would like to leave money to a beneficiary of your choice, you might also divide up this death benefit accordingly. Set aside a time to meet with your estate planning lawyer to discuss how your life insurance policy works in connection with or needs to be considered as part of your overall planning strategy.
A lawyer can help answer many of your most common questions and help you decide who to name as beneficiaries. Life insurance is just part of your estate planning strategy, and it can work entirely separate from or as a complement to your will. When you work with an attorney who has an annual or regular estate planning strategy review, you will be able to discuss updating beneficiaries and making other changes at that time.
It’s well worth it to look at your financial accounts if it’s been years since you have done so. Up to date beneficiary designations are extremely important because even though you hope nothing happens to you, you want the beneficiaries of your choosing to receive those assets in the event of an accident are unexpected illness.
The original people designated as beneficiaries on things like your life insurance policy or your retirement plan might have changed especially if your family structure has changed due to a marriage or divorce.
If you’re married you can almost always change the beneficiary of your accounts without getting your spouse’s permission. If you pass away during a pending divorce, for example, your accounts will almost always go to the beneficiary, not the spouse. There are exceptions to this including IRAs, other tax-deferred accounts and 401(k)s.
These require the signature of a spouse to change beneficiary because they are governed by federal law.
With online accounts, it’s a good opportunity to remind yourself when doing your taxes each year to evaluate your beneficiary designations and verify that everything is up to date. Meeting with an experienced estate planning lawyer can help you avoid many of the most common mistakes in this process.
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.
Although your will and other estate planning documents can spell out your wishes, they might not cover everything. Beneficiary forms are used to designate who you wish to receive certain pieces of property when you pass away. Many of these pass outside of your will and can therefore, only be updated when you make changes to these forms.
The following four steps can help you accomplish these goals:
Check your insurance and retirement accounts since these are the once that most frequently have beneficiary designations, which will outweigh what’s inside a will.
Don’t leave any beneficiary sections on forms blank since this could mean that when the account goes through probate it will be distributed based on the state’s rules for who gets that property.
If you forget the beneficiaries that you’ve named on accounts or policies created many years ago, you’ll want to make sure that you update these on an annual basis.
Name contingent beneficiaries. These are people who will receive the assets inside the account if your primary beneficiary passes away before you do and you are not able to update the primary beneficiary designation.
Do you need help with this or other aspects of your estate plan? Contact a New Jersey estate planning lawyer to get a personalized walkthrough of your current plan and to start the process of defining your new goals and intentions.
Keeping all of your key documents in one place makes it easier to grab these in the case of an emergency or find them in any other event in which you might need them. But if it’s been some time since you cleaned up the family filing cabinet, this might be a great opportunity to schedule a consultation with your financial planner, your accountant or even your estate planning lawyer to discuss changes in your strategy.
This is a great time to do spring cleaning as it relates to your estate and your finances. If you’ve kept unnecessary old tax returns, utility bills or even medical records, now is a good opportunity to clean that out and leave the most important documents stored. You only need to keep your tax returns and related documents for a maximum of three years from the date the original return was filed.
However, if you are a business owner or individual filer, the IRS has the right to audit you for several years beyond that period. A general rule of thumb is that you can let these go after 7 years. You also don’t need to keep paper versions of these since digital records can be used in the event of an IRS audit.
Self-filers and clients may choose to work with tax preparation companies that allow you to store your tax documents uploaded from a computer or mobile device. Whether it’s a power of attorney, a trust or your will, estate planning documents should always be stored safely. One document that must be stored in a physical location from an estate planning perspective is your will.
There will be many hoops and jumps through the court in the event that you have to prove the will copy is valid. For more questions about the estate planning process, schedule a consultation with a lawyer in your area.
If a loved one, such as a sibling or a parent passes away and you are the beneficiary of that estate, it is natural to have plenty of questions about how various estate actions can impact you.
An executor will need to be appointed to manage the administration of the estate. The executor plays numerous different important roles in administering this estate including the process of identifying and cataloging all of the assets in the estate.
An executor is said to have a fiduciary responsibility to the beneficiaries of the entire estate. This means that they need to approach each aspect of their job with due diligence, document things clearly, and avoid any self-dealing or activities that benefit them and not the other beneficiaries. It could be very problematic for other beneficiaries like siblings to realize that the person appointed as executor has taken questionable actions or failed to account for different things they have done.
Bear in mind though that they can be filled with conflict when a family member questions how an estate is managed by another relative. You are entitled, however, as the beneficiary of an estate to an accounting of the assets, expenses, income, liabilities and distributions of the estate. You will want to speak with an experienced probate dispute attorney if you find yourself in this situation.
If you are a New Jersey resident and also own property in a timeshare, you need to make sure this is accounted for in your estate planning. Timeshares can be very difficult to get rid of and it is very often the case that heirs of a timeshare owner do not want to take on this responsibility or liability. One of the first questions to ask is, “Do I have a beneficiary who wants this timeshare?”
Beneficiaries who are notified that they now own a portion of a timeshare, can always disclaim or renounce a bequest that is made directly to them in the will. Just because you include something in your will, such as that you wish a certain beneficiary to have your ownership state in a timeshare, does not necessarily mean that this beneficiary has to accept it.
One common example could include a bank account or certificate of deposit that names a beneficiary designation as a sibling. This form would actually override a specific bequest in your will if it is noted differently there: how this bank account or CD will pass on. In this case the beneficiary designation form will determine who receives this asset. The same goes for closely held businesses.
A timeshare is a property that is owned within a contract and for this reason, the terms of a contract will stipulate what happens, not the will. If the will provision does not directly contradict the contract, the documents, however, can coexist. Due to the complexities associated with planning for a timeshare, it’s a good idea to have a relationship with an experienced and established estate planning lawyer to help you.
Did you know that you can leave behind a lifetime gift to your loved ones by doing the necessary work for your estate planning? End of life planning is not necessarily easy but it is so important and a great way to give peace of mind to your loved ones. If you don’t create an end of life plan, your state’s laws will determine who gets everything that you owned.
Furthermore, a physician that you have never met might be responsible for making final decisions on your behalf and your family members could be stuck trying to sort through messy probate.
The good thing is that most of these situations are completely avoidable. Some of the most common ways to ensure that your estate plan minimizes challenges for your loved ones include:
Name an executor.
Complete a comprehensive inventory of everything you own.
Think about relevant health care decisions.
Fill out your living will.
Name a medical proxy appointed to make decisions on your behalf if you become unable to do so.
Sit down with an estate planning attorney.
Even if you don’t have a big estate, there’s still plenty to be gained from the estate planning process. Leaving the gift of careful planning for your loved ones makes things so much easier for them during a difficult time.
Knowing what to do and when to do it can give you a great deal of peace of mind and confidence about the estate planning process. Schedule a consultation with an attorney you trust when you are concerned about crafting an end of life plan in conjunction with any asset protection planning, business succession planning or estate planning.
One of the most commonly misunderstood aspects of your estate planning is considering what you’ll do with your personal property. It is not recommended that you give all of your personal property to one of your beneficiaries and trust that they will be able to distribute it according to your wishes.
One of the most common methods for a person to deal with their personal property inside their estate is to distribute it equally among beneficiaries.
This does give everyone a say in the distribution but is not a perfect plan. You can use something known as a distribution clause to ensure that your wishes are clearly documented. You could, for example, establish a time limit for parties involved to agree as to how personal property should be distributed. This will primarily fall on the personal representative or the person named in your estate planning documents to handle the management of closing out your estate as well as your personal property.
The personal representative, for example, might be instructed through your will’s distribution clause to sell any personal property that is not the subject of an agreement within five months after the date of the person’s death. This can let everyone involved in the distribution clause know that if they are not able to come to reasonable terms of agreement and work it out on their own that the property might be sold to someone else.
This can help to spur along the possibility of collaboration and moving towards resolution. Another way to ensure that a distribution clause is taken seriously is to include a personal property distribution letter. This ensures that the testator can leave a properly executed property distribution letter detailing who gets what so there are limited opportunities for confusion.
Our NJ law firm is here to help you with estate planning needs.
The federal exemption for estate taxes in the United States is very generous, to the point that many people assume that they do not have enough assets to be worried about estate planning. In 2020, that threshold is $11.58 million per individual. You might think that estate planning therefore only applies to the extremely wealthy.
However, there are three reasons why thinking this way is problematic and why you might want to reconsider your frame of reference in deciding to move forward. First of all, you could become wealthier, particularly if most of your current wealth is in stocks. The government could also update the rules and limits for estate tax exemptions in coming years, and finally, some states have an inheritance tax.
This is particularly important for you if you currently live in a state that does not have and inheritance tax but are thinking about retiring in a state that does.
Regardless of where you’re at in your life, you need the benefit of estate planning to help you accomplish your goals and protect those you care about. Putting together an incapacity planning plan can help you get the peace of mind that if something happens to you and you become unable to speak for yourself that there’s a plan in place to ensure you get the care and support you need.
Schedule a consultation with a knowledgeable estate planning lawyer to walk through your options and make sure you’ve thought about estate planning the right way. Our office is here to help you review an existing estate plan or to create new documents and strategies.
Occasionally, clients ask their estate planning attorneys about how to leave behind shared gifts. This is an especially common scenario if you wish to pass along an asset to your children. Shared gifts are those that left to two or more individual beneficiaries.
Each of those beneficiaries receives a portion of the property
ownership. This is different than stipulating inside your will and other estate
planning documents that you wish a particular asset to be left behind and sold
while having the profits divided between the beneficiaries.
All of the beneficiaries with a shared gift instead own the property
themselves. If you are contemplating leaving behind a shared gift, whether to
children or to other beneficiaries, there are a few important considerations
you must review first.
For example, what portion of ownership does each beneficiary receive.
This should be spelled out directly in your trust. If you do not spell out the
percentages of ownership available to each beneficiary, it is typically
presumed by those reviewing your estate planning materials after you pass away,
that you intended equal shares.
There is no reason not to go into details on this matter. Furthermore,
consider who will maintain control of the property. If the beneficiaries intend
not to sell it and to keep it, those beneficiaries must agree about how the
handle their shared ownership.
They might wish to sell it and split the proceeds or want to keep it,
but in the event that the beneficiaries are unable to agree on how to use the
property, they could end up in litigation. The more you discuss your intentions
to pass on this particular item of property to future generations, the easier
planning will be.
Your estate planning documents certainly need to be updated after you get married for a second or third time, but have you overlooked this common mistake of failing to update your beneficiary designations.
Beneficiary designations outline how the property will pass to people on items such as your life insurance policy, your IRA and certain brokerage accounts. If you do not know this information or have not updated it in a long time, there’s a good chance that your previous spouse or another person who is no longer relevant or alive is the person named as your beneficiary. No matter what you have listed in your will, the information included on these beneficiary designations supersedes that.
This means that if you have painstakingly detailed what you hope to happen to these property items when you pass away, the beneficiary designations filed with the company, regardless of how old they are or irrelevant, will still be followed to the letter by the company. This is why you need to protect yourself by regularly updating your beneficiary designations.
It’s also a good idea to consider contingency beneficiaries. Contingency beneficiaries are those who are entitled to receive the assets inside these products if the original beneficiary passes away. Most people forget about the facts that someone who is listed as their beneficiary, even a child, might pass away before them and make the difficult situation of no one receiving these benefits or further confusion and problems. Schedule a consultation with an experienced estate planning lawyer if you are ready to talk about your options with regard to effective primary and contingent beneficiary estate planning and how to regularly evaluate and remind yourself about updating the beneficiary designation forms.
If you have a limited period of time or if you are concerned about accomplishing your estate planning tasks in a particular order, there are certain things you can do to make things easier on you as well as your loved ones. One of the first and most important tasks you should do is to designate beneficiaries on your financial accounts.
Certain bank accounts, retirement accounts and life insurance policies require you to designate a beneficiary. It is strongly recommended that you name a contingent as well as a primary beneficiary. This is because if something happens to the primary beneficiary, another person is able to step in and receive these assets right away.
Although it might seem very basic to designate beneficiaries in comparison with putting together a will, but designating beneficiaries is often more powerful than the will process because you can help to ensure that those assets don’t go through probate. Many people probably don’t know that many of the brokerages in the United States will allow you to attach a transfer on death instruction associated with your non-retirement account.
Transfer on death deeds can be used in real estate that is located in 27 different states. Consult directly with your experienced estate planning attorney to figure out what applies to you. After you have done this, you will want to outline all of your liabilities including your credit card debt, your mortgage and your loans. A contact list of people that your family members can reach out to for assistance is also strongly recommended.
Any of the professionals that you have used in the planning process such as your insurance agent, your attorney, your accountant and your financial advisor should all be included on a contact list with their name, business, contact details, and what services they provided. Even if you do already have an estate plan, it’s a good idea to work with an attorney on the estate planning process because you can avoid most common missteps and obstacles.
Are you concerned about what will happen to your assets after you pass away? If so, you may be ahead of the curve of many people who have not even contemplated the benefits of estate planning. However, updating your beneficiary designations alone, doesn’t always mean that you are fully covered with regards to protecting how these get transferred.
Assets that are transferred at death via appropriately completed beneficiary designations affect many different types of assets. All of your documents should be updated with your underlined goals in mind which means addressing not just the beneficiary designation forms but also all of your other legal documents, including your power of attorney, healthcare proxy and existing trusts.
There is no doubt that divorce represents a significant upheaval of everything you have come to know, however, an estate planning attorney can help you navigate these complexities and ensure that you have a plan to address all of the relevant issues linked to ending your marriage.
In addition to your beneficiary forms, keep on track with all of your goals for your estate planning in general, including updating your will and your trusts.
Far too many people make mistakes related to their beneficiaries on their bank accounts, retirement accounts or life insurance policies. These mistakes usually end up being a problem after the fact for your loved ones when they are not able to receive the assets and benefits that you intended.
There are seven common mistakes that can easily be avoided by conducting an annual review of your estate planning documents with an experienced estate planning attorney. Far too many of these mistakes can be easily avoided with a little bit of regular review and more often than not, the planning mistakes relate to situations in which you haven’t updated your materials after a major life change. The biggest mistakes include:
Not naming a beneficiary at all.
Naming your estate as the beneficiary of your retirement plan.
Having outdated beneficiaries.
Naming a special needs loved one as a direct beneficiary.
Naming a minor as a direct beneficiary.
Naming a child as the co-owner of an investment or deposit account.
Naming separate children or just one beneficiary for separate accounts.
These can all lead to catastrophic problems for your loved ones down the line and should be avoided with the help of an experienced lawyer.
When you fill out important forms with your IRA, 401(k) or your life insurance policy, you may be asked to distinguish between a primary and a contingency or secondary beneficiary. Your primary beneficiary is the individual who is first in line to receive any account assets after you pass away.
The secondary or the contingent beneficiary may be eligible to get the remaining account assets so long as there are no other surviving primary beneficiaries when you pass away. If you name your spouse as the primary beneficiary, for example, and your children are listed as secondary beneficiaries, the children will only be entitled to inherit assets if the spouse passes away before you do, or if the spouse does not claim entitlement to those assets. You can designate a charity, trust or another entity as your primary or secondary beneficiary.
You may get divorced or experience other life changes that prompt an update in your primary or secondary beneficiaries. When this happens, make sure you do more than contact your estate planning lawyer. While that’s certainly essential for any documents and plans you already have with your attorney, it’s also important to contact your bank and life insurance policy about any accounts where they maintain separate beneficiary info. This is crucial for updating all your materials and ensuring that if something happens to you that everything is recorded accurately. Otherwise, your wishes may not be carried out.
Make sure that you talk to your estate planning attorney to ensure that your designated trust has all the necessary legal requirements structured if you choose to designate a trust as a beneficiary for your retirement account. You may choose multiple primary and secondary beneficiaries depending on your individual needs. Make sure that you keep these forms updated on a regular basis as life circumstances change.
Although there are many different things on your mind as you approach your big day and updating your estate plan may not be one of them, it should certainly be if your upcoming nuptials is not the first time you have been married or in the event that you have children from a prior relationship.
According to a Pew Research Center report, up to 40% of marriages in 2013 were a remarriage for one or both partners. It is even more common, unfortunately, to have estate planning that does not measure up. Approximately two-thirds of individuals don’t have a will in the United States at all and nearly 10% have one that is completely outdated. Out of date documents can be even more troubling in the event that you are getting remarried as this could put your former children or your new spouse in a difficult situation.
Getting remarried is the perfect opportunity to set up a consultation with an experienced estate planning attorney to protect you. Getting remarried makes it all the more important to review your existing documents and update beneficiary information and consider whether you have other estate planning strategies that are no longer useful for you.
Any time that someone who is not related by blood is named as a beneficiary of an asset, lawsuits are a potential concern. When you are thinking about giving assets to someone who is not a relative, you need to be extremely careful and consult with a knowledgeable attorney.
One of the primary reasons that red flags are raised about leaving assets to anyone outside of the family has to do with elder financial exploitation which has been on the rise in recent years. Even in the event that a beneficiary or even the person granting the gift has pure motives, this could still raise questions when the estate is being probated.
Naming someone other than a natural heir as an estate beneficiary can bring forth a wide range of emotions from confusion to suspicion to anger especially because the majority of individuals in America will leave behind assets to a charity or loved ones who are related by blood.
One of the best ways to address this situation if you do plan to leave assets to someone outside the family is to have someone stipulate to your mental capacity at the time of making the will. Consulting with an experienced New Jersey estate planning attorney to ensure that your document is legally valid is essential as well.
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 email@example.com or over the phone 732-521-9455