Is It Time to Clean Out the Family Filing Cabinet?

  

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. 

Are Fees Taken Out of an Estate for an Executor Legal?

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.

How Do I Get Rid of a Timeshare as Part of Estate Planning?

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.

 

Think of Your Estate Planning as a Lifetime Gift

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. lifetime-gift-estate-planning

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.

Understanding Distribution Clauses in Your Estate

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.

 

Do You Think You Are Not Rich Enough to Consider the Benefits of Estate Planning?

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.

 

How to Estate Plan with Gifts That Are Shared by More Than One Beneficiary

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.

Five happy smiling kids lying in line on floor. On white.

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.      

Do Beneficiary Designations Really Matter After Your Second Marriage?

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.

 

Should I Create My Will or Designate Beneficiaries First?

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.

What Happens If You Rely on Beneficiary Designations Alone to Transfer Your Assets?

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. estate-planning-bene-forms

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.

 

Most Common Estate Planning Mistakes Related to Beneficiaries

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.

What’s the Difference Between Primary & Secondary Beneficiaries?

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.

 

Getting Remarried? It’s Time to Update Your Estate Plan

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.

 

When an Inheritance Passes Outside the Family, What Concerns Are Raised?

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.

Married Without Children? An Estate Plan Can Help You Give Back

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.2014-10-20_1444

Leaving a legacy is one of the biggest benefits to putting your estate plan together, whether you have children or not. If you’re ready to talk over your options, contact us at info@lawesq.net or over the phone 732-521-9455

Lessons from the Joan Rivers Estate

Joan Rivers was heralded as a stellar performer, but she also left behind a legacy as an incredible businesswoman. Her estate included income, collectibles, and real estate that was estimated in value between $150 million and $250 million. She left behind detailed instructions for her assets after her death, which is rare in a society when many celebrity deaths highlight the weaknesses of their estate plans. Photo Credit: breitbart.com

Looking at her careful planning, there are a few key lessons: be prepared for the unexpected, outline plans for pets, and correctly title the assets. Joan Rivers was also masterful in giving her family a brief overview of the estate plans to help improve clarity and reduce the possibility of arguments. Rivers made use of family trusts to reduce the tax burden for her beneficiaries and titled her assets

appropriately to allow for the smooth transition of business assets. This act alone helped to diminish her capital gains taxes.

Regardless of the size of your estate, proper planning allows you to pass on assets to your heirs in the most efficient manner while minimizing the tax liability. Contact our offices today for a consultation for your business and personal needs through email at info@lawesq.net or contact us via phone at 732-521-9455.

Newlywed Estate Planning

While there is a great deal to celebrate getting ready for your wedding, don’t neglect this excellent opportunity to delve into your estate planning as well. Unfortunately, as you may already know, accidents can happen at any time. Of course we all hope that nothing impacts your new family and celebrations, but it is critical that you discuss your plans with your new spouse and outline your plans early. Remember that it will be much easier to update them later on once you have decided on the proper documents, but that you should never neglect putting your plan together entirely.

Newlywed Estate Planning

Photo Credit: gogirlfinance.com

You can begin with small steps, like changing your account beneficiaries. This is one of the easiest things to do in your overall estate plan, but there are big ramifications if you’re adding on your new spouse. Do it early. Make sure you update your life insurance, IRA, and 401k accounts, including any others that may have beneficiaries listed in the event that something happens to you.

Your next step should be to look over any wills that both of you have and to ensure that each individual has a solid will reflecting his or her current wishes. Powers of attorney and medical directives are also crucial for new spouses who may be updating their information from the past to reflect their new marriage. For more ideas about transitioning your estate planning to married life, contact us through email at info@lawesq.net or contact us via phone at 732-521-9455 to get started.

Supreme Court Decision: Inherited IRA NOT Protected

A recent decision from the Supreme Court means there’s no better time than now to review your estate plans and ensure that you have identified the best possible solution for passing down assets to another generation. This new ruling states that inherited IRA funds DO NOT QUALIFY under the category of “retirement funds” under bankruptcy exemption guidelines. Previously, these kinds of funds might have been considered “bulletproof” from creditors, but this new ruling means it could be time to re-evaluate how you’re transferring your assets down to children and other beneficiaries. Is a Standalone Retirement Trust or IRA Trust right for me?

Supreme Court Decision Inherited IRA NOT Protected
(Photo Credit: baltimoretimes-online.com)

According to the Supreme Court, the members of which conducted reviews of the Bankruptcy Code to get more specifics on the situation, inherited IRAs should not count as retirement funds because the individual inheriting the assets cannot contribute to the funds or invest more money into them. Since the IRA also requires that the accountholder draw money from the account, the Supreme Court argued that this would “undermine the purpose of the Bankruptcy Code”.

Each client wishing to establish plans for the future transfer of assets to beneficiaries has their own concerns and situations, which is why it’s so critical that you work with a team of experienced planning attorneys to meet your goals and increase the chances that those assets will be protected and meaningful for the beneficiary. To review trusts and other options for asset transfer, email info@lawesq.net or contact us via phone at 732-521-9455

It’s not all about the cash: Passing on Wealth and Wisdom

It might feel overwhelming to put together your estate plan, but it’s a good tool for you as well as your children. Taking care of your needs early on can encourage children to plan for the long term and to consider their own estate plans. One of the biggest hurdles with regard to estate planning, in fact, is that there’s a general stigma when it comes to talking about money. Simply setting aside some time for the conversation is a valuable process.

Its not all about the cash Passing on Wealth and Wisdom
(Photo Credit: danielharkavy.com)

Many people that estate planning is simply for the management of their assets after they pass away, but that’s simply not true: it plays just as vital a role during your life, too. If you become incapacitated, a comprehensive estate plan will lay out your wishes clearly for your family members and other stakeholders. It’s also a tool that can be used to reduce risk and minimize taxes while protecting wealth- all of which are just as valuable while you are living.

One mistake to avoid in thinking about your estate planning is in seeing your wealth only for what it can do for the next generation in a positive light. Sometimes, there’s another impact that’s often forgotten- what your assets do to them when it comes to unintended consequences. Taxes can take a big hit on the assets if plans are put into place in advance, and gifts may even cause arguments between family members. Not every child, for example, will react the same way to learning that Mom or Dad has left a gift behind.

Estate planning is just as much about your mindset and passing on your wisdom as it is your wealth. To help create a living legacy that makes the most sense for your family, call us at 732-521-9455 or reach us through email at info@lawesq.net .

Banking on an inheritance? Don’t count your chickens before they hatch!

New research from the Insured Retirement Institute shows that although nearly two-thirds of older individuals considered leaving an inheritance behind important in the past, those numbers have shifted out of beneficiary favor. According to their report, less than half of baby boomers today believe it’s critical to leave behind an inheritance.

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(Photo Credit: greekweddingtraditions.com)

So, what’s behind this big shift in attitude? Many older individuals and couples want to see that you are capable of handling an inheritance first, taking the following factors into consideration:

  • A pattern of good financial decision-making skills. This doesn’t mean you’re mistake free on your credit report. Parents just want to see improvement and a pattern of it to verify that you’re responsible enough to handle a lump sum inheritance.
  • Understanding of your own financial missteps and accomplishments. Once again, it’s not about being perfect. Some older parents thinking about an inheritance left behind want to know that you’ve made your mistakes, learned from them, and moved on. It’s a sign that you’re growing in terms of financial independence and understanding. If you have a pattern of racking up debt and then struggling to pay it off, however, that’s not a good sign.
  • Debt awareness. Are you making student loan payments? That’s okay, because it was an investment in your future. Credit card debts and big car loans, however, show that you might not be familiar with the right kind of debt- or the right way to pay it off. Both are red flags for parents.
  • Educate yourself. No need for a post-graduate degree here, but certainly some financial education on your own through books, planning, and even videos can be really helpful. Find out your weak spots and work to improve them on your own. This shows ambition and desire, both of which parents love to see.

There’s never been a better time to get started. To discuss your plans for asset protection, tax minimization, and your estate, email info@lawesq.net or contact us via phone at 732-521-9455 to get started.