Important Documents Series Part 1: What Should You Keep for Estate Planning Purposes?

Many people worry about having the appropriate documents on hand. In this four-part series, we’ll explore the various issues associated with keeping documents so that you know exactly what to hold on hand for the long term and what can be disposed of in a safe manner after an appropriate period of time. Certain documents should only be kept for three months or less. how long to keep planning documents

These might initially seem important or have personally identifying information on them, but they don’t need to be kept over the long haul and could actually expose you to a higher risk of identity theft if they’re floating around your home.

These may be good to keep for a couple of months, in case you become incapacitated and your financial power of attorney agent needs to step in. These documents to keep for 90 days or less include:

  • Utility bills
  • Receipts for everyday purchases
  • Credit card receipts
  • ATM receipts

Unless you have specific issues, like business deductions on your income tax return or company reimbursement practices, these receipts become inconsequential after a three-month period and can only add to the clutter in your office or your home. Your canceled checks or credit card and bank statements can be proof of payment for regular purchases and utilities. Certain documents need to be kept on hand for longer and we will explore these in tomorrow’s blog.

What You Need to Know About Prioritizing a Dead Spouse’s Debts


When a spouse passes away, it can be an alarming discovery to realize that they have more liabilities than they did assets. Paying off these expenses can be extremely confusing for a spouse who was appointed as the personal representative of the estate. When an estate does not have appropriate assets to pay all of the debts in full, they must be prioritized. The first of these debts that should be paid are all funeral expenses and any of the expenses and costs associated with administration. 

If the funeral expenses were advanced by the surviving spouse, those can be paid back first. Furthermore, someone who is serving in the process of probating the spouse’s estate will be able to get reimbursed for the cost of administration, like legal fees. Next in line for debts to be paid are taxes that are entitled to preference under state or federal law. Hospital expenses and reasonable medical expenses are the next in line to be paid, particularly to the point that they relate to the final illness. If there are medical bills for treatment that was not related to the final illness, that is included in the remaining category of unsecured loans and credit card bills.

Every legitimate claim in a category should be paid first, before moving on to the next category. This can be a difficult situation for a spouse to find themselves in after the loss of a loved one when the grief and other elements of moving through the claim can be especially difficult. To understand your rights and to move forward with powerful knowledge about the future, schedule a consultation with an estate planning attorney.

Are You Forgetting About an Estate/Tax Time Bomb?

If you’re a parent and you have used the New Year to do some estate planning for the year ahead, it’s important to get the perspective of an attorney while you do it. This is because many parents have good intentions, but actually set up a ticking time bomb for their children if the proper tax planning hasn’t coincided with setting up the future of your estate. shutterstock_173714501

Taxes can be hefty when an asset is sold, and the amount of the tax depends a great deal of how the asset became the property of the heir.

One such example has to do with real estate: well-meaning parents might pass on a residence deed to their children to avoid probate or to protect it from impacting their ability to qualify for government long-term care services. The child who receives it, however, would not have paid the parents the fair market value for the property. This is why the house would be seen as a gift, and one that potentially necessitates a gift tax return. If a child inherits the home and later sells it, the difference between what the parents paid for it and the price it sold for could be taxed as income for the child.

Any major assets like this should be considered carefully, whether you intend to pass them on during your lifetime or after. The advice of an estate planning attorney can prove especially fruitful during this time.



Living Trusts: The Importance of Proper Funding

If you have decided to use a trust to pass on your assets, this can be an exciting decision that gives you peace of mind about the firmness of your plans. If you don’t ensure that the trust is properly funded, however, it’s unlikely that your trust is going to carry out the plans that you intended.

If you already have assets inside the trust, make sure that you set up reminders to continuously review your materials and always have unfunded or new assets titled into the trust’s name. Don’t ever assume that these changes have been made, since the ownership of verification falls squarely on your shoulders. Keep copies of documents that confirm your changes so that you are always clear on what’s been taken care of already. If values have also changed, ensure that is updated as well.2014-10-20_1448

If an asset that you used to own has now passed onto someone else through a sale or closure, make sure it’s removed from your funding portfolio. This makes it easier on your family members in the future and the trust executor so that they are not searching for assets that are no longer present. To review your funding in your living trusts, get in touch with us through email at or over the phone 732-521-9455

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 or over the phone 732-521-9455

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.

(Photo Credit:

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 or contact us via phone at 732-521-9455 to get started.

How To Handle Leaving Unequal Amounts To Your Children

Many parents divide their assets equally among their children. That’s the easy way.

Family discussion
(Photo credit: Muffet)

But what if you want to give more to one child than to another? Is that fair? Is it a good idea?

Sometimes it may be the best plan. For example, maybe one of your children earns much more than the others. Does this child really need to share equally in your estate?

Maybe one of your children has several children of his own, while the others are childless or have only one child. That may be a good case for giving the child with the most children a larger share.

Another reason might be that one of your children spent a lot of time and energy caring for you in your old age. Shouldn’t that child get rewarded?

And what if one of your children went down the wrong path? Maybe he became addicted to drugs or alcohol. Should this behavior be reinforced?

These are difficult decisions posed in an article in the Wall Street Journal. And they can lead to hurt feelings, lawsuits and other problems.

If you end up giving different children differing amounts in your will or estate plan, your decision may end up being challenged in court by the child or children who got less. It could turn into a mess.

To make sure your wishes are carried out, make sure to prove that you are of “sound mind” when you drew up your plan. You might want to get a letter from your doctor or psychologist saying so.

At the same time, make sure to talk to each of your children and explain what you are doing and why. This could result in fewer bad feelings.

Perhaps you can establish a pattern by helping those who need the most help while you are alive, as well as helping those who help you by giving them financial support during that time.

You can also include clauses mandating that disputes be settled through mediation or arbitration, not litigation. You can even include a “no contest” clause that says if any of the beneficiaries tries to contest the will, that child’s share is forfeited.

These are tough decisions that your estate planning attorney can help you make when drafting your will or estate plan.


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Keys To Selling Your Family Business

There are plenty of challenges to running a successful family business. But they can look like a hop, skip and a jump compared to the challenges associated with passing your family business along to your children or other relatives.

English: Pugh's Garden Centre A family-owned b...
(Photo credit: Wikipedia)

Only 33 percent of family owned businesses survive the transition from first generation ownership to the next, according to an article in the Vail Daily.

Why so hard?

In some cases, it is because no one in the family is interested in taking the business over.

But more often it is because there no good succession plan in place.

To come up with a workable succession plan, you must collect the thoughts and opinions of all family members as to who wants to be involved and how. You must know who wants to do what kind of work.

You must also discuss retirement goals for family members, cash flow needs and the goals and needs of the next generation of management.

Key decisions, of course, include who is going to be in control and who will eventually own it.

Your succession plan could be based on setting up a family limited partnership, where you, as the general partner, control day to day decisions, but over time sell off shares to family members. Eventually you give up control to who is ultimately going to run it.

Or you could set up a buy-sell agreement, which allows you to name the buyer — it could be one of your children — and establish a price. Then your child could buy a life insurance policy on you and eventually use the proceeds to buy the business.

But there are many strategies that can be considered. Best to consult an attorney with expertise on business succession and business buying and selling.

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Teenager Gets $25 Million Fortune – With One Catch

Actor Paul Walker of Fast & Furious fame, who died in a car accident in November, left his entire fortune of $25 million to his 15-year-old daughter, who had recently left her mother and childhood home in Hawaii to live with him in California.

Paul Walker at the Fast & Furious premiere at ...
Paul Walker at the Fast & Furious premiere at Leicester Square. (Photo credit: Wikipedia)

Walker did not leave a dime to any other family members or even his girlfriend.

But Walker’s will did have one catch. His daughter, Meadow, will not be able to touch the money until she becomes an adult. Nothing unusual there, except that Walker named his own mother to be Meadow’s guardian.

According to an article on, this is a bit unusual and could be tricky. One wonders why he named Meadow’s grandmother as her guardian rather than Meadow’s own mother, Rebecca Soteros.

However, the matter will be decided by a judge later this month. In the meantime, Meadow is back in Hawaii living with her mother.

Walker was a very private person and not much is known about the circumstances of his breakup or the decision to have Meadow come live with him in California.

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Hoffman’s Will Raises Legal Issues

Actor Phillip Seymour Hoffman, who died of a drug overdose in February, had not updated his will in years. The mistake could prove troublesome for two of his daughters and their mother.

Philip Seymour Hoffman won a Academy Award for...
Philip Seymour Hoffman (Photo credit: Wikipedia)

The will was signed in 2004 when the actor had just one child, Cooper, now 11. But he subsequently had two daughters, Tallulah and Willa, neither of whom are mentioned in the will.

This may or may not be a problem.

The award-winning actor, who was just 46 when he died, left everything to his longtime companion, Marianne O’Donnell, the mother of his three children. But that’s just the beginning of the story, according to an article on

Since Hoffman and O’Donnell were not married, she does not get any of the estate tax breaks available to spouses. You can give an unlimited amount to your spouse during life or in an estate plan, with no federal or state tax applied.

Hoffman was worth an estimated $35 million at the time of his death. The federal estate tax exemption is $5.3 million, but the rest is taxed at up to 40 percent. New York has its own estate tax of up to 16 percent for non-spouses, with a $1 million exemption.

In all, Hoffman’s estate will be taxed at more than $15 million. And since they were not married, any assets that remain at O’Donnell’s death would be taxed again.

There may be a way out for O’Donnell, however, The will allows for her to turn down all or part of her inheritance and put it into a trust. Any assets that go into the trust bypass her estate and cannot be taxed when she dies.

But the fact that only Cooper was mentioned in the will, complicates the matter. The will provides that he get half the principal of such a trust when he turns 25 and the other half when he turns 30. However, the law of New York and most states protects children not named in a will that has not been updated from being disinherited.

The article suggests that O’Donnell, who is the executor of the will, should appoint a guardian to represent the two sisters.

Other matters that could complicate matters include if Hoffman had set up a retirement account or a life insurance policy.

But all the confusion could have been avoided if Hoffman had included a clause in the will stipulating that any reference to Cooper includes any other children born after him.

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Auld Lang Syne: Talk Estate Planning This New Year

Family Discussion
(Photo credit: LRJ53)

While it is not the first item on everyone’s resolution list, the New Year is a great time to discuss your estate plan with your family. As a recent article explains, the benefits of having the estate planning discussion far outweigh the problems that may otherwise arise out of the desire to avoid a sometimes awkward or difficult conversation.

First, discussing estate planning provides your family with a sense of empowerment because it allows your family members to take control of your family’s collective future. Without this element of control, many aspects of your estate plan are inevitably left to chance.

Additionally, through discussing estate planning, you can pass on your family values. For example, discussing charitable giving is a great way to talk about the causes you are passionate about. Additionally, you can discuss the stories behind sentimental objects and why you are distributing them as you have selected.

Finally, discussing your estate plan with your family helps to prepare the family, should you become incapacitated. Your family will be better able to carry out your wishes and tend to your affairs if they know what your plan for incapacity is and how you would like them to implement it.

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What About The Picasso? How to Manage Tangible Assets

As a recent article explains, high net worth families are increasingly turning to tangible assets to hold their wealth. A 2012 report cited in the article explains, “high net worth individuals hold an average of 9 percent of their wealth in tangible assets.” More than half of those surveyed stated that a large reason they purchase rare collectables and memorabilia is for the investment value of the items. Additionally, unlike a bank account, these assets have aesthetic benefits. Despite their many benefits, tangible assets do not come without some form of risk. Therefore, it is important to consider these assets as part of your overall asset protection strategy.

Asset protection for a tangible asset begins with an accurate appraisal. If you need help finding a qualified appraiser, consult an appraisal industry association such as the American Society of Appraisers. After you have gotten an appraisal, the next step is to confirm that you have proper insurance coverage. Most insurance companies offer a valuables policy, which allows a person to declare their valuable items individually and list the value of each piece or collection within the policy. Additionally, for tangible assets subject to price variation, many policies will guard against this by covering the item for its market value at the time of loss up to 50 percent over the value indicated on the policy.

While insurance is important, most people would rather not have to deal with loss of a valuable item in the first place. Therefore, it is also important to meet with a risk consultant with the goal of preventing loss altogether. Through working with a risk consultant, families can assess risk factors and provide more security for their items.


Our version of TMZ: Estate Planning Blunders & The Famous People Who Committed Them

Famous people are like us in many ways. They are born, they pay taxes, they make estate planning blunders, and they die. A recent article discussed several of the more common estate planning mistakes and the famous people who committed them.

English: US Congressional picture of Sonny Bono
English: US Congressional picture of Sonny Bono (Photo credit: Wikipedia)

Failing to Plan

Perhaps the worst estate planning blunder is failing to create an estate plan. When entertainer and Congressmen “Sonny” Bono died unexpectedly in a 1998 skiing accident, he left no estate plan. Therefore, his wife had to petition the court to administer his estate and continue his business ventures.

Failing to Seek a Professional

If anyone should be able to draft his own will without incident, it would be a former Chief Justice of the United States Supreme Court. However, even United States Supreme Court Justice Warren E. Burger couldn’t get it right. Burger drafted his own will, which contained simple errors, failed to address important things, and cost his family $450,000 in taxes.

Failure to Update

Importantly, a person’s estate plan should grow and change with him or her. Sometimes an out-of-date estate plan is worse than having no estate plan at all. When Actor Heath Ledger died at a young age, he had a will prepared. However, the will was drafted before the birth of his daughter, Matilda, and therefore left nothing to her.

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Make Sure Your “S” Is Covered: Estate Planning Considerations for S Corporations

It is important for those who hold shares in an S Corporation to carefully plan for the distribution of those shares. The stakes for these transfers are high, as a faulty transfer may result in the inadvertent termination of the corporation’s S status. A recent article discusses several considerations to make when planning for the transfer of S Corporation shares.

Individuals or entities such as estates or certain types of trusts may hold shares in an S Corporation. The types of trusts that are qualified to hold S Corporation shares include grantor trusts, qualified Subchapter S trusts, electing small business trusts, testamentary trusts, and voting trusts. All other trusts are considered to be non-qualifying shareholders.

If a shareholder’s estate plan inadvertently transfers his or her S Corporation shares to a non-qualifying shareholder, not only will the S Corporation be inadvertently terminated, but corporate level taxes may be triggered on the other shareholders. To avoid this fate, it is important to review your estate plan to ensure that your plan does not transfer S Corporation shares to a non-qualifying trust. On the other hand, the right kind of trust can be a powerful tool to achieving Estate Planning, Asset Protection & Business Succession Planning goals.

S Corporations can also work to avoid costly missteps by employing shareholder agreements, which provide that the shares may only be transferred to qualified shareholders. Additionally, S Corporation shareholders should carefully monitor shareholder trusts to ensure that the trusts remain eligible to hold S Corporation shares.

Applying the K.I.S.S. Principle: – Simplifying Estate Planning

For members of the baby boomer generation, estate planning is about more than organizing their financial affairs. Many Boomers wish to create estate plans that leave a legacy and make a difference in the world. However, when considering these estate planning goals, Boomers might quickly become overwhelmed with the task at hand. A recent article offers simple tips for Boomers to get started on their estate plan and create their legacy.

The first step in creating an estate plan is making a list of all of your assets. This list should include all real estate, valuable personal property, insurance accounts, retirement accounts, the value of any trusts, and any amounts you expect to receive before you pass on. When making this list, be sure to note if any of these assets are tied to debt, such as a mortgage or lien on a home. After you list your assets, consider how you would like to distribute them, and who you would like your beneficiaries to be.

Next, consider who you would like to serve as your financial power of attorney. This is the person who is tasked with managing your financial affairs should you become incapacitated. Remember that incapacity can take many forms, such as mild dementia or an intensive hospitalization after an accident. You may limit this power if you wish. For example, you could provide a limited power of attorney to only handle your small business. With these important decisions, creating an estate plan will be essential in detailing your wishes should you become incapacitated.

“Non-Tax Issues Within Estate Planning that Impact Everyone”

Estate planning is not solely about tax avoidance. A recent article discusses several other issues that render estate planning paramount, despite the value of your estate.

Medical Care
Every estate plan should include details as to how your medical needs should be addressed. A medical power of attorney designates who will make medical decisions for you, should you become unable to make these decisions for yourself. A living will designates what type of care you would like to receive. If you do not want life-saving medical treatments to be performed on you in the event of an emergency, consider a do-not-resuscitate order.

Avoiding Disputes
Poorly thought out estate plans often lead to chaos and disputes among a person’s heirs. Adult children often fight about the management and distribution of assets. Moreover, disputes become more common as a person’s family becomes more complicated. Do not assume that your children will work everything out after your death. Consider what disputes are likely and plan for them accordingly.

Care of Others
If you are caring for or anticipate caring for a relative, it is important to ensure that the person receives the appropriate care after you are gone. This person may be a child, elderly parent, grandchild or special needs family member.

Estate Planning Oversight Will Cost Koch Estate 3 Million Dollars

After the death of New York City legend Ed Koch on February 1st, 2013, his estate plan became the topic of public conversation. A recent article discussing the plan suggests that he could have saved his estate 3 million dollars in taxes had he set up an irrevocable trust.

Edward I. Koch, mayor of New York City, sports a sailor’s cap at the commissioning ceremony for the guided missile cruiser USS LAKE CHAMPLAIN (CG 57). Location: NEW YORK, NEW YORK (NY) UNITED STATES OF AMERICA (USA) (Photo credit: Wikipedia)

Koch drafted his final estate plan in 2007. Through his will, he directed that his 10 million dollar estate be distributed mainly between his sister, three sons, and secretary of 40 years. His estate plan did not utilize any type of irrevocable trust in order to facilitate these distributions. According to Managing Director of Estate Street Partners, LLC, Rocco Beatrice, using such a trust could have eliminated the entire estate tax bill of 3 million.

Koch’s estate will be required to pay New York state taxes of 16% on the amount by which it exceeds $1 million, as well as federal estate tax of 40% on the amount by which the estate exceeds $5.25 million. Assuming his estate is worth $10 million, these taxes would amount to $1.44 million and $1.90 million, respectively.

According to Beatrice, “That is a lot of money in taxes which could have easily been avoided.” Beatrice explained that, had Koch set up irrevocable trusts, the $3 million could have gone to his family, rather than the government.

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Family Wealth Can Be – Surprise! – A Curse

What some people would think of only as a blessing can also be a curse.

Family wealth is, at times, a double-edged sword, as Thayer Willis, author of “Navigating the Dark Side of Wealth: A Life Guide for Inheritors” and “Beyond Gold: True Wealth for Inheritors,” wrote in a recent article for Forbes magazine.

“But what many people don’t realize is that family wealth can be a curse. It was for me as a member of the family that founded Georgia-Pacific Corp.,” Thayer stated. “And that has given me an inside perspective on the privileges and tragedies that wealthy families encounter.

The biggest curse of intergenerational wealth for me and many other people is the illusion that you don’t have to do much with your life. You might want to and you might make the effort, but you don’t have the same pressure to earn enough to live on. And that takes away a lot of the incentive to find meaningful work.

Though many wealthy families attend to tax, financial and legal planning, with expert advice and well-developed strategies, they often neglect psychological planning. The consequences can be dire.”

Thayer offered three ways in which, without the proper psychological preparation, inherited wealth can amount to a curse, rather than a blessing.

They are:

  • Too much too soon
  • Too much financial focus
  • Ingratitude

“This results in the familiar demotivation that wealthy parents worry about,” she said of the first issue. “A form of laziness, it involves remittance addiction, being dependent on the money source. Kids aren’t required to support themselves. Parents have low expectations of the next generation.”

“This focus can be so big that families neglect human, intellectual and social capital in the family,” Thayer indicated regarding a laser attention on money matters. “As a result, there’s no balance. Instead, the emphasis is on the dollars, the assets, the strategies and the money managers. Family meetings only cover financial concerns.”

“Ingratitude is insidious, based on fear and anger. It leads to low self-esteem, insecurity and the self-doubt that comes from never having become good at anything.”

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Selecting Your Personal Representative

When creating an estate plan, one of the most important decisions to make is selecting a personal representative. A recent article discusses some of the different options individuals have when making this important decision.

Most people will select a close friend or family member to serve as their personal representative. If you choose this type of person, be sure that you select somebody you can trust to follow your final wishes. This person does not necessarily have to live close to you, or even in the same state as you. However, proximity to your estate does ease the process of estate administration.

If you would like to select a professional to serve as your personal representative, consider an estate planning attorney. Attorneys are beneficial because they are knowledgeable as to the law, and have a wealth of experience in estate administration. Speak with your estate planning attorney to determine whether they offer such services. If they do not, they may be able to recommend another professional who can assist you.

Another professional option is the trust department of a bank. As with estate planning attorneys, banks are a good option because they are knowledgeable professionals with a wealth of experience.

Why Everyone Needs An Estate Plan

With the current estate tax exemption over $5 million – $5.25 million to be exact – many people wonder if estate planning is necessary for them. As a recent article points out, the answer is yes.

Estate taxes are only one of a myriad of reasons why a person should put together an estate plan. The main reason for which people create estate plans is so that they can be sure that their assets will be distributed according to their wishes. No matter if you are very wealthy, or have a modest estate, an estate plan is vital if you wish to direct the distribution of your assets. Moreover, by providing instructions for an orderly distribution of your assets, you can save your heirs from the infighting that often results.

It is also important to draft a valid will if you wish to avoid probate. Many people falsely believe that if their estate is not subject to estate taxes, it is not subject to probate. This, however, is not the case. If you would not like your estate to go through the process of probate, you must put together an estate plan that utilizes various estate planning tools that will transfer the bulk of your estate outside of probate.

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