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What Is the Purpose of a Charitable Trust?

In discussing and researching options for your own estate planning, you may come across multiple options and strategies that can help you accomplish your goals. This can be further cemented by talking with a knowledgeable estate planning lawyer about your next steps, and you might hear the term charitable trust as part of this planning process.

At its most basic level, a charitable trust holds assets inside and distributes them to charities. How the assets will be managed and invest will depend on what you have specified in the trust. You can also use the terms of the trust to determine how it will make donations. Tax advantages are available to those creating a charitable trust but other forms of trust management may be more appropriate for you based on the individual goals you intend to accomplish.

One of the biggest reasons to use a charitable trust is to establish a long term plan for charitable giving. When you establish a charitable trust for these purposes, you can continue to make gifts over a long period. The trust is completely separate from you when established for charity. Any assets held inside the trust are owned by the trust and the trust requires management and pays taxes just as any other legally recognized entity would. To ensure this is the right fit for your estate planning strategy, schedule a time to speak with a lawyer.

 

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Study Show Few Employees in America Are Confident in Their Retirement

Do you have a solid retirement or estate plan? If not, you could be exposed to unnecessary challenges in the future or put your loved ones in a difficult situation.

Only 24% of US workers reported that they were very confident they’ll be able to retire in the lifestyle they want, according to a new study from the Trans America Center for Retirement Studies.

Demographic segments also have multiple implications for how people feel about retirement. In total, just under 35% of workers who have a household income of over $100,000, for example, are very confident about their future retirement, but that number drops all the way down to 14% for household incomes between $50,000 and $99,999.

Urban workers are more likely than rural and suburban workers to feel confident in their retirement abilities and those with full time positions are more confident that they’ll be able to retire at the age and lifestyle level they want. It becomes extremely important to consult with a knowledgeable estate planning lawyer about your individual goals and how they connect to your retirement strategy.

The support of a lawyer is instrumental in giving you the help to navigate through this process and increase your chances of a comprehensive planning strategy that adopts your retirement and estate planning goals.

 

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What Is Succession Planning with GRATs?

The gap between what your current business is worth during the process of completing your estate and succession planning and what it could be worth in the future when you pass away should be considered as part of your overall planning process.

Many people choose to address this financial gap using a tool known as an irrevocable life insurance trust. When an irrevocable life insurance trust is structured correctly the benefits in that insurance policy do not pass through probate and can be available to your beneficiaries immediately. This can provide valuable cash reserves for the payment of estate taxes or other concerns.

You might also wish to retain a source of income for yourself while passing your business assets onto your children, and you might be able to use a tool known as a grantor retained annuity trust to accomplish this.

If assets inside grow during the course of the trust, the appreciation is not subject to estate taxes if you’ve done your planning properly. This can be a very beneficial and powerful tool for passing on a business that is growing rapidly. As with all things related to business succession planning and estate planning it is important to have the support of an experienced lawyer to guide you through the process. Schedule a consultation with a dedicated lawyer today to learn more.

 

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Signs of Alzheimers in Loved Ones

If you notice that a loved one has started to show signs of dementia, this is important from a care perspective a legal perspective. The sooner you can get them necessary help, the better you’ll understand treatment options as well as some of the things you can expect if the disease progresses.

Likewise, there are key planning steps that must be taken in the early stages of Alzheimers to protect that loved one’s needs and wishes. If the disease progresses and they are no longer able to speak up for themselves or be seen as legally competent to make their own decisions, this can create a cluster of legal issues around guardianship and their estate planning.

Although there are so many things to think about when you realize that a loved one has dementia, don’t let the planning fall by the wayside. If you suspect that you’ve seen signs of early dementia, this detection process is important because you can get a diagnosis and begin exploring treatment options sooner rather than later.

Here are some of the key symptoms that your family member might have dementia. As always, get these reviewed by a medical professional to confirm any diagnosis:

  • Memory loss that makes you concerned about their safety or is seen as a disruption to their everyday life
  • Your loved one has difficulty completing basic tasks or suffers from forgetting things often
  • Trouble understanding relationships
  • Confusion related to place or time

If your loved one is beginning to experience these issues, you want to take them seriously and decide to move forward with getting a healthcare professional’s insight as soon as possible.

If you need assistance with planning after someone in your family has been diagnosed with dementia, time is of the essence. Contact a dedicated estate planning lawyer now to learn more.

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When Should You Consider Using a Charitable Lead Annuity Trust?

If you experience an income or financial surge this year like a bonus, a sale of crypto currency, or appreciated option exercises, you may wish to use a charitable lead annuity trust strategy to respond to it. There are three primary situations that should trigger you to think about a grantor CLAT.

They include:

  • You have a very high tax bracket due to your income
  • A low interest rate environment exists
  • You have a long period of time to allow your money to grow without touching it

Whether you’re paying significant taxes on crypto farming, receiving RSUs taxed as ordinary income or exercised start up equity that has appreciated highly, there are tax benefits you can tap into through a CLAT. The first is the ability to create return arbitrage and second is to shift your current income into long term capital gains.

The major downside of using a grantor CLAT is that you will not have immediate access to the capital. You will need to plan for the capital to set aside for at least 20 years and you do remain responsible for the income inside the trust in that interim period.

To determine whether or not a grantor CLAT is the most appropriate tool for you to create in 2021 or early 2022, you should schedule a consultation with an experienced and knowledgeable lawyer to discuss your next steps.

 

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New Study Shows Reverse Mortgages Could Improve Wealth and Reduce Risk for Retirees

Retirees have many important considerations when it comes to elder law and their estate planning. One financial option that is advertised to many retirees is a reverse mortgage.

A new study completed by the Finance of America Reverse publNew Study Shows Reverse Mortgages Could Improve Wealth and Reduce Risk for Retireesished in the Journal of Financial Planning found that reverse mortgages when used properly can help appropriately mitigate risks for millions of retirees when they are properly educated about how to use them. The biggest benefit for reverse mortgages, the study found, applied to those people with $100,000 to $1.5 million in investable assets.

A reverse mortgage with a coordinated withdrawal strategy could help decrease the possibility for retirees to run out of money while also improving their gains over time. There are many important considerations for those people who are thinking about using reverse mortgages or other strategies in their older years.

A reverse mortgage is not the right choice for everybody, however. It depends on your specific situation and your needs, which should always be discussed with your financial team. 

You must think about your retirement drawdown strategy, other assets you have access to, and what you hope to pass on to your loved ones. In all of these circumstances, the support of an experienced team of financial professionals including an estate planning lawyer can be instrumental in supporting you.

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In Which States Do People Pay the Highest Estate Taxes?

Estate taxes don’t apply for the vast majority of estates in the United States, however, there are 17 locations with their own inheritance and estate taxes. A report from the Internal Revenue Service reveals tax data from the year 2020 showing that over 1200 taxpayers ended up owing estate taxes to the tune of $9.3 billion after state death tax deductions and allowable deductions.

Verifying that you have a taxable estate should prompt you to contact an experienced and knowledgeable estate planning lawyer. There are many different strategies that you can use to minimize your estate planning and tax obligations at the time that you pass away, but it does require advance work with the support of an experienced and knowledgeable lawyer.

New Jersey came in at number 11 on the top 15 list with 92 people who had gross estates of over $2 billion total and a net estate tax of $142.8 million. If you haven’t yet taken advantage of estate planning strategies, schedule a consultation with a lawyer now.

With many possible changes on the horizon with federal estate tax rules and limits, you’ll want to be in touch with a legal team who can keep you informed about these issues and help you navigate many any required changes to your plan. With so many aspects to think about, a lawyer’s insight can help cut through some of the confusion and allow you to create a custom plan for your family’s needs.

 

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Does My Executor Need to Keep a Detailed Log of Assets?

Who you choose to serve as an executor and the information at preplanning you do for them can make a big difference on how easy it is for them to handle probate.

Executors, also known as personal representatives, have important responsibilities that all must be handled with care. The first of these is to begin by gathering information. It is very important for a personal representative or an executor to keep a detailed log of all assets. This is often overlooked but a clearly detailed record of every item or asset that is to be distributed is especially important if there is no will in place.

This also ensures that nothing is unaccounted for or misplaced. Representatives, creditors, attorneys and even beneficiaries can ask for information about what was included in the estate so keeping a thorough log can help to prevent any issues later on in the process.

Before distributing anything, make sure that you sit down and complete this detailed log, you will thank yourself later when it becomes much easier for you to reflect back on this information and show how you have clearly approached each part of the process. The support of an experienced attorney is instrumental in guiding you through these phases

 

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What is Premature Asset Division in Probate?

An executor or personal representative is responsible for handling many aspects of probate, including the distribution of assets once other administration issues have been managed. However, prematurely passing on these assets to beneficiaries can come with consequences.

It might seem easier or even a good way to make beneficiaries happy by making those distributions right away, this can be illegal and can expose you to personal liability. It’s much better to make a comprehensive list of all the assets and then hold them until probate can be completed.

At the early stages of probate, you don’t know about all the possible legal creditors, either. This means someone could come forward with a legitimate claim once you’ve already liquidated or given an asset to someone else. This does not delete the creditor’s right to recover, which can create a very complex situation.  You don’t want to have to go back to that family member and ask for the item back.

Another reason to wait to make any transfers is that not all assets are probate assets. Some technically do not fall under the guidance of the will, such as retirement accounts or those placed in trusts. If those accidentally get lumped in with probate assets, this could create unnecessary confusion as well as personal liability.

If you’re newly appointed as an executor, even if the deceased person left great instructions for you, you might still want to hire an experienced probate lawyer to assist you with the many tasks required to close out probate. Even if you have a decent handle on all that is involved, it’s helpful to know that you’re on track and to feel confidence about the order in which you accomplish things.

Haven’t yet created your own estate? Contact an estate planning lawyer now to learn more about creating a personal plan.

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Company Owners Need Individual and Business Estate Plans

Many sad stories about celebrities highlight the importance of estate planning. Many of them leave behind complex assets and high value items. Without estate planning, this leaves their loved ones coping with probate problems for months or even years.

A similar situation applies to those entrepreneurs who don’t look at their personal and professional estate planning as worthy of effort. Consider the estate of Tony Hsieh, Zappos CEO, who passed away suddenly in a fire at age 46. With an expected net worth in the hundreds of millions of dollars, his family was shocked to learn that he passed away without a personal estate plan.

It’s believed that over 60% of Americans don’t have an estate plan at all. Without a personal estate plan, your loved ones might struggle to receive the assets that you intended them to have. As a company owner, however, you can’t ignore the related challenges with your business.

Your business requires considerations and questions like:

  • What happens if I become disabled or unable to make decisions within the business for a period of time?
  • Are there any other owners or key employees who need to be included in the planning process?
  • What existing documents do we already have in place with a succession plan?
  • Do we have insurance policies in place on key employees to allow us to hire new help and weather the storm if they were to suddenly exit?
  • What does the future of my business look like?

Most business owners want to know how their company will expand and grow in the coming years. It’s equally as important to have the support of an experienced business succession lawyer to guide you through the process and help you figure out answers to the questions above.

If you need help defining what your succession plan is and the key people involved in that process, now is the right time to document and implement that plan.

Reach out to our office today to learn more about estate planning, business planning, and how to make sure these work together.

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What Happens to a Beneficiary’s Share of the Estate If the Beneficiary Passes Away?

If parents create wills naming contingent beneficiaries as their two adult children, there is always the possibility that the adult children will pass away before the parents.

This can have implications for the contingent beneficiary’s share. Language of the created will impacts what happens with each beneficiary’s share. Some wills allow the surviving sibling to receive the entire estate with the remainder getting divided among any living children.

However, the more common strategy for accomplishing these planning goals is to use a per stirpes. This language in a will means that if a child passes away before the testator and this child has surviving descendants, that pre-deceased child’s share goes to the descendants.

If your assets are inside a trust or life insurance policy, then the naming of a contingent beneficiary ensures that there’s a plan to pass on those assets to someone else. Make sure you review your contingent beneficiaries and backup plans on a regular basis.

You can always discuss the specifics of your estate planning strategy directly with your lawyer to verify that this covers your intended goals and plans. If you don’t yet have a plan for what to do with your backup beneficiaries, an estate planning lawyer can give you the support you need.

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Most Americans Today Have an Estate Plan That Is Outdated; is Yours?

When is the last time you really sat down and reviewed your estate plan? It’s probably been awhile. If anything has changed in your life since the last time you made this plan, now is a great time to review. Whether you’ve adopted, had grandchildren, had a change in marital status, or simply accumulated more possessions, you need a plan.

Most people have not updated their estate plan recently and may not have even considered some of the important questions about what would happen to them, their medical care, their children or their property if something happens to them. If you are unable to make decisions at a future point in time, you may need those estate planning documents to be in place for your family members to make important and quick decisions.

Many people get overwhelmed by estate planning or assume they don’t need it and these are big mistakes that could block you from getting the important benefits of the estate planning process. It’s a good idea to instead consult with a knowledgeable lawyer to discuss the opportunities available with estate planning. You can start by writing down what is most important to you and if you have any specific requests around what you want to happen to certain pieces of property.

Likewise, if you and your spouse can agree on who would be responsible for taking care of your minor children, it is vital to document this in at least a basic will. The support of a lawyer can go a long way for answering many of your most common questions and helping you to understand the next steps available to you. If you haven’t updated your plans in several years, it is now the perfect opportunity to schedule a consultation. If you’ve never created a plan at all, there is no time like the present. Reach out to a knowledgeable estate planning lawyer today to learn more.

 

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How Does Location Affect Your Vacation Home Planning?

If you are holding title to a piece of real estate property that you intend to pass on to your loved ones and it’s in a different location, you’ll need to think carefully about how this location could impact your planning options. One of the best ways to approach this strategy overall is to schedule a consultation with an experienced and knowledgeable estate planning lawyer. Your estate planning lawyer can help you consider all of the different aspects of your planning concerns and craft an individualized plan that helps to accomplish your goals. Nj-vacation-home-estate-planning

You want to be careful if you hold title to a vacation home in a different state other than your primary home. If you own tangible property like a piece of real estate and what is known as ancillary estate or a second location, the executors of your will might have to open a second probate proceeding. You might think about placing that property inside an LLC or a trust which could help prevent having to open a second probate. 

There are many different strategies available to you when it comes to making a plan for your estate and for vacation homes but you need to start by considering the opportunities of working directly with an estate planning lawyer who is very knowledgeable about your concerns. The support of an attorney can help you avoid catastrophic mistakes that could make it more difficult for your loved ones to receive this property.

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What is NJ Will Probate?

If you are a family member, beneficiary, or appointed executor, you might have questions about how that probate is handled when a loved one passes away. Understanding the NJ will probate process can make things easier for all the people mentioned above to understand what goes into this and some of the common pitfalls that can happen. NJ-last-will-and-testament

The one person who has the biggest responsibility in a NJ probate is the executor. This person has the job of probating an existing will, in which the existence of a will is used to determine validity of that legal document. The authenticity process begins when the will is submitted to the County Surrogate for the county in which the deceased person lived. An original copy of the will must be submitted for that process to work.

When the person who created the will streamlined their estate plan and when the executor is familiar with their role, probate will be much easier for beneficiaries. The executor also has the option of getting the help of a probate lawyer in NJ to help them with all the estate-related tasks.

An executor cannot start probating a will until ten days has passed from the decedent’s death. A certified copy of the death certificate, information about names and addresses of next of kin, and an original copy of that will should all be brought to court to start probate. Once received and approved, the executor receives their letters authorizing them to act in the capacity of executor.

The executor will eventually pass on remaining assets to beneficiaries, but has several important tasks before then, including notifying creditors about the estate and reviewing any claims submitted by them. After debts and taxes have been paid, the probate is concluded by distributing remaining assets to those named in the will or next of kin if no will is available.

Have you named an executor for your NJ estate yet? If not, now is the perfect time of year to create or updated your estate plans.

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What Happens If My Spouse and I Are Retiring at Different Times?

It is very important to get on the same page as your spouse when you’re thinking about retirement and estate planning goals. This may be the only way for you to protect your interests and to avoid unfortunate conversations or challenges in the future.

Although most couples know that retirement is important and assume they are on the same page, research has shown that many of them are thinking about things differently. This can be very problematic when you only realize this as you get closer to retirement. In fact 34% of couples disagree on whether or not they are spenders or savers, and 8/10 couples anticipate and desire living a comfortable retirement life but nearly half of them disagree on the age that they will retire at. Have a conversation with your spouse about when you intend to retire.

This can occur for several different reasons, such as age differences or one person may not be ready to retire. It can be advantageous to accrue more substantial benefits to your social security and save more and can even get a trial run for retirement when one couple plans to retire first. Retirement is a difficult transition and you need to have open and honest conversations with your spouse about it as well as adjust any estate and retirement plans to ensure you have accounted for any differences in your strategies.

In these circumstances, you deserve to have a lawyer walk you through the process so you have a clarity on what you have to anticipate and can help you move forward effectively.

 

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What Happens If My Power of Attorney Agent Just Doesn’t Act?

The selection of a power of attorney agent is an important one because this person is responsible for acting on your behalf and in your best interests, but what happens if the power of attorney agent doesn’t act at all? Sometimes an agent might be unable to handle decisions for you because they are sick themselves.

In other cases, they do not want to handle the decisions. If an agent does take the action, however, they have to act in your best interests and in line with the power of attorney for property that was drafted by you. It’s always a good idea to speak with your power of attorney agent when you begin to craft this document to make sure they clearly understand their responsibilities and what is expected of them.

This is also a good opportunity if your power of attorney agent to voice their concerns over disinterest in acting. It can be difficult to be named as someone else’s power of attorney agent when you’re unclear of this role or do not realize what it entails until you are appointed. At that point the agent is put in a difficult situation of trying to act in the best interests of their loved one.

Make sure that you schedule a time to speak with a dedicated estate planning lawyer to think carefully about who you should name as your power of attorney agent and to schedule a separate time with that agent to walk through the potential responsibilities and expectations.

 

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Are We Facing a Long Term Care Crisis?

The cost of long term care is a top concern for plenty of retirees, but new research shows that we could be facing a potential crisis in the U.S. when it comes to providing it.

The oldest of the baby boomers will starting turning 80 in 2025, more people will need support for their healthcare concerns. Since most people have not planned for the possibility of long term care, this is likely to have the biggest impact on the adult children of those baby boomers.

Being a caregiver comes with many challenges. Most adult children have working lives and families of their own, and depending on their loved one’s caregiving requirements, this can be challenging. Most are not prepared and don’t have the time or the healthcare training needed to help with advanced situations. But family members are often a stopgap method of giving long term care support when a loved one cannot afford a nursing home yet.

Longevity has increased, but outside of Medicaid, there’s no real system in place to help people plan for and pay for long term care. Since it can be so expensive for a person to use assisted living, adult day care, or nursing home facilities, these costs can rack up quickly. For an older married couple, one person’s need for long term can drastically draw down retirement resources when it’s too late to continue contributing to them.

What happens if you don’t have a plan for your own long term care? Now is a good time to look over your existing plans and create a strategy for paying for it just in case. This might include moving other assets now or discussing legal spenddown strategies with your elder lawyer in NJ. Don’t neglect these important tasks if you want to cover your bases and protect your family.

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Special Planning For Small Business Owners

Neel Shah is a practicing estate planning attorney as well as a certified financial planner(r).  He has conducted over 3000 corporate business and real estate transactions throughout his career and is the author planning for business owners (available on Amazon).

Estate planning for business owners is especially important, but also a delicate endeavor. Business owners are often what is labeled as “asset rich, but cash poor.”

This is because of the illiquid nature of a small business, which can create problems when a business owner has passed away or become incapacitated there’s a need for liquidity.

Further, how are shares to be transferred of a business when the business owner passes away? Should they go to a spouse in which case the widow with a widower- may become partners with the small business owner’s business partner? Or should they go to the adult children? What if one adult child is involved in the business and others are not? Or what if there are no adult children and they are all minors? Business succession planning is paramount for these scenarios.

There are unique opportunities for business owners to take advantage of tax saving strategies beyond traditional IRAs. Business owners may decide to incorporate some combination of 401(k)s, solo 401(k)s, defined benefit plans, cash balance plans, and/or other retirement planning which can greatly reduce income tax liability.

One way to create liquidity is to use life insurance. In fact, business owners can and should evaluate life insurance needs on a regular basis-both for liquidity needs for the family, as well as in a succession planning/buy sell agreement type scenario.

If you’d like to discuss your estate planning needs further use the link below to schedule a call!

https://calendly.com/jmotz-3/15-minute-intro-call-1

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What Are the Four Fiduciaries for a Proper New Jersey Estate?

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.

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It’s My First Estate Planning Meeting; What Do I Bring?

If this is the first time you’ll be sitting down with your estate planning lawyer, there’s no doubt you’ll have some questions about what you need to think about or bring with you to that initial meeting.

If your lawyer does not already have a questionnaire prepared for you to fill out in advance of this meeting, you can do your own due diligence by documenting a few key things that are likely to come up during the meeting.

Use this checklist to get organized before your very first meeting with your estate planning team so that you will be able to discuss options and planning strategies if you’re ready to go to that step by hiring the attorney:

  • Family information such as names, addresses, dates of birth, and any specific details about who would like to receive what in your plan
  • Information about any of your retirement assets, such as with company they are with and how much is in those accounts, as well as copies of any beneficiary forms
  • Details for any non-retirement assets, such as your bank account locations and any forms you’ve filed with them
  • Previous details regarding any documents you’ve created with another lawyer, such as an active power of attorney form
  • A list of all the tangible personal property you own that you want to be included in your estate and any initial thoughts over who you want to receive what
  • Details about real estate and businesses, if applicable for your situation

In general, you want to give your estate planning lawyer a holistic perspective on what your estate looks like. You don’t need to have all the details organized by the time you meet with them, as you will surely think of other things after the fact, but this will help you get the process started as effectively as possible so that you can see a good perspective on your own estate.