<![CDATA[New Jersey Estate Planning and Probate Law Blog]]> tag:www.jpresslaw.com,2013-03-21:/blog/77152 2019-10-10T17:15:53Z Movable Type Enterprise <![CDATA[Fitting digital assets into an estate plan]]> tag:www.jpresslaw.com,2019:/blog//77152.3841642 2019-10-10T17:16:53Z 2019-10-10T17:15:53Z Digital assets are emerging as a new source of investment and wealth for individuals all across the United States and even the world. In New Jersey, residents may not be familiar with cryptocurrencies like Bitcoin and other online only resources that individuals may keep in their digital wallets. Cryptocurrencies are not physical tokens or other tangible items that holders may trade; transactions using digital assets like cryptocurrencies occur online and through secure blockchain interfaces.

Unlike traditional money that may be held in a bank and taken out at the owner's discretion, digital assets simply do not exist outside of the digital domain. The value of digital assets fluctuates and, due to the structure of digital transactions, the transfer of ownership of cryptocurrencies can be complex. All of these and many other reasons may complicate the estate planning wishes of individuals who choose to invest in these emerging financial tools.

]]> Individuals who choose to own digital assets should be prepared to address them in their estate planning documents. They may be more difficult to track down when it comes to distributing assets to beneficiaries, and estate administrators may not have the authority or power to manage how digital assets are transferred once their owner has passed away. Getting help with the management of digital assets in an estate plan should be a priority for those who choose to invest in them.

An estate plan should be a comprehensive set of legal tools that clearly direct where a decedent's wealth and assets should go upon their passing. Digital assets are a relatively new type of property that may not follow all of the same rules that apply to their tangible counterparts.

<![CDATA[Laws of intestacy in New Jersey]]> tag:www.jpresslaw.com,2019:/blog//77152.3836885 2019-09-26T19:24:03Z 2019-09-26T19:23:03Z Intestate succession is a complicated area of estate administration law. It becomes applicable to the estate of a deceased individual when that person passes away without having first executed a valid will. As our readers in New Jersey may know, a will is a legal document that a person may use to identify beneficiaries who will receive items of the decedent's property once they have passed on.

If a decedent does not have a valid will in place when they die, the laws of intestacy may take over to govern intestate succession.

]]> Generally, if a person dies without a will, the estate will pass to the spouse. This can change if the decedent had children from a relationship other than with their current spouse. If that is the case, then the spouse may be required to share the estate with those other heirs. If a spouse does not survive the decedent, then the decedent's estate may go to the children.

If a decedent has no spouse and no children, the estate may pass to parents, if those individuals survive them. The estate would then next go to their siblings and those siblings' descendants. Next, the estate would go to the decedent's grandparents, aunts, uncles and cousins. Intestate succession generally follows a decedent's family tree until an heir is found, and this process may run contrary to the desires of an individual. As such, estate planning can help people avoid intestate succession by providing them with control over the disposition of their estates.

<![CDATA[What is included in an end-of-life estate?]]> tag:www.jpresslaw.com,2019:/blog//77152.3828549 2019-09-11T16:13:08Z 2019-09-11T16:12:08Z When New Jersey residents pass away, the items that they owned must be properly distributed to their loved ones, creditors and other relevant parties. The things and assets that they leave behind constitute their estate and depending upon the type of estate plan that they leave the distribution of those things and assets can look very different from decedent to decedent.

End-of-life estates can include tangible and intangible items. For example, the personal property that a person owns can be included in the estate. These items of property may include, but are not limited to, vehicles, pieces of art, jewelry and clothing, furniture, collections, books and heirlooms.

]]> However, it is often the intangible items that individuals own that require the most consideration when creating estate plans. Estates are often built around financial assets such as investments and stocks, bank and checking accounts, securities, real estate and insurance policies. These intangible assets can have high values and can make up the bulk of individuals' estates, even though they may not be apparently visible as items of owned property.

The items and assets that individuals choose to buy and invest in throughout their lives will dictate what they own when they die and, therefore, what will be included in their end-of-life estates. Most people want to have a say in where those assets go when they die and, as such, estate planning is an important process for everyone to be knowledgeable about so that their chosen beneficiaries receive what they deserve when the estate plan goes into effect.

<![CDATA[The benefits of a credit shelter trust]]> tag:www.jpresslaw.com,2019:/blog//77152.3820303 2019-08-30T01:08:01Z 2019-08-30T01:07:01Z A credit shelter trust is a special type of living trust that may be established between two married people. It is set up during the partners' lifetimes and generally benefits their children when they are both gone. At its most basic level, a credit shelter trust takes possession of the partners' assets and when one dies, the assets pass to the beneficiaries who must use it for the benefit of the surviving partner. When the second spouse passes away, their children take possession of the assets.

Credit shelter trusts have a number of benefits. But, different individuals may have different estate planning goals and needs.

]]> One of the biggest benefits that individuals experience when they use credit shelter trusts is the reduction or elimination of their estate taxes. Because the spouse who survives the death of the partner does not own the assets in the trust, those assets are not taxed on their distribution when the surviving spouse also passes away.

Additionally, credit shelter trusts allow surviving spouses to maintain some control over the assets that will benefit them, even if they do not technically own them. A surviving spouse who has a credit shelter trust in place may have some ability to manage the assets that have been set up to support them without carrying the responsibility of ownership. These are only some of the benefits of credit shelter trusts that individuals may experience when they choose to put them in place. New Jersey residents will likely need to get more information about their own unique circumstances.

<![CDATA[Are irrevocable trusts permanently set in stone?]]> tag:www.jpresslaw.com,2019:/blog//77152.3812036 2019-08-16T13:20:18Z 2019-08-16T13:19:18Z There are many types of trusts, but the main categories are testamentary trusts, which go into effect upon the grantor's death, and living trusts, which go into effect while the grantor is still alive. Among living trusts, there are another two main subcategories: revocable trusts and irrevocable trusts. As its name implies, an irrevocable trust usually cannot be modified after it is executed. However, there are always exceptions to the rule, and irrevocable trusts are no different.

New Jersey residents may be surprised to hear that, in certain limited circumstances, it is possible to modify an irrevocable trust.

]]> If a grantor wants to ensure beneficiaries to the trust have some discretion in the future to alter the trust if circumstances change, the trust can give "power of appointment" to beneficiaries. However, state laws determine how a beneficiary can change the terms of an existing trust.

In most states, a trust can be "decanted." This means that when decanting a trust the terms that you wish to keep are "poured" into a new trust, and the terms that are no longer wanted are left behind. In states that do not allow decanting, trustees can move the court for permission to change the terms of an irrevocable trust.

It is important to note that grantors cannot decant or change the terms of an irrevocable trust themselves. Only the trustees and the trust beneficiaries can decant an irrevocable trust or move the court for a modification of an irrevocable trust. For this reason, it is sometimes advisable to appoint an institution as a trustee, such as a bank, rather than a relative. It is also important to consider the tax consequences of decanting or altering the terms of a trust.

<![CDATA[Estate planning when you have a chronic illness]]> tag:www.jpresslaw.com,2019:/blog//77152.3803160 2019-08-02T12:27:33Z 2019-08-02T12:26:33Z It is not unusual for a person in New Jersey to have a chronic illness. Some chronic illnesses, such as Parkinson's or Alzheimer's will become progressively worse over time and will eventually make it difficult for a person to communicate their wishes or care for themselves. Therefore, it is very important that those with a chronic illness execute an estate plan while they are still able to do so.

While having a will and/or a trust are an important part of any estate plan, people with chronic illnesses will have some special considerations to make when comes to estate planning. For example, they will want to execute a HIPPA (Health Insurance Portability and Accountability Act) Release. A HIPPA Release gives a named person the ability to access your health records. A physician order for life-sustaining treatment (POLST) can be included in your medical records. It allows your doctors to understand what end of life care you want should an emergency arise.

]]> Living wills are also important for those who have a chronic illness. Living wills dictate what your health care preferences are, as well as how you want to be cared for at the end of your life. Living wills generally are broader than a POLST. Healthcare proxies augment living wills. This document -- also referred to as medical power of attorney -- designates someone to make healthcare decisions on your behalf, should you become incapacitated.

Finally, there is a financial power of attorney. This document names someone who will take care of your legal, tax and financial affairs should you become incapacitated. How much control to give the agent in a financial power of attorney should reflect your situation with regards to the progression of your chronic illness.

Being diagnosed with a chronic illness can be distressing. After all, depending on the circumstances you may find that your health is going to decline over time, sometimes rapidly, leaving you alive but incapacitated. Being prepared from the get-go with an estate plan can provide reassurance that when the time comes, your wishes will be followed.

<![CDATA[What situations could cause a person to challenge a will?]]> tag:www.jpresslaw.com,2019:/blog//77152.3791581 2019-07-18T13:51:15Z 2019-07-18T13:50:15Z When a person in New Jersey writes a will, they generally believe they are making clear their intentions for how they want their estate dispersed between their heirs after their death. And, for the most part, a properly executed will does just that. However, there could be times when an heir feels the will should not be followed and wants to contest it. This can lead to estate litigation.

It is important to note that challenging a will can be difficult. This is because it is presumed that if the will was executed with all proper formalities, it is valid and should be followed. However, there are circumstances that could provide grounds for challenging a will.

]]> For example, a person could argue that the testator was unduly influenced when executing the will. For example, if the testator was isolated from loved ones, and the person isolating the testator was the primary beneficiary of the testator's will, it could be argued that that person unduly influenced the testator into leaving the majority of his or her estate to them. This could be an argument for invalidating a will.

Another argument is that the testator did not have the mental capacity to execute a will at the time it was signed. Medical evidence or other evidence could be used to show that the testator was mentally unable to understand the extent of their estate, who their heirs were or how the will was distributing their estate to their heirs. This also could be an argument for invalidating a will.

These are two circumstances that could possibly give rise to estate litigation. Of course, this is only a general overview of this topic and doesn't address other legal issues regarding estate litigation, such as who has standing to pursue such litigation and how long they have to file such a claim with the court. The general information found in this post should not be relied upon as legal advice. Instead, those wishing to challenge a will can consult with estate law professionals so they can learn more about their options.

<![CDATA[The basics of estate taxes versus inheritance taxes]]> tag:www.jpresslaw.com,2019:/blog//77152.3782837 2019-07-03T19:19:08Z 2019-07-03T19:18:08Z As the saying goes, the only two guarantees in life are death and taxes. And, for some people, receiving an inheritance after a loved one dies means that either Uncle Sam will take his share before the estate is distributed, or the state may ask the heirs to pay up, depending where they live. Therefore, it is important to understand the basics of inheritance taxes and estate taxes, and when these taxes apply.

An inheritance tax is paid by the person who inherits the estate. For example, if your Aunt Edith passed away and left you $500,000 in her will, you may be personally liable for paying taxes on that $500,000. Only certain states have an inheritance tax. New Jersey is one of those states. The state inheritance tax in New Jersey depends on the size of the inheritance and the relationship between the heir and the decedent. There is no federal inheritance tax.

]]> However, as many people may be aware, there is a federal estate tax. The estate tax is paid out of the estate assets before any money or property is handed down to the deceased's heirs. Some states also have estate taxes, but New Jersey is no longer one of them. Only the wealthy are subject to the federal estate tax. As of 2019, the federal estate tax only applied to estates worth $11.4 million or more for single individuals and $22.8 million for those who are married. Any lesser estates are entirely exempt from the federal estate tax.

So, in New Jersey, most people will never need to worry about the federal estate tax, and only some will need to pay an inheritance tax. While the idea of paying taxes is not something most people like, it is important to understand when they apply, so that a person does not run afoul of the IRS or the New Jersey Division of Taxation.

<![CDATA[Avoid making these common estate planning mistakes]]> tag:www.jpresslaw.com,2019:/blog//77152.3772482 2019-06-20T14:44:46Z 2019-06-20T14:43:46Z Most people in New Jersey execute an estate plan with the intention that it will meet their wishes and benefit their heirs. However, a poorly drafted estate plan or an outdated estate plan can lead to undesirable complications when it comes to enforcing your wishes.

The following are some common mistakes people make when estate planning.

]]> First, some people do not draft a will or trust at all, because they assume their state's intestacy laws will pass their estate on to their desired heirs. However, while state intestacy laws dictate who is to inherit a person's estate if there is no will or trust, not having an estate plan means that the court will choose your heirs, and the court's decisions may not align with what you would have wanted. Moreover, going through the probate process when there is no will or trust is a time-consuming and costly process that can deplete estate assets and cause heirs much grief.

If a person has a trust, retirement accounts or a life insurance policy as part of their estate plan, these items will have a named beneficiary, who will receive these assets once the person passes away. However, it is important to update beneficiaries when life changes. For example, new children may be born that you might want to include as beneficiaries to an account. Or, a person might name a spouse as a beneficiary but later divorce. In this case, they will likely want to remove their ex as a beneficiary.

Speaking of trusts, it is important that a trust is funded with estate assets. If assets are left out of a trust at the time of a person's death, those assets will not go to directly to the trust beneficiaries, but instead would be probated. And, as mentioned above, intestacy laws may make it so that the person who ultimately inherits these assets may not be the person you would have chosen.

Estate planning generally is not one-and-done. An estate plan should be reviewed periodically to ensure it still meets your wishes. In addition, having an estate plan -- even a simple one -- is often better than having no estate plan at all. Parsippany residents who have not executed an estate plan or have not revisited an existing one for a while will want to ensure that they have the tools in their estate planning arsenal that meet their current needs and desires.

<![CDATA[What are some advantages to special needs trusts?]]> tag:www.jpresslaw.com,2019:/blog//77152.3761480 2019-06-06T20:23:22Z 2019-06-06T20:22:22Z Parents of special needs children in New Jersey may have concerns about how their child will be cared, especially after the child is an adult and the parents pass away. While parents may want to ensure that their adult special needs child receives the government benefits they need, such as Medicaid and Supplemental Security Income, they may also want to leave some of their assets to their child for the child's care. However, this can be complicated, as most government benefits have low thresholds for the income a disabled adult can have to qualify for benefits. For this reason, some parents choose to execute a special needs trust for the care of their child.

In a special needs trust, the beneficiary can still receive an inheritance, be given gifts and receive other funds without losing their government benefits. This is because these assets will belong to the trust, not the beneficiary and will be managed by a trustee. Even a beneficiary's own assets can be included in a special needs trust, since they will also belong to the trust and be managed by a trustee. There are several types of special needs trusts.

]]> One type of special needs trust is a first-party trust. The beneficiary's own assets will be placed in this trust. During the beneficiary's lifetime, these assets will be used for their care. Once the beneficiary passes away, the assets left in the trust will then be used to pay the government back for the Medicaid services provided.

Third-party trusts can be funded with any assets that belong to the relatives, as well as assets such as a house and investments. These assets will be used for the needs of the beneficiary that are not already covered by government benefits. However, unlike a first-party trust, once the beneficiary dies the remaining trust assets can be passed on to the beneficiary's heirs or a charity, rather than the government.

These are only some types of trusts that can be used to assist adults with special needs. It can be a great relief for parents of special needs children to know their child will be cared for as an adult. However, since this post does not contain legal advice, parents who want to set up a special needs trust as part of their estate plan will want to seek the guidance needed to determine how to meet these goals.

<![CDATA[Why is it prudent to review your estate plan from time-to-time?]]> tag:www.jpresslaw.com,2019:/blog//77152.3744357 2019-05-23T13:47:33Z 2019-05-23T13:46:33Z Some people in Parsippany have executed a comprehensive estate plan, including a will, trust, living will, and power of attorney. However, it is a mistake to simply file that estate plan away allowing it to collect dust as the years pass on. In fact, there are several reasons why a person will want to update their estate plan.

First, state law varies on what is required to execute a will and who will inherit. There may be other specific details determined by state law as well. If a person has moved to a new state since executing their estate plan, they will want to make sure their estate plan complies with their new state's laws so that their wishes for asset distribution can be fully protected.

]]> Second, as time marches on a person's relationships with loved ones may change. For example, a new child or grandchild may be born, a person may remarry, or an individual might divorce their spouse. It is important to review one's estate plan in the event that any of these situations arise. This review includes assessing beneficiary designations on assets such as life insurance policies and retirement accounts. After all, a person might want to leave assets to a new child, grandchild, or spouse, and most people certainly do not want to leave their assets to their ex-spouse.

Third, the assets in a person's estate may change. For example, they may have sold a house or car that was initially earmarked as an asset in their will or trust. After all, you can't give away what you don't have. But an individual may also acquire new assets that may passed down in an unexpected fashion if not addressed in an estate plan

As this discussion shows, estate planning is a not a one-and-done venture. Instead, estate planning is an ongoing process, so it behooves an individual to review their estate plan every few years, especially if they undergo a major life change. Life is ever-changing and a person's estate plan should reflect this to ensure their wishes are met.

<![CDATA[Why is estate planning important for blended families?]]> tag:www.jpresslaw.com,2019:/blog//77152.3731856 2019-05-09T18:46:10Z 2019-05-09T18:45:10Z Families in New Jersey come in all shapes and sizes these days, and it is not unusual for a person to marry a second time either due to divorce or the death of their first spouse. Oftentimes there are children from a first marriage, resulting in a blended family with step-parents and step-children. In such situations, it is important to have a well-rounded estate plan that meets your wishes both for your new spouse and your children from your first marriage, especially if those children are now adults.

First, merely having a will may not be enough to meet your estate planning needs if you have a blended family. For example, if you leave everything to your new spouse in your will, once your new spouse passes away there is no guarantee that he or she will leave anything to the children from your first marriage, leaving them with nothing.

]]> Instead, it may be prudent to execute a trust that leaves a certain amount of funds to your new spouse while he or she is alive, and once he or she passes away the trust assets will go to your children from your first marriage. A trust can also contain contingencies in the event that your new spouse remarries after your death, and it can leave some assets to your children from your first marriage directly rather than making them wait until your new spouse passes away.

In the end, blended families have to deal with some estate planning challenges that other families may not face. While it is hoped that step-parents and step-children will form a strong and loving bond, this bond may become rocky at the time of your death, especially if one party does not agree with the terms of your will. Having a clear estate plan that provides both for your new spouse and your children from your first marriage, if that is what you want, can help your loved ones understand what your wishes are and avoid conflict.

<![CDATA[New Jersey residents do not have to face probate alone]]> tag:www.jpresslaw.com,2019:/blog//77152.3718902 2019-04-26T13:09:50Z 2019-04-26T13:08:50Z Being selected as the executor of a loved one's estate is an honor, but it also comes with responsibilities. Even though the probate process in New Jersey is not as complex as the probate process is in other states, costly mistakes can be made by those who are unfamiliar with it.

For example, a deceased's will must be submitted to the surrogate in the deceased's county of residence. An inventory must be made of all the estate's assets, and creditors will be paid using these assets. Final taxes must be paid using estate assets, too. Also, a final accounting of the estate must be submitted so that the beneficiaries of the estate can approve or challenge these findings. Finally, the remaining assets of the estate will be distributed per the terms of the deceased's will or, absent a will, through the laws of intestate succession.



<![CDATA[Plan now for the eventual sunset of the federal estate tax]]> tag:www.jpresslaw.com,2019:/blog//77152.3700719 2019-04-11T20:54:06Z 2019-04-11T20:53:06Z When the Tax Cuts and Jobs Act raised the threshold for the amount of assets a person can hold before they are subjected to the federal estate tax, many people in New Jersey may have cheered. After all, now that a person can hold $11 million in assets as an individual or $22 million in assets as a married couple before being subjected to the federal estate tax, it may seem like most people do not have to worry that the federal government will take a sizable chunk of their estate upon their death.

And, for the most part, this is true. However, like many things in life, the good times do not last forever. Once 2025 rolls around, the threshold for the amount of assets a person can hold before they are subjected to the federal estate tax will plummet to around $5.5 million for individuals and around $11 million for married couples. This means that the estates of many of those who manage to survive to 2025 or beyond will be subjected to the federal estate tax whereas they wouldn't be had they died earlier.

]]> This may not seem like a big deal. After all, most people in New Jersey do not consider themselves to be millionaires. But let's say that all an individual's assets -- including a home, savings accounts, retirement accounts, investments and more -- add up to $1 million. If the person's assets grow over time, it may be possible that once 2025 rolls around that $1 million could potentially grow to $5.5 million or more, thus subjecting the individual's estate to the federal estate tax.

So, those with a sizable estate will want to start planning now for the eventual sunset of the federal estate tax. While those of more modest means may not need to worry about the federal estate tax, those whose estates are larger should anticipate that while they may not be subjected to the federal estate tax now, they may be subjected to the federal estate tax if they die in or after 2025. Fortunately, estate planning attorneys can provide more information on the federal estate tax sunset and how to plan for it.

<![CDATA[Can you challenge a will simply because you think it's unfair?]]> tag:www.jpresslaw.com,2019:/blog//77152.3683002 2019-03-28T14:35:16Z 2019-03-28T14:34:16Z When a person in New Jersey dies, he or she may have left behind a will that dictates who is to inherit his or her assets. While most of the time the terms of the person's will are followed, there are instances in which estate litigation is pursued by an heir who believes the will should be invalidated. In general, there are four grounds on which a person can challenge a will.

One ground for contesting a will is that the testator did not follow the necessary laws when signing the will. For example, there may not have been enough witnesses, or the witnesses may not have been in the presence of one another when signing the will.

]]> Another ground for contesting a will is that the testator did not have the capacity to sign the will, meaning that he or she did not have a full understanding of the value of his or her assets or who the heirs are. In sum, to have testamentary capacity, a person must understand the legal effect of executing a will.

A third ground for contesting a will is that the testator was subject to undue influence. This means that the influencer pressured the testator to execute a will under severe duress, so that the provisions of the will were not made under the testator's own free will.

Finally, a person may contest a will based on fraud. Fraud takes place when the testator was tricked into signing a will. For example, they may have been told that the will they were signing was actually a different type of document.

As this shows, it is not enough to contest a will simply because you do not like its terms or you do not think it is fair. There are specific grounds upon which one can challenge a will, and in general they can be difficult to prove. Thus, those who wish to challenge a will may benefit from seeking legal advice so that they can determine whether it is worthwhile to pursue such action.