Estate Plan Checklist

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After weeks, months, or maybe even years of procrastinating, you’re finally ready to set up your estate plan. Remember, the sooner you create your estate plan, the sooner you will have peace of mind that your family is taken care of should something happen to you.

Many people who decide to create an estate plan say, I just want a simple plan, nothing fancy. The truth of the matter is that your estate, assets and family members greatly determine the complexity of your estate plan. So while you may want a simple plan that requires very little of your time to set up, the circumstances of your estate and life may dictate otherwise.

Of course you can always make your life easier by running through the following estate plan checklist:

  1. Determine the goal of your estate plan — So, you’ve decided you need an estate plan. Why? What is the ultimate goal of having an estate plan in place? Are you a philanthropist who wants to see your wealth enjoyed by the less fortunate? Maybe you want to leave everything you have to your spouse. Or perhaps your intention is to preserve your legacy for many generations after you’re gone.
  2. Retain an estate planning lawyer — Unless you practice law, you probably don’t know much about estate planning, wills, trusts, healthcare directives and other estate planning mechanisms. When hiring a lawyer, make sure you choose someone who practices estate planning law in your state. And no, don’t attempt to move forward on your own without an estate planning lawyer — this is your legacy after all.
  3. Identify your assets — Prior to setting up an estate plan, you need to be able to identify all assets and property you own. Depending on your financial situation, compiling such a list may require more than a Sunday afternoon.
  4. Identify your executor — If you had to choose one person in your life to handle all your affairs after your death, who would it be? The person you name as your executor must be a trustworthy and competent individual who will ensure the wishes of your last will and testament are carried out.

Now that you’ve successfully gone through this checklist, it’s time to draft your estate plan. To begin the process, make an appointment with your estate planning lawyer as soon as possible. For more information on estate planning in NJ and NY, Contact Alec Borenstein, Esq., at alec@bmcestateplanning.com, or call 908-236-6457.

What to Leave Out When Making Your Will

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So you’ve finally decided to sit down and draft your Will. While you should be applauded for your effort, what you may not realize is what you leave out of your Will can be just as important as what you include.

Having a sound Will in place is important because it tells your surviving loved ones how your property and assets should be disposed of after you’re gone. Without a Will in place, your estate falls under New Jersey’s intestacy laws. Many people assume that by creating a Will, they can distribute their property and assets with impunity. However, depending on your situation, you may have certain assets or properties that are already bequeathed to another beneficiary.

One common example is joint tenancy property. Let’s say you and your brother own a piece of property together. When drafting your Will, however, you request that your ownership pass to your spouse. Upon your death, by law, your interest in the joint tenancy property would pass to your brother and not your spouse despite your Will requesting otherwise.

Another similar example is life insurance. If you already have a beneficiary to your life insurance policy, stating in your Will that you would like another person to be your beneficiary is a futile effort. According to the law, you already named a beneficiary — your Will cannot invalidate your policy and designate a new beneficiary.

Avoid leaving gifts for unlawful purposes

When leaving a gift in your Will, do not include unlawful instructions regarding how the gift should be used. For example, you would be unable to leave your Malibu home to your nephew under the condition that the home only be used for trafficking drugs.

Leave funeral instructions out of your Will

If you have detailed instructions about how you wish to buried, you aren’t alone. However, you should resist the urge to include funeral instructions in your Will. Why? Because most estates and probate proceedings aren’t dealt with until after the funeral, making your extensive and well-thought out funerary guidelines of little use to your heirs. Instead, simply talk to your loved ones about how you wish to be buried.

For more information about what you should and should not include in your will, consult with an experienced estate planning attorney today. Contact Alec Borenstein, Esq., at alec@bmcestateplanning.com, or call 908-236-6457 for assistance with estate planning matters in New Jersey and New York.

Tomorrow is a New Day in New Jersey

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New Jersey. The Garden State. The land of extremely high taxes, corrupt politicians, and (often) broken roads. But at least we have the second cheapest gas in the coun–wait, what?

Is our gas tax going up tomorrow?

On October 23, 2016, Chris Christie signed legislation which raises our gas tax by 23 cents per gallon. If you live in the Garden State, then your gas bill will go from the second lowest in the country to the seventh highest.

Why do we live here again? It must be the weather!

There is a saving grace to this legislation, and it directly impacts your estate plan.

First, let’s discuss the new law. The “gas tax bill” calls for a 23 cents per gallon increase. In total, our gas tax will be 37.5 cents a gallon. The tax increases are supposed to generate $1.23 billion a year for the Transportation Trust Fund.  According to the American Automobile Association, this will cost the average driver about $170 more a year.

That’s the bad news. And for people like me who drive all the time, it’s very bad news.

But for my estate planning clients, it’s a Game Changer.

In exchange for the gas tax increase, our governor negotiated a raise to the estate tax. As I’ve written before, New Jersey currently has the worst estate tax in the country, with an exemption of $675,000. This means that for estates over $675,000, the amount of tax owed to New Jersey could get as high as 16% (in the most extreme cases). If you own a home and an insurance policy and a few retirement assets your kids will probably have to pay something to New Jersey.

However, that seems to be changing. In exchange for the raise in the gas tax, the New Jersey estate tax exemption will be raised from $675,000, to $2,000,000 in 2017, and eventually fully repealed in 2018.

This is huge. I can’t tell you how many times I meet with clients who do not want to leave New Jersey, but they feel compelled to leave because they do not want our legislature getting their hard-earned money.

According to NJ.com, about 3,500 estates are subject to the estate tax each year. The richest 94 estates paid an average of $1.2 million. The non-partisan New Jersey Office of Legislative Services has estimated that the estate tax elimination should decrease the budget by $16 million in 2017, $116 million in 2018, and $320 million in 2019.

What those numbers do not account for are all the people (many of my clients included) who have left the state because of our crazy estate tax. My hope is that, what New Jersey loses in estate tax, it will gain in income tax. I can personally think of dozens of clients who will now stay in New Jersey because of estate tax change.

There is more good news. The Earned Income Tax Credit will get a rise from 30% to 35% (the federal level). For retirees, the news is also positive. Currently, a married couple who files jointly can exclude the first $20,000 in retirement income from state income taxes. The gas tax bill increases that number to $100,000 for married filing jointly, $75,000 for individuals, and $50,000 for married filing separately. There is also another tax exemption for veterans.

A question I’ve been getting a lot – do I need to change my documents? Yes, and no. If your estate plan is older than 10 years, you probably should have someone look at your plan immediately. Older plans often forced people to set aside money (in a Credit Shelter Trust) to save on New Jersey estate taxes after the death of the first spouse. But if there is no New Jersey estate tax, then there is no reason to make your money harder to access.

On the other hand, none of my clients have to change their plans because we made setting aside the money in a Credit Shelter Trust an option, but not the only option. Many other attorneys have done the same thing, which is why you may or may not be OK. If you would like me to take a look at your plan (for free) send me an email and I’ll let you know if you’re covered.

As I write this on October 31, 2016, I know that tomorrow we will all wake up to a new day in New Jersey. If you drive you will suffer, but your children and heirs will not. Just another day in the Garden State!

If you or someone you know wants to make sure your estate plan is prepared for the estate tax situation, please feel free to call us at (908) 236-6457, or email me at alec@bmcestateplanning.com.

More Help for Modest Estates in New Jersey

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For people of modest means, the estate administration process often adds legal and administrative expenses that serve only to reduce the amount of the estate that passes onto heirs. In addition to these hard costs, a lot of the heirs’ time and energy can be lost at a time when they are likely already grieving the loss of a loved one. It hardly seems worth it to process these modest estates.

Fortunately, the State of New Jersey recognizes the burden that estate administration can place on people of modest means and thus always allowed intestate estates valued at less than $20,000.00 to pass to a surviving spouse or partner without the need for administration. An intestate estate is an estate where there is no Will.

Recently, the New Jersey State Legislature passed two new laws which expand upon this policy. First, the amount that can be transferred to a surviving spouse or partner has been increased to $50,000.00. This adjustment will allow a much larger number of estates to pass without administration and should serve to alleviate unnecessary stress on many New Jersey families.

If the decedent does not have a surviving spouse or partner, the maximum amount that could pass was previously $10,000.00, but that amount has also been increased and is now $20,000.00.

The second law assists some of the State’s least financially secure individuals — nursing home patients. Under this new law, nursing homes are required to work with residents to help them designate a beneficiary who will be entitled to any personal needs allowance funds that amount to $1,000.00 or less. The named beneficiary will usually be able to take these monies without administration.

If you have questions regarding your eligibility, or the eligibility of a loved one, under the provisions of either of these laws, consult with a lawyer as soon as possible. For residents of New York and New Jersey seeking estate planning assistance, contact Alec Borenstein, Esq., at alec@bmcestateplanning.com, or call 908-236-6457.

Creating a Fair Estate Plan for Your Children

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If you’re a parent, it goes without saying — you want what’s best for your kids. When your children are young, it makes sense to divide your estate equally among them. However, as your kids get older and reach their 20s and 30s, you may discover that one child is more financially responsible than another. How does this affect your estate plan? Should one child receive more than the other?

When creating your estate plan and deciding how your property and assets should be divided after you die, consider the following factors:

  • Caregiver — What if one child stuck around to take care of you later in life while your other children moved away? You may want to leave more to him or her since he or she sacrificed part of their life to take care of you.
  • Life situations — One child may be a single lawyer with few expenses while the other may have a large family to support on a modest salary. Should both children receive the same amount?
  • Special needs children — If you have a child who is handicapped or disabled, he or she will likely require special care and attention for the rest of their lives. As a result, he or she may require considerably more assets to survive.
  • Younger children may need more support — Is there a drastic age disparity between your children? You may have older children who are independent adults and a younger child who is just broaching adulthood.

Regardless of how you decide to set up your estate plan, one thing is certain: you must inform your children — you do not want have them surprised by your estate plan. In some cases, siblings are so distraught over the outcome of a Will, they may seek a will contest. The last thing you want as a parent, is to have your children fighting over your will after you die. Sit down with a skilled estate planning attorney, voice your concerns, and heed his or her advice. Then, speak to your children and let them know about your estate plan and what they should expect if you pass away or become incapacitated.

Many aspects of estate planning are complicated and sensitive. By consulting with an experienced lawyer, you can gain a better understanding of the process and ensure your legacy is enjoyed by your children. Contact Alec Borenstein, Esq., at alec@bmcestateplanning.com, or call 908-236-6457 for assistance with estate planning matters in New Jersey and New York.

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