The Documents You Need for Your Estate Plan

The Documents You Need for Your Estate Plan

Whether you are thinking about creating an estate plan or already have one in place, it is important to ensure you have the proper documentation. Unless you have a law degree, understanding estate planning can be confusing.

In this DIY age, you may be inclined to try and create your estate plan on your own via the internet. Don’t. In fact, without an effective estate plan and proper documentation, your future heirs may suffer and your last wishes may not be upheld.

Following are the documents you need to ensure your legacy is preserved:

1. A will — For many people, this is the be all/end all of estate planning – the holiest of holy documents and the only one seen as worth having. A will is indeed vital to your estate plan as it provides instructions on how your property and assets should be disposed of and who your beneficiaries should be. In your will, you may describe how you wish to be buried, what charities you wish to donate to, who should care for your pets, and more. Additionally, your will allows you to name an executor to handle the administration of your estate after your death. Without this document, your estate is subject to New Jersey’s intestacy laws.

2. A health care proxy — A health care proxy is a document that names a trusted individual to make decisions about your health should you become unconscious or mentally disabled. No one wants to imagine what might happen to their loved ones if they should fall into a vegetative state or suffer from a terrible illness like dementia. Yet considering such possibilities and setting up a health care proxy is important to ensure your family knows your wishes should something happen to you.

3. Durable Power of attorney — Unfortunately, many estate planners stop at their will. While your will is extremely important to your estate plan, the buck doesn’t stop there. What if you should become incapacitated via accident, injury or illness? Who will handle decisions about your healthcare and finances? With a durable power of attorney, you name a trusted person who takes care of things like paying your bills, making medical decisions or handling your investments.

No two estate plans are the same. Your estate plan reflects your life, your estate, your assets and the legacy you wish to leave behind. Depending on your unique situation, your plan may be more or less complicated.

For more information about estate planning in Union or Hunterdon County, consult with Alec Borenstein, Esq., a partner with the firm at alec@bmcestateplanning.com or call 908-236-6457 today.

Improper Estate Planning Reveals the Secret KFC Recipe!

Happy New Year! In the culinary world, a secret recipe is everything. For fast food giant KFC, the recipe for its chicken is so closely guarded that it sits in a 770-pound safe covered in two feet of concrete and monitored by motion sensors and video cameras. Seriously, it sounds like something out of a Mission Impossible movie!

Yet recently, as covered in a New York Times article, the company’s lip-smacking spice blend may have been revealed to the world via the last will and testament of Colonel Sanders’ second wife. It all started this past August when Jay Jones, a reporter for The Chicago Tribune, traveled to Corbin, Kentucky to write a piece about the town where the famous Colonel first made his fried chicken.

Mr. Jones set up a meeting with Colonel Sanders’ nephew, Joe Ledington. At some point during the meeting, Mr. Ledington pulled out an old scrapbook that contained pictures and family memoirs. Allegedly, the scrapbook was the property of Claudia Ledington, Colonel Harland Sanders’ second wife who passed away in 1996. Tucked away in the back of the scrap book was Claudia’s last will and testament. In the last pages of the will was a handwritten recipe for a spice rub. Mr. Ledington claimed that the 11 spices and herbs listed in the last will were in fact the secret recipe locked up tight in a safe weighing nearly 800 pounds.

Yum Foods, the parent company that owns KFC, claims the recipe isn’t accurate. The exact spice blend from Claudia Ledington’s last will and testament is as follows and should be mixed with 2 cups of flower:

2/3 tablespoon salt
1/2 tablespoon thyme
1/2 tablespoon basil
1/3 tablespoon oregano
1 tablespoon celery salt
1 tablespoon black pepper
1 tablespoon dried mustard
4 tablespoons paprika
2 tablespoons garlic salt
1 tablespoon ground ginger
3 tablespoons white pepper

Now, from an estate planning perspective, a couple of things can be learned. First, you can bequeath amazing recipes to your descendants. However, if you have a recipe that may be responsible for hundreds of franchise restaurants and billions of dollars in revenue, you may want to update your estate plan. In 1996 when Claudia Ledington passed away, KFC was already a successful brand and household name. Instead of leaving the original spice rub on a hand-written note in the back of a scrap book, she may have wanted to rewrite and seal the document in a safe or safety deposit box.

Second, if you do have a secret recipe to leave in your safety deposit box, it’s never a good idea to leave your last will and testament in your safety deposit box. It’s like leaving the key to the deposit box in your deposit box.

Whether you need help leaving Grandma’s famous apple pie recipe to your children or establishing a trust, it is in your best interests to contact an experienced estate planning lawyer. If you have any questions, please call us at (908) 236-6457, or email me at alec@bmcestateplanning.com.

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.

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