Articles Tagged with “New Jersey Estate Planning”

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stock-photo-15852330-elderly-couple-talking-and-smiling.jpgThe American Bar Association Task Force on Real Property Probate and Trust Law issued a report discussing the following shortcomings of drafting your own estate planning documents using the services of a “Do It Yourself” package. Some of those short comings are as follows.

  • Things are often more complicated than they seem. When a person writes their own will, often the results are not what she intended. For example, an elderly widow wants to divide her assets equally between her two adult children. Her assets consist or a house worth $500,000 and an IRA worth $500,000. She decides to write her own will giving one child the house and the other the IRA. Then after her death, it comes to light that the IRA, which has designated beneficiaries, is to be shared equally by her two children. Moreover, at the time of her death, her IRA is valued at $200,000 and the value of the house has appreciated to $600,000. So, one child receives the house and $100,000 from the IRA house, a total value of $700,000 and the second child receives $100,000 from the IRA. This was not what she intended. Having an experienced estate planning lawyer can help prevent this.
  • An estate planning lawyer offers more than the expertise in drafting your documents. A significant role of an estate planning lawyers is to counsel clients when making these important and personal decisions, for example, guidance on whom to choose as a guardian for minor children. While this may seem simple, it is complex decision on who is best suited to nurture children, but consideration must also be given the ability to provide financial support. Moreover, when a couple makes decisions, it may be important to have an attorney help the couple chose guardians who are acceptable to both parties.
  • In the event of a dispute after a person’s death, the court will often hear a wide variety of allegations about the decedent’s intentions – all from family members who have an interest in how the court will decide. This is a difficult role for a judge who will look to hear from a person who had discussion with the decedent while she was alive about how she wanted her assets to be distributed. Often, that person is the estate planning lawyer.
  • Technical issues with your will can render it void. A will must unequivocally state the decedent’s intentions. If you draft your own will, you might inadvertently use words which are meaningless in the probate court. For example, if you state “I would like my niece to have my car” would be an unenforceable provision. Moreover, the will must be executed in accordance with New Jersey probate and estate law in order to be admitted to probate and enforced.
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Thumbnail image for 800px-Flower-arrangement-funeral-white.jpgGifting your assets to your intended beneficiaries is an effective way to minimize Federal and New Jersey Estate taxes. In order to do so, you must consider the tax implications of making the gift, who will receive the gift, the type of gift, the value of the gift, and the cost basis of the gift.

There are several possible tax liabilities which can be incurred as the result of making a gift: federal gift tax, capital gains tax, generation skipping transfer tax, federal estate tax, New Jersey estate tax, and New Jersey inheritance tax.

Gifts made in contemplation of death can trigger New Jersey inheritance tax liability if the value of the gift is over $500 and they are made within three years of the date of a person’s death. New Jersey Inheritance tax is a tax imposed upon certain classes of beneficiaries. Thus, you must consider who is receiving the gift before you can determine if this will result in liability. The New Jersey tax code separates beneficiaries into “Classes.” Class A beneficiaries pay no inheritance tax, Class C beneficiaries will pay tax on gifts over $25,000 made within three years of the date of death and Class D beneficiaries will pay tax on gifts over $500 made within three years of the date of death.

The decedent’s spouse, civil union partner, domestic partner, children, grandchildren, great-grandchildren, parents, grandparents, great-grandparents, and step-children are Class A beneficiaries, and no inheritance tax will be attributable to gifts made to these people. The decedent’s brother and sister, and son-in-law, and daughter-in-law (if they are the spouse of decedent’s predeceased child) are Class C beneficiaries. Anyone not included in Class A or Class C are Class D Beneficiaries.
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