Protecting your family’s inheritance from their creditors

Perhaps you’ve heard friends talking about a “legacy trust” or a “family trust ” or a “bloodline trust.”  These are all names for the same basic concept. You may be at a point in your life that you feel that you do not need to retain the ownership of all of your assets because you feel that you really “have enough.” You feel that you want to leave a family legacy that might even be there for the grandchildren. So you wonder what is the best way to do this.

An outright gift transfer of assets will certainly provide a nice benefit for your children. Some people bypass their children and make transfers that are expressly just for the grandchildren. You can fund their education, help the grandchild with that first new car or their first home.  Either way, when transferring assets to children with the hope that the assets will be preserved and will grow for future family needs, though, you might consider the idea of protecting the assets against hazardous circumstances that could arise. These same principles apply when you are designing your Last Will and Testament.

The beauty of a trust for the family is that the assets can be protected. If enough safeguards are build into the trust structure, trust assets can be protected against creditors (“spendthrift”), they don’t get intermingled with the child’s own assets, and they may remain “off the table” in case of divorce or lawsuits. Also, the assets can be excluded from the child’s own estate at death. The family trust preserves assets for the family’s future while protecting against these all-too-common hazards.

There are many variations of trusts, and no one trust will be exactly right for everyone. They need to be customized for the particular family’s needs. And trusts can be built into your Last Will and Testament as well. The main idea is that sometimes, your goals of family protection might be better served with a trust than with an outright transfer, and you can explore these issues with your attorney.

Call us about senior estate planning and family legacy protection planning … 732-382-6070.

The NJ Estate tax may be going away, but you can still do important planning with a Will

On October 14th, Governor Christie signed a tax package into law which does away with the New Jersey estate tax  and certain income taxes in exchange for a 23 cent per gallon increase in the gasoline tax so that the roads and bridges can be repaired. There’s still no estate tax on any assets that pass at death to your spouse.  At the present time, the estate tax exclusion is only $675,000, so many couples have estate plans in which this amount is transferred at death into a ‘credit shelter trust” for the surviving spouse so that it will pass to the heirs free of estate tax when the second spouse dies. About 99 % of NJ estates have to pay estate tax. As of January 1, 2017, $ 2 million can pass to your other heirs free of estate tax. The estate tax will be totally repealed as of January 1, 2018. With the new law, this # will likely drop to less than 15% in 2017 (based on the 2014 tables from the Office of Legislative Services cited by Forbes Magazine).

So do you need a Will? Certainly. Without a Will, the law determines who inherits your estate. On the other hand, if you want to distinguish among your next of kin and leave unequal amounts, you need to sign a document such as a Will. If you don’t want a certain person to inherit their share outright — because of pending divorce, or debtor-creditor problems, or disability or youth — you need to consider writing a trust into your Will to receive their share. Oftentimes, a person who is on disability benefits like SSI or Medicaid inherits assets because their parent didn’t plan things carefully. They are then at risk of losing their benefits because they’ve got access to resources. Court proceedings are often required, to establish a Special Needs Trust and direct the inheritance into the trust.

With estate taxation disappearing as an issue for most people, it’s important to turn your attention to how you’d like your estate to be managed over the long-term for the greatest benefit of your heirs. Has it been years since you looked at your old Will? …………….

Call us for updated estate and trust planning … 732-382-6070

The Secret Life of Pet Trusts is a Heartwarming Tail!

A few weeks ago, I took my kids to see The Secret Life of Pets. It was cute, fun and the kids loved it. Of course, when I take my kids to the movies, my elder law brain has to go with me. So, spoiler alert, there was a pet in the movie who had an older owner who had died. This put the pet in a vulnerable position.  Wacky hi-jinks ensue, and all is well at the end.  But my brain goes to, wow, this pet could have really benefited from a pet trust so that in the event of his owner’s death, he would have a responsible human and funding to take care of him.

Now fast forward.  I recently supervised a Will signing and I’m happy to say there was a pet trust included.  In New Jersey, like in many states, there are statutory provisions for funding a pet trust during life or in your Will. There are also nonprofit organizations such as the Associated Humane Societies Inc. who will accept pets, and you can make an arrangement with them for the pets to receive lifetime care. Kitty City is one example of these kinds of places.If you want to include a charitable bequest or pet trust in your Last Will and Testament, it’s important to be specific, provide all important details, and have the name of the charitable organization precisely correct (to avoid disputes between different charities).

If you are an animal lover, take advantage of this!  Make sure that the not-so-secret lives of your pets are provided for in your estate plan!

Call us for estate plan advice and to prepare trusts for your pets … 732-382-6070

“Keep it Simple” by signing a Last Will and Testament

Countless times, clients have told me they just want things kept “simple” if they die. Yet they never signed any Last Will and Testament. Why? “too complicated.” I’ve had meetings with panicky children who are dealing with a health crisis or death of a parent, who have just learned that in mom or dad’s quest for “simplicity,” they had never signed any Will (or power of attorney for financial and health care, for that matter). If a person dies without a Will, the law dictates what will occur, as a court cannot create a Will for a person who never signed one. The necessary legal procedures and administrative red tape that are caused by the absence of a Will can certainly destroy that hoped-for “simplicity,” and cause great delay and expense. And “simply” putting everything in joint names  can create problems of its own. The N J probate process itself is simple … but only if there is a Will.

Here are some suggestions to help you prepare for the meeting with your attorney about a Will. First, choose your Executor and a few successors (as life is uncertain). Appointing Co-Executors can be fine as long as they get along with each other and both of them are responsible, willing to be accountable, understand the job to be done, and are able to work cooperatively with the other Executor. Once I had a situation in which a parent had several children who  had been bitter enemies for years. This parent appointed them as co-Executors, in essence saying : “if you don’t work together now, no one will ever be able to receive a dime from the estate.” Unfortunately, this set of co-Executors couldn’t even agree on who should be hired to appraise the house. It took years to finish that estate.

Next, identify specific bequests such as to grandchildren, charities or friends. Unless you write these into your Will, you cannot assume that those gifts will ever be given. You can’t assume that the beneficiary of your estate will share their new-found wealth with someone else you had asked them to give some to, and sometimes, legal problems intervene that make it impossible for your beneficiary to honor such a request.

Consider if a bequest should be placed in a trust. You may want to protect that bequest if a beneficiary is young, has special needs and receives government benefits, or is in the midst of a divorce, a binge, a lawsuit, or has addictions or debtor-creditor problems. But make sure to pick a trustee who is up to the task, as they could have a relationship with this beneficiary that will go on for many years.

Next, you’ll need to specify how the estate is to be divided. If you are leaving one person “the house,” does it matter that its value could skew the overall distribution? Specify who receives each shae if the beneficiary predeceases you. Will there be estate and inheritance tax? Talk to the attorney about how to make sure here is enough cash in the estate to pay the tax.

Finally — Safeguard the original Will! If it’s lost or misplaced, someone will have to go to court. Let the Executor know where you are keeping it. Some people choose to leave their Wills with their attorneys.

Believe me — estates without WIklls can be anything but simple to administer, and often the outcome is not what the person would have preferred.

 Call for advice on the estate planning that’s right for you … 732-382-6070