Set
up Trusts within Wills to protect Assets of children under age 30
Example The
principal held in each child's share shall be distributed to him or her upon
his or her attaining the age of thirty (30) years.
In the
event either of my children have not attained the age of thirty (30) years, if
he or she has attained or upon his or her attaining the age of twenty two (22)
years, my Trustee shall distribute one-third (1/3) of the principal held in
such child's share to him or her.
If
either child has attained or upon attaining the age of twenty five (25) years,
an additional one-half (1/2) of the balance of the principal held in such
child's share shall be distributed to him or her. Upon attaining the age of thirty (30) years,
the balance of the principal held in such child's share shall be distributed to
him or her.
As
average Americans, we work 80,000 hours in a lifetime, or 45 to 55 years. In spite of all the resources and assets we
earn, the vast majority of us do not take the time to create a Will.
National statistics indicate that 80%
of Americans foolishly die without leaving a Will. There are several reasons for this: fear of
death; procrastination; and misinformation (people presume that only the rich
need to have Wills). Whatever the
excuse, it is clear that people would benefit from having a Will.
In the absence of a Will or other legal
arrangement to distribute property at death, problems arise. The result can be lengthy delays before the
rightful heirs receive their property.
IF
YOU HAVE NO WILL:
If you leave no Will or your Will is
declared invalid because it was improperly prepared or is not admissible to
probate:
*
State law determines who gets assets, not you
*
Additional expenses will be incurred and extra work will be required to qualify
an administrator
*
Judge determines who gets custody of your children
*
Possible additional State inheritance taxes and Federal estate taxes cannot be
reduced
* If you have no spouse or close relatives the
State may take your property
* The procedure to distribute assets becomes
more complicated-and the law makes no exceptions for persons in unusual need or
for your own wishes.
* It usually cause fights and sometimes
lawsuits within your family
When loved ones are grieving and
dealing with death, they shouldn’t be overwhelmed with Financial concerns. Careful estate planning helps take care of
that. Don’t try to do Estate Planning with a cheap form found online.
THE FOLLOWING IS A SAMPLE OF A VARIETY
OF CLAUSES AND ITEMS WHICH YOUR ATTORNEY
MAY INCLUDE IN A WILL:
1ST: DEBTS AND TAXES
2ND:
SPECIFIC BEQUESTS
3RD: DISPOSITION TO SPOUSE
4TH:
DISPOSITION OF REMAINDER OF ESTATE
5TH:
CREATION OF TRUSTS FOR SPOUSE
6TH:
CREATION OF TRUST FOR CHILDREN
7TH:
OTHER BENEFICIARIES UNDER 21
8TH:
EXECUTORS
9TH:
TRUSTEES
10TH:
GUARDIANS
11TH:
SURETY OR BOND
12TH:
POWERS
13TH:
AFTERBORN CHILDREN
14TH:
PRINCIPAL AND INCOME
15TH:
NO ASSIGNMENT OF BEQUESTS
16TH:
GENDER
17TH:
CONSTRUCTION OF WILL
18TH: NO CONTEST CLAUSE
A Will must not only be prepared within
the legal requirements of the New Jersey Statutes but should also be prepared
so it leaves no questions regarding your intentions.
WHY
PERIODIC REVIEW IS ESSENTIAL
Even if you have an existing Will,
there are many events that occur which may necessitate changes in your
Will. Some of these are:
*
Marriage, death, birth, divorce or separation affecting either you or anyone named in your Will
*Significant
changes in the value of your total assets or in any particular assets, which you
own
* A
change in your domicile
*
Death or incapacity of a beneficiary, or death, incapacity or change in
residence of a named executor, trustee or guardian of infants, or of one of the
witnesses to the execution of the Will
*Annual
changes in tax laws
MAY
I CHANGE MY WILL?
Yes.
A Will may be modified, added to, or entirely changed at any time before
your death provided you are mentally and physically competent and desire to
change your Will. You should consider
revising your Will whenever there are changes in the size of your estate. For
example, when your children are young, you may think it best to have a trust
for them so they do not come into absolute ownership of property until they are mature. Beware, if you draw lines through items,
erase or write over, or add notations to the original Will, it can be destroyed
as a legal document. Either a new Will
should be legally prepared or a Codicil signed to legally change portions of
the Will.
Save
money with proper planning
Your estate will be subject to probate
whether or not you have a Will and in most cases, a Will reduces the cost by
eliminating the requirements of a bond.
With a well-drawn Will, you may also reduce death taxes and other
expenses. Don’t pinch pennies now to the
detriment of your beneficiaries.
The
proper preparation of a Will should involve an analysis of the client’s assets,
family and his/her desires.
Estate Planning is the process of
examining what will happen to your property when you die and arranging for its
distribution in such a manner as will accomplish your objectives.
The cost of a Will depends on the size
and the complexity of the estate and the plans of the person who makes the
Will. A properly drawn Simple Will
without Trust costs approximately $200.00 to $600.00. It is one of the most
important documents you will ever sign, and may be one of the best bargains you
will ever have.
Be sure your Will takes into account
the Federal Tax changes and New Jersey Inheritance Tax changes. Also, ascertain if your Will is
“self-proving”, which would dispense with having to find the Will’s witnesses
after death.
WHAT
IS A WILL?
“A Will is a Legal written document
which, after your death, directs how your individually owned property will be
distributed, who will be in charge of your property until it is distributed
and who will take care of your minor children if the other parent should die
". You should remember that the
term “property” under the law includes "real estate as well as other
possessions and rights to receive money or items of value.” Everyone who has at least $3,000 in assets
should have a Will. You do not have to
be wealthy, married, or near death to do some serious thinking about your Will.
Reducing the NJ Estate Tax on estates
over $675,000.
A
New Jersey estate tax return must be filed if the decedent's gross estate plus
adjusted taxable gifts exceeds $675,000.
Even if there is no NJ Inheritance Tax there can be
a NJ Estate Tax if the estate exceeds $675,000 and the beneficiaries are
children or grand children. There is a substantial tax that must be paid after
the 2nd spouse dies on amounts over $675,000.
You can hire an attorney to set up Trusts or a Will
with a Credit Shelter Trust to try to reduce NJ Estate taxes due. We charge a
minimum fee of $400 for each Trust within a Will. A separate stand alone Trust
has a minimum fee for $2,500.
Even if your net worth is well below
the Federal threshold where the federal estate tax becomes an issue, the New
Jersey Estate Tax may still be a problem. The New Jersey Estate Tax affects any
person or married couple with net worth over $675,000. There is no
exemption for assets you leave to your children; those assets are fully taxed,
even if in joint names. There is also no exemption for the value of your home
and life insurance, so it is easy to hit the $675,000 threshold very quickly.
If you have assets such as bank
accounts in joint names, or bank accounts payable upon death, these go directly
to the beneficiary. Your Will cannot change who the beneficiary is on a joint
account, payable upon death accounts, or other assets such as Life Insurance
policies. You would have to directly contact the bank or company where the
assets are held and either direct that they change the beneficiary or not list
any beneficiary at all other than your Estate.
Therefore, if you have $1,200,000 in assets, you can change the
beneficiary so the husband owns $600,000 and the wife owns the other $600,000.
WHAT IS CREDIT SHELTER TRUST and how
can the attorney help Reduce NJ Estate Taxes and protect the surviving spouse
and children?
"The Credit Shelter Trust
(sometimes referred to as a “Bypass Trust” or an “A/B Trust”) is a popular
estate planning technique used by married couples with combined assets in
excess of $675,000. The purpose of the Credit Shelter Trust is to avoid the
wasting of federal and state exemptions on the death of the first spouse.
Instead of leaving all assets to the surviving spouse and thereby exposing the
surviving spouse’s estate to more tax, both spouse’s Wills are drafted to
establish a Credit Shelter Trust to come into existence and be funded on the
first spouse’s death.
In a typical Credit Shelter Trust, the
surviving spouse is entitled to receive all of the income from the Trust for
his or her lifetime, and has the right to demand principal distributions for
his or her health, education, support and maintenance in his or her accustomed
manner of living. Distributions in excess of that standard require the
cooperation of a Co-Trustee – often an adult child of the surviving spouse or a
trust department of a bank.
The amount, which funds a typical
Credit Shelter Trust, varies according to a particular Client’s financial and
family circumstances. For Federal Estate Tax purposes, a Credit Shelter Trust
can be funded with the Decedent’s remaining federal estate tax exemption ($5.4
million as of 2015 if no prior gifts have been made). However, in New Jersey,
since the state estate tax exemption is only $675,000, if the Credit Shelter
Trust is funded with more than $675,000, this will cause some New Jersey Estate
Tax to be paid. For example, if the $2 million is funded, the tax to the State
of New Jersey is $99,600. Because of this, many Clients choose to fund the
Credit Shelter Trust with only $675,000.
If the Credit Shelter Trust technique
is implemented as part of a Client’s Estate Plan, you can hire the attorneys
for a separate fee to assist the Client in re-titling his or her assets so that
assets are available to fund the Credit Shelter Trust. Re-titling is necessary
because most Clients tend to hold assets jointly with right of survivorship and
assets must be titled individually in a person’s name in order to be eligible
to fund a Credit Shelter Trust. We work with a tax attorney to help our
clients." Source: http://www.davidkwhitlock.com/CM/FAQ/What-Is-Credit-Shelter-Trust.asp:
Examples
of NJ Estate Tax due if no estate planning
Estate
of $800,000 and no spouse
Your
Estimated NJ Estate Tax: $22,799.60
If Estate Value: $900,000.00
Your
Estimated NJ Estate Tax: $27,600.00
If
Estate Value: $1,000,000.00
Your
Estimated NJ Estate Tax: $33,200.00
If
Estate Value: $1,100,000.00
Your
Estimated NJ Estate Tax: $38,800.00
If Estate Value: $1,200,000.00
Your
Estimated NJ Estate Tax: $45,200.00
If
Estate Value: $1,300,000.00
Your
Estimated NJ Estate Tax: $51,600.00
ADMINISTRATION OF AN ESTATE
If you are named the executor, you must
visit the County Surrogate to probate the Will.
You will need the following items:
1. The Death Certificate
2. The Original Will
3. Names and Addresses of decedent's,
next of kin and list of beneficiaries
4. Minimum of $130.00 for Surrogate
fees
A
NJ state inheritance tax return must be filed if real estate is left and the
tax may be required on the transfer of real or personal property within eight
months after death.
Call our office to schedule a
"confidential" appointment 732-572-0500
Kenneth
Vercammen & Associates.
2053
Woodbridge Avenue
Edison,
NJ 08817
www.centraljerseyelderlaw.com
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