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Bridgewater New Jersey Estate Planning Law Blog

Should you choose irrevocable trusts to protect your assets?

You've worked hard to live a life with many assets, and at this point, you just want to protect as many of them as you can. As you age, you know you could risk losing assets to the government if you do not plan carefully.

There is an easy solution. If you want to protect your assets, one of the things you can do is have an irrevocable trust. This trust cannot be terminated or modified without a beneficiary's permission. You, the grantor, transfer assets into the trust. This removes the assets from your ownership.

4 reasons you may need an advance directive

When you create an advance directive, you lay out your wishes for medical care in writing. These are decisions you would typically make in person, at the time they need to be made, but the advance directive gives you some insurance if you're unable to do that. You can address things like what lifesaving machines you want the doctors to use and whether or not you should be resuscitated.

Four reasons you may need an advance directive include:

  1. You have severe dementia. You can no longer make choices for yourself. You do not understand the situation or the ramifications of your decisions, and you cannot accurately make your desires known to your family.
  2. You went into a coma. It is impossible for you to communicate your wishes. Without an advance directive, your family has to make those choices for you.
  3. You are suffering from a terminal illness. For instance, perhaps you had a stroke. You can no longer talk or communicate with those around you. Even if you still understand the situation, you have no way to express your desires.
  4. You suffered a serious injury. You may have gotten in a car accident, for instance. When you arrived at the hospital, you were still unconscious. Doctors need to act quickly, and it helps to know what you would want them to do.

Does the family gather to hear the reading of the will?

If you watched a movie where a character passed away, you may have then watched a scene where all of the friends and relatives sat in a room while a lawyer read them that person's will. Does this really happen? Is that how you find out what was left to you?

While this scene can build a lot of suspense and works well in movies, it is not all that realistic in 2018. Instead, the person in charge of the estate makes copies of the will and then mails them out to those who are named in the document. This way, those people have hard copies and they can read them whenever they want. The family members do not have to arrange their schedules to meet up for a will reading, and there's no element of surprise.

Should you give more money to a child who needs it?

You know that you want to be fair when you leave your money to your children. But does that necessarily mean leaving them equal amounts? This is one of the biggest questions that parents have to ask themselves.

For instance, one couple had three children. One of those children had done very well financially, to the point that they had enough money for expensive extras like a vacation house. The next child had not done that well, but did have enough to live without worry and to put money aside to retire.

4 advantages of a special needs trust

You have an heir with special needs, and you are trying to figure out your best course of action during your estate planning. You want to provide for that person and help him or her significantly after you pass away, but you do not accidentally want to do something with unintended consequences. What should you do?

One option is to use a special needs trust. This sets money aside from your estate to help the individual, keeping it in the trust rather than passing it to the person directly. There are some major advantages to doing this, such as:

  • Making sure that the individual is still eligible for government assistance in the form of Medicaid or Supplemental Security Income (SSI). The trust can pay any additional costs over what that assistance covers. Leaving money directly may increase a person's wealth so that he or she becomes ineligible, but the trust does not do so.
  • Ensuring that the money that you leave behind is actually used to care for that individual. If you worry that others may try to take advantage of the person, a trust is safer than a direct gift.
  • Giving you a way to deduct the money for tax purposes.
  • Keeping the funds away from any creditors. For instance, if your heir has outstanding debts, creditors cannot take the money from the trust. It is not technically part of your heir's estate, so it is protected, and you know that it will only be used as instructed by the trust -- to care for the beneficiary.

Hurt feelings may lead to estate disputes

People often assume that estate disputes revolve solely around possessions. Two people want the same assets, they can't have them and so they start a long legal dispute to see who gets them.

Certainly, this does happen, and assets do change hands during these disputes. However, experts note that the real problem is often that someone has his or her feelings hurt.

Why don't people think about estate planning?

When was the last time you gave some serious thought to your estate plan? If you cannot remember, or if you have never done any estate planning, you are not alone. We will all need it eventually, so why don't we think about it more often?

For one thing, many people do not realize just how fragile life can be. They assume they have all sorts of time -- years or perhaps decades -- to get their affairs in order. Of course, the reality is that anyone can pass away at any age due to accidents, unexpected diseases, violence and a host of other factors. Sometimes, people only start thinking about estate planning when a close friend or family member passes away unexpectedly.

Joint accounts, inheritance and estate taxes

As of Jan. 1, New Jersey no longer has a state-imposed estate tax. However, we still have an inheritance tax on assets that go to a beneficiary after a person's death.

Surviving spouses do not have to pay an inheritance tax on assets left to them by their husband or wife. However, estates can still be subject to federal estate taxes.

An important difference between Class C and Class A beneficiaries

When you're writing your will in New Jersey, you must take into account the state's estate tax laws and how they can impact the money you're leaving behind. A small mistake or oversight could cost your family a lot.

For instance, one man became sick and decided to draft a will. At the time, his sisters were the ones providing him with daily care and assistance, so he opted to leave his money to them instead of his mother.

A proxy directive versus an instruction directive

You may know what types of medical care you want, but what if you cannot tell the doctors? What if you have a stroke, for instance, and you are unconscious when you reach the hospital. How are doctors supposed to know if you want to use life support, if you want to be resuscitated and what other types of care they should provide?

The answer lies in an advance directive. This is a document that you can set up before you need it to make these decisions. There are two main types: An instruction directive and a proxy directive.

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