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Recent Articles
Seven Things You Should Do To Protect Your Family And
Ensure A Successful Estate Strategy
Joseph G. Maniaci, Esquire
- Review Your Estate. In order to plan your estate properly, you must first understand the nature and extent of your assets. Prepare an inventory or list of everything you own, including real estate, bank assets, investments, retirement plans, and life insurance. The value of your estate will determine whether your estate is subject to Federal estate tax and will also determine whether you should consider "gifts" to family members to avoid potential inheritance tax and to protect your assets from a nursing home or other long term care facility.
- Understand Joint Assets and Beneficiary Designations. Most people believe that their Will control how all of their assets will be distributed. Be careful - - this is not always true. Generally, bank assets, stocks, and mutual funds that are titled in joint name pass to the surviving owner, regardless of what your Will says. In addition, IRA's, retirement assets, and life insurance will pass to the beneficiary you designate on such accounts, regardless of what your Wills says. Make sure your beneficiary designations are up to date; people get divorced, get remarried, have children, and sometimes forget to update the beneficiary designations on life insurance and retirement accounts.
- Understand Inheritance and Estate Tax Better. Good estate planning attempts to minimize potential state inheritance tax and federal estate tax. Although there is generally no inheritance tax on assets passing to a spouse, Pennsylvania does impose inheritance tax on assets passing to children, grandchildren, siblings, and others. New Jersey does not currently impose any inheritance tax if assets pass to a spouse, children, or grandchildren, but it does impose an inheritance tax on assets passing to siblings and others, and New Jersey also imposes a relatively new "New Jersey Estate Tax" on assets valued in excess of $675,000. Further, the Federal estate tax exclusion in 2007 and 2008 is $2 million, and estates in excess of $2 million may owe substantial Federal tax. An excellent planning opportunity exists for married couples who have estates valued in excess of $2 million - - bypass trusts can be created whereby a married couple can pass up to $4 million to children and others estate tax free. Again, proper planning is the key.
- Draw Up A Will or Trust. Don't put it off any longer. Sit down with an estate planning attorney and prepare a Will or Trust that helps you minimize potential taxes and ensures that your assets pass to your intended beneficiaries. A Will also permits you to designate a guardian to care for your minor children and a trustee to manage your childrens' assets until they reach adulthood. A Will also permits you to designate an "executor" - - the person you trust to sell your assets and distribute them in accordance with the terms of your Will.
- Prepare for Incapacity. If you become incapacitated or disabled, who will handle your finances, such as paying your bills, handling your investments, and paying your taxes? Who will make your health care decisions if you develop dementia or become incompetent? The answer is that you should have a durable power of attorney document in which you designate a person you trust, such as your spouse or adult child, to handle financial matters and health care decisions. A durable power of attorney document is a relatively inexpensive document; if you fail to sign a durable power of attorney, your family may have to go to court to have a legal guardian appointed - - a much more expensive and time consuming process.
- Protect Your Assets from a Nursing Home. The cost of nursing home care can devastate a family's assets. Nursing homes generally cost in excess of $80,000.00 per year. Recent changes in federal Medicaid law impose a new "five year" lookback period which affects the planning process. We can assist you in creating a plan to re-title assets and make family gifts in an effort to preserve and protect family assets, but it is important to realize that the earlier you begin the planning process, the more assets you are able to protect.
- Consider a Living Will. If you tragically are ever in a permanent coma or otherwise suffer from an end-stage medical condition or persistent vegetative state, do you want to be kept alive on respirators, ventilators, or feeding tubes? If not, you should sign a Living Will, which directs your doctors and other medical providers not to artificially prolong your life if there is no hope of regaining cognitive ability. A Living Will can relieve your family from the burden of watching a loved one being artificially maintained when there is no hope of recovery.
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