By Fredrick P. Niemann, Esq. an Estate Administration and Probate Attorney
Here’s a quick post. Disclaimers are a popular and effective tax planning tool after the death of a person. It allows an estate to take advantage of the tax code. The New Jersey statute was amended about a half dozen or so years ago to allow disclaimers to be file beyond 9 months after death even if the disclaimer might not be a qualified disclaimer under Section 2518 of the IRC. It’s a big deal!
Contact me personally today to discuss your Estate Administration/ Probate matter. I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns. You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.
Archive for the ‘Estate Administration’ Category
TIME TO FILE DISCLAIMERS IN NEW JERSEY IS NOT LIMITED TO NINE MONTHS
Tuesday, December 6th, 2011Estate Planning in New Jersey with Premarital Agreements Involving Second Marriages and Death
Wednesday, November 2nd, 2011By Fredrick P. Niemann, Esq., a New Jersey Estate Planning Lawyer
New Jersey law allows a waiver of right to inherit an estate of a deceased spouse. A widow’s premarital waiver of an elective share to the Estate of her late husband will however be voided after lawsuits are filed when the underlying premarital contract is found unenforceable.
Often there are conflicts between a step-parent and the children of the deceased parent. The issues involve the enforceability of the steps-parents’ rights to inherit a portion of his/her late husband’s estate, even though she had waived her rights to the estate before marriage.
Under New Jersey Law, because of the requirements of N.J.S.A. 3B:8-10 and N.J.S.A. 37:2-30, if a premarital agreement cannot be enforced then a waiver of rights is unenforceable.
Fredrick P. Niemann, Esq. of Hanlon Niemann, a central New Jersey law firm commented that a married person needs to exercise extreme caution and adherence to both form and substance who contemplate second and/or successive marriages and who want to protect their estate for the benefit of their children. Mr. Niemann cautions that without a carefully prepared pre-marital agreement, “Older, financially successful men and women must be aware of the significant, almost enormous risks to them should the marriage fail. By consulting with a qualified New Jersey Estate Planning attorney, the individual can take meaningful steps to protect their life’s savings for the benefit of all who are intended to receive it.”
If you have any questions regarding Premarital Agreements and New Jersey Estate Planning, contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or e-mail him at fniemann@hnlawfirm.com. He will be happy to assist you.
Factors to consider when choosing the right Trustee for Your New Jersey Living Trust
Friday, October 28th, 2011Fredrick P. Niemann, Esq., a NJ Trust Attorney
Your revocable living trust is much more than just a document that says who gets what percentage of your estate or which specific items that you leave behind when you die. A living trust details how and when heirs are to receive their inheritance, which is to take over any businesses in question, and many crucial issues of your estate. A living trust should be very specific in how your estate is to be administered. Therefore, the choice of a suitable is a very important decision that should be carefully considered in your estate planning process.
How Should You Choose the Trustee of your New Jersey Living Trusts: Choosing a Trusted Friend or Family Member
When selecting a person to be the trustee of your living trust, you need to answer an important question:
Who can and will step into my place and confidently act as I would in carrying out my wishes?
It is critically important to select a person that you have full faith and confidence in. You should feel at ease that he or she would carry out your requests as they are written in your estate planning documents. Some typical choices include a:
Close family friend
Close family member
Child
Professional trustee
A licensed professional such as a CPA or attorney
While you may feel completely secure in trusting this huge responsibility for carrying out your wishes to a family member, there are several situations when that is not wise or possible. In that case, your estate planning wishes can be addressed by a trusted outsider.
Living Trusts: Choosing an Outside Trustee
If you do not have a close friend or relative that you feel comfortable with, or if by selecting one of the heirs will cause conflict, then there are other options. You can hire an outside trustee like:
Your bank
A trust company
Your lawyer
A financial advisor
These professionals are generally experienced and knowledgeable in what is required to be a trustee and can often work more expediently and effectively, which saves the heirs money and time. While there are many benefits to not having a family member involved as the trustee of your living trust; there are also some drawbacks to using a bank, trust company or professional as your trustee.
Higher fees and expenses
Minimal estate value of around $700,000
No matter whom you select as your trustee, you want to be sure that you have full confidence in him or her to do exactly as you want, no matter what other people say. There may be heirs who are unhappy with the terms and conditions of the living trust and will try to sway your representative to do as they want. Knowing that you have a strong, trustworthy individual protecting your wishes will provide peace of mind.
If you have any questions about New Jersey Trusts or the role of a trustee in a New Jersey Trust, contact Fredrick P. Niemann, Esq. at 732-863-9900, or fniemann@hnlawfirm.com. He is happy to meet with you to address your inquiries. For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/0/RHnI7RoPYds to learn more.
ESTATE AND GIFT TAX RETURNS: WHAT ARE THE REQUIREMENTS: AVOIDING MISTAKES
Friday, October 28th, 2011By Fredrick P. Niemann, Esq. a New Jersey Estate Administration and Probate Lawyer
The Requirement of Filing Federal Gift Tax Returns – Under the tax code the general rules applicable to income tax returns apply to annual gift tax returns. That is, a 3-year statute of limitations applies to the initiation of an audit based on the value of the gift. The IRS has issued regulations describing substantiation requirements to ensure the protection of the statute of limitations for gift purposes. The IRS can challenge the substantiation or appraisal information on gift tax returns many years after the expiration of the statute of limitations under certain cases, mainly based on fraud. The IRS may challenge the gift value based on the adequacy of the substantiation provided with the initial return and will most likely occur when the donor’s estate is audited. Our recommendation at this time is that all records, such as valuation reports, bank records, and any other items substantiating a gift tax return, should be kept until the donor’s estate tax return is settled.
New Jersey and Federal Estate Tax Returns – The federal statute of limitations is, again, 3 years from the date the return is filed. However, in many cases, the federal estate tax return is extended by 5 months beyond the normal due date of 9 months following the date of the decedent’s income tax returns as long as the estate is open. These income tax returns will also have a 3-year statute of limitations. A good rule of thumb is to keep the estate records for 5 years after the decedent’s death or until a final closing agreement is reached with the IRS, if later.
If you have any questions regarding gift taxes, contact Fredrick P. Niemann, Esq. toll free at (888) 800-7442 or e-mail him at fniemann@hnlawfirm.com. He will be happy to assist you.
Picking the Right Executor as your Estate Fiduciary Under your Last Will and Testament?
Friday, October 21st, 2011By Fredrick P. Niemann, Esq., a NJ Will Attorney
When creating your last will and testament as part of estate planning, an important decision you will have to make is who to name as your executor fiduciary. By fiduciary, I mean your Executor under your Last Will and Testament. An estate fiduciary is a fancy legal term for the person who will take care of your assets and Estate if you are unable to do it yourself, such as the 1) executor of an estate, 2) the trustee of a trust, or 3) an attorney-in-fact under a power of attorney. Your first reaction might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best option.
When naming a fiduciary, be confident you can rely upon the individual. This is why people often name family members as fiduciaries. However problems can arise when a parent with two or more children names one child as a fiduciary. According to Fredrick P. Niemann, an attorney from Freehold, New Jersey, who spoke on the issue of family harmony at a recent will seminar, a child is often not the best fiduciary for several reasons:
• It is hard for a child to be completely objective.
• Children often disagree over many things, including how long the estate should take to complete, the selling of assets, and the division of personal property.
• Children often don’t communicate with each other well.
• Unresolved lifetime rivalries.
An alternative is to hire a professional fiduciary or executor. A professional fiduciary can be a bank, investment firm with estate administration experience, a certified public accountant, or a trust company. A professional fiduciary will charge a fee, but the fee is established ahead of time. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under this person’s or institution’s guidance.
To ensure that your family remains partially involved and has some input, you can include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as fiduciary.
For further information and advice in any estate planning matter or by the use of a will, do not hesitate to contact me toll-free at (888) 800-7442, or e-mail me at fniemann@hnlawfirm.com. We can meet to discuss your questions and issues. For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/0/XfXdZF-5snk to learn more.
Using IRA’s in your New Jersey Estate Planning
Friday, October 21st, 2011By Fredrick P. Niemann, Esq., a New Jersey Estate Planning Attorney
An individual Retirement Account (IRA) is a well known and utilized investment for retirement, but needs to be understood when doing estate planning. IRA’s can be used to provide for heirs either directly or through a trust. Understanding to what extent your heirs will benefit from the IRA and avoiding unnecessary taxes depends on proper planning.
What is an IRA? An IRA is a form of a personal saving plan that is designed to set aside money for your retirement in a tax deferred and tax savings manner. The advantage of IRA’s is that you may be able to deduct some or all of your contributions to an IRA from your income taxes and also be eligible for a tax credit equal to a percentage of your contribution. Earnings withdrawn from a traditional IRA generally are not taxed until distributed to you. At age 70 ½ you have to start taking distributions from a traditional IRA. Earnings in a Roth IRA are not taxed nor do you have to start taking distributions at any point, but contributions to a Roth IRA are not tax deductible. Any amount remaining in your IRA upon your death can be paid to your beneficiary or beneficiaries.
Here is an important thing to remember: With an IRA you must name a beneficiary. While a spouse is usually the logical choice for a beneficiary, you should be sure to name contingent beneficiaries as well. If you and your spouse died at the same time and there was no contingent beneficiary, then the IRA would go to your estate and be subject to probate (the legal process of administering the estate of a deceased person). When a spouse inherits an IRA, he or she can roll it over into his or her own IRA. When a non-spouse inherits an IRA, the heir will need to start taking distributions within a year after the IRA owner dies. See my recent posts on the importance of beneficiary designations found.
Extending the timing and payout of your IRA if you don’t need the funds in your IRA for retirement and want to use them to provide for your beneficiaries instead, you may be interested in “stretching out” your IRA. To do this, when you reach 70 ½, take only the required minimum distributions, leaving more assets in your IRA. When you die, your beneficiary can also stretch distributions out over his or her lifetime and then designate a second-generation beneficiary. It makes sense to name a young beneficiary because the younger the beneficiary, the smaller each distribution must be, which gives the funds in the IRA extra tax-deferred years to grow.
Trusts as Beneficiaries – In some cases, it may make sense to name a trust as a beneficiary. This is particularly true if you have minor children, children with special needs, or a beneficiary with poor spending habits. But the trust must be properly drafted to avoid negative tax consequences. If the trust is a “see-through” trust or “conduit” trust, then the distributions from the IRA to the trust after the participant’s death can be stretched out over the life expectancy of the oldest trust beneficiary. If you are planning to leave your IRA to a trust, you must consult with your attorney to ensure that the trust is properly drafted and the beneficiary is properly named.
An IRA can be a valuable part of a New Jersey estate plan, but the rules can be complicated.
If you have any questions regarding IRA’s in estate planning, please contact Fredrick P. Niemann, Esq. today. He can be reached toll free at 888-800-7442 or by email at fneimann@hnlawfirm.com. Mr. Niemann will be more than happy to meet with you to answer any questions you may have.
Have you selected the Right Person as your Fiduciary Under your Power of Attorney?
Thursday, October 13th, 2011By Fredrick P. Niemann, Esq., a NJ Power of Attorney Lawyer
When creating an estate plan and creating a power of attorney, an important decision you will have is who to name as your fiduciary. By fiduciary, I mean your power of attorney. A fiduciary is a fancy legal term for the person who will take care of your assets if you are unable to do it yourself, such as an attorney-in-fact under a power of attorney. Your first reaction might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best option.
When naming a fiduciary, be confident you can trust the individual. This is why people often name family members as fiduciaries. However problems can arise when a parent with two or more children names one child as a fiduciary. According to Fredrick P. Niemann, an attorney from Freehold, New Jersey, who spoke on the issue of family harmony at a recent estate planning seminar on powers of attorney, a child is often not the best fiduciary for several reasons:
• It is hard for a child to be completely objective.
• Children often disagree over many things.
• Children often don’t communicate with each other well.
• Unresolved lifetime rivalries.
An alternative is to hire a professional power of attorney. A professional fiduciary can be a bank, investment firm with trust administration, a certified public accountant, or a trust company. A professional fiduciary will charge a fee, but the fee is established ahead of time. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under this person’s or institution’s guidance.
To ensure that your family remains partially involved and has some input, you can include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as fiduciary.
For further information and advice with a power of attorney, do not hesitate to contact me toll-free at (888) 800-7442, or e-mail me at fniemann@hnlawfirm.com. We can meet to discuss your questions and issues.
Estate Administration by the Use of the New Federal Tax Portability Option
Thursday, October 13th, 2011By: Fredrick P. Niemann, Esq., a New Jersey Estate Planning Attorney
This is the 3rd part of a three part series on credit shelter trust and the new federal estate tax portability.
Blended Family Estates
Reliance on portability may also defeat, either intentionally or unintentionally, the testamentary plan of the pre-deceased spouse. It is common today for one or both spouses to have children from prior marriages. There is no assurance that a surviving spouse who inherits outright the estate of his or her pre-deceased spouse will leave that property to the pre-deceased spouse’s children. It is equally common for a surviving spouse to remarry. If such a remarriage ends in divorce, it is possible that some or all of the inherited assets may be subject to division by the family law court. If the marriage is successful, it is equally possible that the surviving spouse will leave his or her new spouse some or all of the assets inherited from the pre-deceased spouse.
Tax Considerations
A credit trust is a potentially more tax efficient vehicle than reliance on portability. A property drafted credit trust can be used to sprinkle taxable income to beneficiaries in lower tax brackets, which cannot occur when property is left outright to the surviving spouse without such distributions being treated as taxable gifts. If portability is relied upon and the pre-deceased spouse leaves his or her surviving spouse to children during his lifetime will constitute taxable gifts to the extent they exceed the surviving spouse’s annual exclusion.
Lastly, planners should keep in mind that portability will sunset for people dying on or after January 1, 2013. Planners relying on portability are limited to factual situations in which both spouses die prior to that date. In most situations, it appears estate plans that use credit trusts are far more practical and far less dangerous than reliance on portability.
For more information on credit shelter trusts and the new federal estate tax portability, please contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or email him at fniemann@hnlawfirm.com.
Have you selected the Right Person as your Trust: Caution: Your Decision Matters
Friday, October 7th, 2011By Fredrick P. Niemann, Esq., a NJ Trust Attorney
When creating an estate plan under your will, an important decision you will have is who to name as your fiduciary. By fiduciary, I mean your Executor under your Lat Will and Testament. A fiduciary is a fancy legal term for the person who will take care of your assets and Estate if you are unable to do it yourself, such as the 1) executor of an estate, 2) the trustee of a trust, or 3) an attorney-in-fact under a power of attorney. Your first reaction might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best option.
When naming a fiduciary, be confident you can trust the individual. This is why people often name family members as fiduciaries. However problems can arise when a parent with two or more children names one child as a fiduciary. According to Fredrick P. Niemann, an attorney from Freehold, New Jersey, who spoke on the issue of family harmony at a recent trust seminar, a child is often not the best fiduciary for several reasons:
• It is hard for a child to be completely objective.
• Children often disagree over many things, including how long the estate should take to complete, the selling of assets, and the division of personal property.
• Children often don’t communicate with each other well.
• Unresolved lifetime rivalries.
An alternative is to hire a professional fiduciary. A professional fiduciary can be a bank, investment firm with trust administration experience with trust powers, a certified public accountant, or a trust company. A professional fiduciary will charge a fee, but the fee is established ahead of time. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under this person’s or institution’s guidance.
To ensure that your family remains partially involved and has some input, you can include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as fiduciary.
For further information and advice in estate planning with living ,revocable trust, do not hesitate to contact me toll-free at (888) 800-7442, or e-mail me at fniemann@hnlawfirm.com. We can meet to discuss your questions and issues. For further information, go to http://www.youtube.com/user/NJElderLawCenter#p/search/6/GxL71TQgsWw to learn more.