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Flemington NJ Estate Planning Law Blog

Estate planning and caregiving

A New Jersey resident who is creating an estate plan might think primarily of putting together a strategy that will pass assets on to loved ones. However, making a plan that covers potential incapacitation is another important aspect of estate planning. Many seniors end up needing a caregiver at some point, and around one-third of people eventually need long-term care.

There are several legal documents an estate holder may need. For example, a financial power of attorney appoints someone to take care of financial matters if the estate holder is incapacitated. A living will and possibly other documents cover health care matters. A person may also need a will and a trust.

Build for the future with a legacy plan

Legacy planning involves much more than assigning beneficiaries for money and other assets after death. Although legacy planning is often used interchangeably with estate planning, the two are different. Estate planning is something New Jersey residents do when they want to ease tax burdens and allocate assets. Legacy planning is done to continue a life's work after the estate holder has died.

Estate planning starts with assets that a person already owns. An attorney might help a client transfer the assets or put them into trusts to avoid probate and excessive taxes after death. Legacy planning is quite different. It starts with determining what a person wants to be known for and working on a plan to continue that work after they're gone. Although physical assets might be involved, they aren't a necessary element of a legacy plan.

The importance of reviewing estate plans when getting divorced

After people in New Jersey have completed their estate plans, it is important that they review them regularly. It is especially important for people to review and change their estate plans when they decide to get divorced so that they don't accidentally leave their estates to their ex-spouses when they die.

If a person has a large amount of money before he or she gets married, the person may keep it as separate property by placing it in a trust that is only in the person's name. If the person adds his or her spouse as a beneficiary and later decides to divorce, the spouse will receive a portion of the trust if the person dies before the divorce is final.

Estate planning for couples without children

Some New Jersey couples might think that if they do not have children, they do not need an estate plan. However, estate plans are not just for passing on wealth to the next generation. They can also help protect people and allow them to decide what becomes of their assets after their death.

When people do not have children, they may have other plans for their assets. They might want to leave them to friends, a charity or even to pets. There may be advantages to careful planning. For example, if a couple wishes to leave assets to a charity, a charitable trust might be the best way to do it.

What to know about powers of attorney

New Jersey residents should never be pressured into signing a power of attorney document. In fact, it may be a sign of fraud for another person to pressure someone to take that step. As a general rule, those who aren't ready to delegate financial duties to another person in the event they are mentally incapacitated should step away and reconsider the situation.

Those who are being pressured to sign such a document may want to check to see that no one is trying to access their accounts without permission. Bank or brokerage accounts may be prime targets for anyone engaging in a scheme that includes gaining power of attorney. There are two main parties to any such document; the person who creates a power of attorney is known as the principal while the party who acts on that person's behalf is known as an agent.

Planned giving and estate planning

New Jersey residents may want to consider planned giving as part of their estate plan. Planned giving refers to arranging a donation to charity while a person is still alive. Planned giving can offer a number of benefits to donors, charities and beneficiaries.

Planned giving can help a person save on taxes. Some options include a charitable remainder trust, a charitable gift annuity and an IRA charitable rollover. These tax advantages may also affect the tax burden on beneficiaries. By doing this planning early and putting it in writing, both the donor and beneficiaries will know what to expect. The burden of guessing what a person may have wanted is removed for loved ones. Charitable trusts may also provide income for the donor during that person's lifetime.

Why special needs trusts are important

Parents in New Jersey and elsewhere will ideally create an estate plan that takes into account the needs of their children. Doing so may be more important if a child has special physical, mental or emotional needs. This is because a properly crafted plan may allow a child to receive assets without jeopardizing their ability to receive government benefits if necessary.

One mistake to avoid is naming a child as a beneficiary to money inside of a retirement account. Some people choose to do this because of the flexibility and convenience it provides. If a child currently qualifies for Medicaid, receiving that money directly may disqualify him or her going forward. To avoid such a situation, it may be best to create a special needs trust.

Why durable powers of attorney are important

New Jersey adults of all ages should think about having some basic estate planning documents in place. Even people who are in their 20s may benefit by drafting these documents because unexpected accidents or illnesses can occur. There are several types of estate planning tools that can offer protection in the event that people become incapacitated and are unable to make financial decisions for themselves either temporarily or permanently.

Durable powers of attorney may offer the type of protection that people might need if they are unable to make financial decisions for themselves. If people suffer a debilitating injury or illness and are unable to make those decisions, it can make things very difficult. Family members may be unable to access their accounts, pay bills and take care of other important tasks without durable powers of attorney.

The importance of a funeral planning declaration

When New Jersey residents are making their estate plans, they may not include what they want their final arrangements to be. Traditionally, the final arrangements were included in a person's will. However, those who have specific desires should prepare a funeral planning declaration.

This document is somewhat similar to a power of attorney that grants a trusted love one the power to organize and carry out the person's final wishes. For example, if the person wants to be buried or cremated, the declaration ensures that those wishes will be carried out. If the person does not have any particular wishes when it comes to his or her final arrangements, the document grants a trusted loved one the authority to lay the person to rest as he or she sees fit.

Elements of an estate plan for entrepreneurs

Many entrepreneurs in Hunterdon County rely in large part on the income of their businesses. Since this income is responsible for sheltering the family, feeding them and providing a consistent standard of living, protecting the business is a necessity that shouldn't be overlooked in estate planning. However, a survey of entrepreneurs found that few had engaged in even the basics of protecting their business interests.

The first documents a business owner will want to investigate are various powers of attorney, wills and living trusts. Most are aware of the health care proxy, which authorizes a specified person to make health care decisions in the case of incapacity. A financial power of attorney functions similarly by vesting a person with the ability to make financial decisions, such as conducting transactions, paying taxes and dealing with clients.

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Flemington, NJ 08822

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