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New Jersey Estate Planning and Probate Law Blog

What does it mean to be of "sound mind" when planning a will?

Executing a will is an important legal process that can alter the way a person's estate and assets are distributed when they pass away. Because of this, some beneficiaries may be greatly enriched by a loved one's estate plan. Similarly, some who feel as though they should have benefitted from a loved one's will may discover that they were left out.

In New Jersey, there are several important requirements that must be fulfilled in order for wills to be considered valid. First, individuals must be adults to execute wills. Once a person reaches the age of 18 that person may create and sign their own testamentary document for the purposes of distributing their end of life estate.

A review of the federal gift tax

During the holidays, over loved ones' birthdays and for other special occasions, New Jersey residents may relish in offering to their friends and relatives tokens of their love and appreciation. These gifts may range from modest items of personal meaning to lavish assets with financial growth opportunities. Many gifts may be given without thought to the federal gift tax, but as gifts grow in value they may become relevant to this important financial consideration.

The gift tax is applied to gifts of value that exceed a federally established threshold. Over time the gift limit to avoid the gift tax has gone up, and for 2019 gifts to any one person that exceed $15,000 may be taxed. That is to say, a person may give up to $15,000 worth of gifts to someone they love before they will be subject to the gift tax.

Fitting digital assets into an estate plan

Digital assets are emerging as a new source of investment and wealth for individuals all across the United States and even the world. In New Jersey, residents may not be familiar with cryptocurrencies like Bitcoin and other online only resources that individuals may keep in their digital wallets. Cryptocurrencies are not physical tokens or other tangible items that holders may trade; transactions using digital assets like cryptocurrencies occur online and through secure blockchain interfaces.

Unlike traditional money that may be held in a bank and taken out at the owner's discretion, digital assets simply do not exist outside of the digital domain. The value of digital assets fluctuates and, due to the structure of digital transactions, the transfer of ownership of cryptocurrencies can be complex. All of these and many other reasons may complicate the estate planning wishes of individuals who choose to invest in these emerging financial tools.

Laws of intestacy in New Jersey

Intestate succession is a complicated area of estate administration law. It becomes applicable to the estate of a deceased individual when that person passes away without having first executed a valid will. As our readers in New Jersey may know, a will is a legal document that a person may use to identify beneficiaries who will receive items of the decedent's property once they have passed on.

If a decedent does not have a valid will in place when they die, the laws of intestacy may take over to govern intestate succession.

What is included in an end-of-life estate?

When New Jersey residents pass away, the items that they owned must be properly distributed to their loved ones, creditors and other relevant parties. The things and assets that they leave behind constitute their estate and depending upon the type of estate plan that they leave the distribution of those things and assets can look very different from decedent to decedent.

End-of-life estates can include tangible and intangible items. For example, the personal property that a person owns can be included in the estate. These items of property may include, but are not limited to, vehicles, pieces of art, jewelry and clothing, furniture, collections, books and heirlooms.

The benefits of a credit shelter trust

A credit shelter trust is a special type of living trust that may be established between two married people. It is set up during the partners' lifetimes and generally benefits their children when they are both gone. At its most basic level, a credit shelter trust takes possession of the partners' assets and when one dies, the assets pass to the beneficiaries who must use it for the benefit of the surviving partner. When the second spouse passes away, their children take possession of the assets.

Credit shelter trusts have a number of benefits. But, different individuals may have different estate planning goals and needs.

Are irrevocable trusts permanently set in stone?

There are many types of trusts, but the main categories are testamentary trusts, which go into effect upon the grantor's death, and living trusts, which go into effect while the grantor is still alive. Among living trusts, there are another two main subcategories: revocable trusts and irrevocable trusts. As its name implies, an irrevocable trust usually cannot be modified after it is executed. However, there are always exceptions to the rule, and irrevocable trusts are no different.

New Jersey residents may be surprised to hear that, in certain limited circumstances, it is possible to modify an irrevocable trust.

Estate planning when you have a chronic illness

It is not unusual for a person in New Jersey to have a chronic illness. Some chronic illnesses, such as Parkinson's or Alzheimer's will become progressively worse over time and will eventually make it difficult for a person to communicate their wishes or care for themselves. Therefore, it is very important that those with a chronic illness execute an estate plan while they are still able to do so.

While having a will and/or a trust are an important part of any estate plan, people with chronic illnesses will have some special considerations to make when comes to estate planning. For example, they will want to execute a HIPPA (Health Insurance Portability and Accountability Act) Release. A HIPPA Release gives a named person the ability to access your health records. A physician order for life-sustaining treatment (POLST) can be included in your medical records. It allows your doctors to understand what end of life care you want should an emergency arise.

What situations could cause a person to challenge a will?

When a person in New Jersey writes a will, they generally believe they are making clear their intentions for how they want their estate dispersed between their heirs after their death. And, for the most part, a properly executed will does just that. However, there could be times when an heir feels the will should not be followed and wants to contest it. This can lead to estate litigation.

It is important to note that challenging a will can be difficult. This is because it is presumed that if the will was executed with all proper formalities, it is valid and should be followed. However, there are circumstances that could provide grounds for challenging a will.

The basics of estate taxes versus inheritance taxes

As the saying goes, the only two guarantees in life are death and taxes. And, for some people, receiving an inheritance after a loved one dies means that either Uncle Sam will take his share before the estate is distributed, or the state may ask the heirs to pay up, depending where they live. Therefore, it is important to understand the basics of inheritance taxes and estate taxes, and when these taxes apply.

An inheritance tax is paid by the person who inherits the estate. For example, if your Aunt Edith passed away and left you $500,000 in her will, you may be personally liable for paying taxes on that $500,000. Only certain states have an inheritance tax. New Jersey is one of those states. The state inheritance tax in New Jersey depends on the size of the inheritance and the relationship between the heir and the decedent. There is no federal inheritance tax.

J. Jeffrey Press, P.A.
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