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New Jersey Estate Planning and Probate Law Blog

Will my heirs be subject to the New Jersey inheritance tax?

While New Jersey no longer has an estate tax, as of right now it is one of only a handful of states that still imposes an inheritance tax. This tax applies to any transfers of assets to certain (but not all) heirs once you pass away. And while inheritances worth $500 or less won't be taxed, other inheritances will be subjected to the legally complex inheritance tax.

Whether the tax applied and how much is due depends on what "class" the heir falls under based on his or her relationship with the decedent. Class A heirs are exempt from the inheritance tax altogether. This includes spouses and children of the decedent, grandchildren and great-grandchildren of the decedent and parents and grandparents of the decedent. Class E heirs are also exempt from the inheritance tax. Class E heirs include charities, religious bodies, schools, hospitals, non-profit groups and the State of New Jersey itself.

Pet trusts are one way to provide for your furry friend

The late fashion designer Karl Lagerfeld was known not just for his creative genius, but also for the love he had for his cat, "Choupette." In an April 2018 interview, Lagerfeld stated he wanted to be cremated, rather than have a burial. He also stated that his ashes should be dispersed with those of his mother and his beloved Choupette, if the cat passed on before he did. And, while it is not clear what accommodations he made for Choupette, his death does bring up the important fact that sometimes a pet owner passes on before his or her pet does.

Many pet owners in New Jersey view their pet as a member of the family, so it makes sense to address their pet's needs in their estate plan. One option some people choose is to execute a pet trust. Pet trusts can address who will care for a pet and how the pet will be cared for.

Do not let these aspects of trusts trip you up

A trust is a complex legal tool, but it is one that many people in New Jersey find to be extremely valuable. After all, a trust allows a person to pass assets on to loved ones without having to go through the expensive and time-consuming probate process. However, do not make the mistake of assuming trust planning is one-and-done.

First, simply signing off on the trust does not matter if the trust is never funded. Assets must be titled in the name of the trust. Assets left out of the trust at the time of one's death could be subject to probate and the laws of intestate secession without a will.

Can a "no-contest" clause really prevent estate litigation?

Many people who execute a will in our state have very strong opinions about who should inherit their property. They may even want to go as far as inserting a clause in their will stating that if an heir pursues estate litigation, he or she will be disinherited. However, are such "no-contest" clauses enforceable under state law?

Under New Jersey Statutes, Section 3B:3-47, if a person puts a clause in their will that penalizes an interested person for challenging the will is unenforceable, if the interested person has probable clause to challenge the will. If the interested person does not have probable cause to challenge the will, the "no-contest" clause may be enforced.

Can certain assets bypass the probate process entirely?

In New Jersey, when a person dies, his or her estate generally must go through the probate process before the assets can be distributed to the person's heirs either per the terms of the person's will or through the state laws of intestacy should the person die without a will. Many people wish to avoid probate, as it can be a time-consuming and costly process that could potentially reduce the size of a person's estate. However, it is important to note that certain assets are exempt from being probated.

First, assets placed in a revocable trust will not be probated. If a person owns a home or other piece of real estate via tenancy by the entirety or via joint tenancy with a right of survivorship, that real estate will not be probated. This is often the case when a couple is married, owns a home together and then one spouse passes away, while the surviving spouse is still alive.

What steps can you take to simplify the estate planning process?

Many people in New Jersey may have the vague idea that they should have an estate plan but may have no idea where to begin. Estate planning can be complex, but there are some basic steps you can take prior to executing an estate planning that may help the process run more smoothly.

First, determine what your goals are for estate planning. For example, you may wish to pass valuables on to loved ones, plan for incapacitation or both. Next, decide who you want to benefit from your estate plan. This could include family, friends, charities or even your pets. Depending on their age, health and stage in life, some of your loved ones will have different needs than others, and these needs should be identified.

Review your estate plan in light of federal estate tax changes

The Tax Cuts and Jobs Act passed in 2017 will take effect this year, and it means big changes for some New Jersey taxpayers. The jump in the federal estate and gift tax exemption to $11.8 million may be good news to those with a large estate. However, these individuals may want to review their estate plan in light of these tax law changes, so that they can ensure they are utilizing the new laws to their greatest advantage.

First, if a person wants the value of their taxable estate to drop low enough that the federal estate tax will not apply to them, they can consider making charitable donations. Specifically, they should choose charities that have been approved by the Internal Revenue Service. This could reduce the size of one's taxable estate.

Points to consider when choosing a trustee

When a person in New Jersey executes a trust, they will need to select a trustee. The trustee's role is very important, as it is their duty to oversee the management and distribution of trust assets, acting in the best interests of the trust beneficiaries with no self-dealing. People might initially think that they should choose a close relative or friend to fulfill this role, but it is important to understand that there are other options as well.

A trustee must be able to separate his or her personal interests from those of the trust beneficiaries. All beneficiaries must be treated impartially. A trustee must be able to competently oversee the investment of trust assets, but without taking unnecessary risks. Whoever serves as trustee must make sure they have the time needed to give an appropriate amount of attention to their fiduciary duties.

Guiding you through the estate planning process

For some, it is hard to think beyond this year, let alone this month or this week. Planning for the future can be challenging because there are many what-ifs and uncertainty. While no one can be completely prepared for what is to come, there are some measures individuals in New Jersey and elsewhere can take to help protect their assets and wishes in the event of their incapacitation or death.

The estate planning process can initiate for many reasons. One may have just got married, had a child, is about to undergo surgery, was diagnosed with an illness, is reaching retirement age or just simply wants to because they have reached the age of maturity. No matter the reason, at J. Jeffery Press PA, our experienced legal team is here to guide you through the process.

Who has standing to challenge a will in New Jersey?

The loss of a loved one can leave a family in New Jersey grief-stricken. The matter can be made even worse if a person believes the terms of their loved one's will should not be followed, for example, if they believe the will was executed under undue influence or when their loved one was incompetent. However, before a person can pursue estate litigation, he or she must have standing to challenge a will.

Not just anyone can contest a person's will. Only "interested persons" to the will can pursue litigation if they believe the terms of the will should not be followed. In general, only those who would inherit through intestacy laws if there was no will, those who were named as beneficiaries of a previous will executed by the deceased, or those who were named as beneficiaries of a subsequent will executed by the deceased may contest the will.

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