Free Report on Wills and
eliminating the NJ Estate Tax
Compiled by Kenneth Vercammen
As average Americans, we work
80,000 hours in a lifetime, or 45 to 55 years.
In spite of all the resources and assets we earn, the vast majority of
us do not take the time to create a Will.
National statistics indicate that 80% of Americans foolishly
die without leaving a Will. There are
several reasons for this: fear of death; procrastination; and misinformation
(people presume that only the rich need to have Wills). Whatever the excuse, it is clear that people
would benefit from having a Will.
In the absence of a Will or other legal arrangement to
distribute property at death, problems arise.
The result can be lengthy delays before the rightful heirs receive their
property.
IF YOU HAVE NO WILL:
If you leave no Will or your Will is declared invalid because
it was improperly prepared or is not admissible to probate:
* State law determines who gets
assets, not you
* Additional expenses will be
incurred and extra work will be required to qualify an administrator
* Judge determines who gets
custody of your children
* Possible additional State
inheritance taxes and Federal estate taxes cannot be reduced
* If you have no spouse or close relatives the
State may take your property
* The procedure to distribute assets becomes
more complicated-and the law makes no exceptions for persons in unusual need or
for your own wishes.
* It usually cause fights and sometimes
lawsuits within your family
When loved ones are grieving and dealing with death, they
shouldn’t be overwhelmed with Financial concerns. Careful estate planning helps take care of
that. Don’t try to do Estate Planning with a cheap form found online.
THE FOLLOWING IS A SAMPLE OF A VARIETY OF CLAUSES AND ITEMS
WHICH YOUR ATTORNEY MAY INCLUDE IN A
WILL:
1ST: DEBTS AND TAXES
2ND: SPECIFIC BEQUESTS
3RD: DISPOSITION TO SPOUSE
4TH: DISPOSITION OF REMAINDER
OF ESTATE
5TH: CREATION OF TRUSTS FOR
SPOUSE
6TH: CREATION OF TRUST FOR
CHILDREN
7TH: OTHER BENEFICIARIES UNDER
21
8TH: EXECUTORS
9TH: TRUSTEES
10TH: GUARDIANS
11TH: SURETY OR BOND
12TH: POWERS
13TH: AFTERBORN CHILDREN
14TH: PRINCIPAL AND INCOME
15TH: NO ASSIGNMENT OF BEQUESTS
16TH: GENDER
17TH: CONSTRUCTION OF WILL
18TH: NO CONTEST CLAUSE
A Will must not only be prepared within the legal requirements
of the New Jersey Statutes but should also be prepared so it leaves no
questions regarding your intentions.
WHY PERIODIC REVIEW IS
ESSENTIAL
Even if you have an existing Will, there are many events that
occur which may necessitate changes in your Will. Some of these are:
* Marriage, death, birth,
divorce or separation affecting either you or
anyone named in your Will
*Significant changes in the
value of your total assets or in any particular assets, which you own
* A change in your domicile
* Death or incapacity of a
beneficiary, or death, incapacity or change in residence of a named executor,
trustee or guardian of infants, or of one of the witnesses to the execution of
the Will
*Annual changes in tax laws
MAY I CHANGE MY WILL?
Yes. A Will may be
modified, added to, or entirely changed at any time before your death provided
you are mentally and physically competent and desire to change your Will. You should consider revising your Will
whenever there are changes in the size of your estate. For example, when your
children are young, you may think it best to have a trust for them so they do
not come into absolute ownership of
property until they are mature.
Beware, if you draw lines through items, erase or write over, or add
notations to the original Will, it can be destroyed as a legal document. Either a new Will should be legally prepared
or a Codicil signed to legally change portions of the Will.
Save money with proper planning
Your estate will be subject to probate whether or not you have
a Will and in most cases, a Will reduces the cost by eliminating the
requirements of a bond. With a
well-drawn Will, you may also reduce death taxes and other expenses. Don’t pinch pennies now to the detriment of
your beneficiaries.
The proper preparation of a
Will should involve an analysis of the client’s assets, family and his/her
desires.
Estate Planning is the process of examining what will happen to
your property when you die and arranging for its distribution in such a manner
as will accomplish your objectives.
The cost of a Will depends on the size and the complexity of
the estate and the plans of the person who makes the Will. A properly drawn Simple Will without Trust
costs approximately $200.00 to $600.00. It is one of the most important
documents you will ever sign, and may be one of the best bargains you will ever
have.
Be sure your Will takes into account the Federal Tax changes
and New Jersey Inheritance Tax changes.
Also, ascertain if your Will is “self-proving”, which would dispense
with having to find the Will’s witnesses after death.
WHAT IS A WILL?
“A Will is a Legal written document which, after your death,
directs how your individually owned property will be distributed, who will be
in charge of your property until it is distributed and who will take care of your minor children if the other parent should die
". You should remember that the
term “property” under the law includes "real estate as well as other
possessions and rights to receive money or items of value.” Everyone who has at least $3,000 in assets
should have a Will. You do not have to
be wealthy, married, or near death to do some serious thinking about your Will.
Reducing the NJ Estate Tax on estates over $675,000.
A New Jersey estate tax return
must be filed if the decedent's gross estate plus adjusted taxable gifts
exceeds $675,000.
Even if there is no NJ Inheritance Tax there can be a NJ
Estate Tax if the estate exceeds $675,000 and the beneficiaries are children or
grand children. There is a substantial tax that must be paid after the 2nd
spouse dies on amounts over $675,000.
You can hire an attorney to set up Trusts or a Will with a
Credit Shelter Trust to try to reduce NJ Estate taxes due. We charge a minimum
fee of $400 for each Trust within a Will. A separate stand alone Trust has a
minimum fee for $2,500.
Even if your net worth is well below the Federal threshold
where the federal estate tax becomes an issue, the New Jersey Estate Tax may
still be a problem. The New Jersey Estate Tax affects any person or married couple
with net worth over $675,000. There is no exemption for assets you leave
to your children; those assets are fully taxed, even if in joint names. There
is also no exemption for the value of your home and life insurance, so it is
easy to hit the $675,000 threshold very quickly.
If you have assets such as bank accounts in joint names, or
bank accounts payable upon death, these go directly to the beneficiary. Your
Will cannot change who the beneficiary is on a joint account, payable upon
death accounts, or other assets such as Life Insurance policies. You would have
to directly contact the bank or company where the assets are held and either
direct that they change the beneficiary or not list any beneficiary at all
other than your Estate. Therefore, if you
have $1,200,000 in assets, you can change the beneficiary so the husband owns
$600,000 and the wife owns the other $600,000.
WHAT IS CREDIT SHELTER TRUST and how can the attorney help
Reduce NJ Estate Taxes and protect the surviving spouse and children?
"The Credit Shelter Trust (sometimes referred to as a
“Bypass Trust” or an “A/B Trust”) is a popular estate planning technique used
by married couples with combined assets in excess of $675,000. The purpose of
the Credit Shelter Trust is to avoid the wasting of federal and state
exemptions on the death of the first spouse. Instead of leaving all assets to
the surviving spouse and thereby exposing the surviving spouse’s estate to more
tax, both spouse’s Wills are drafted to establish a Credit Shelter Trust to
come into existence and be funded on the first spouse’s death.
In a typical Credit Shelter Trust, the surviving spouse is
entitled to receive all of the income from the Trust for his or her lifetime,
and has the right to demand principal distributions for his or her health,
education, support and maintenance in his or her accustomed manner of living.
Distributions in excess of that standard require the cooperation of a
Co-Trustee – often an adult child of the surviving spouse or a trust department
of a bank.
The amount, which funds a typical Credit Shelter Trust, varies
according to a particular Client’s financial and family circumstances. For
Federal Estate Tax purposes, a Credit Shelter Trust can be funded with the
Decedent’s remaining federal estate tax exemption ($5.4 million as of 2015 if
no prior gifts have been made). However, in New Jersey, since the state estate
tax exemption is only $675,000, if the Credit Shelter Trust is funded with more
than $675,000, this will cause some New Jersey Estate Tax to be paid. For
example, if the $2 million is funded, the tax to the State of New Jersey is
$99,600. Because of this, many Clients choose to fund the Credit Shelter Trust
with only $675,000.
If the Credit Shelter Trust technique is implemented as part of
a Client’s Estate Plan, you can hire the attorneys for a separate fee to assist
the Client in re-titling his or her assets so that assets are available to fund
the Credit Shelter Trust. Re-titling is necessary because most Clients tend to
hold assets jointly with right of survivorship and assets must be titled
individually in a person’s name in order to be eligible to fund a Credit
Shelter Trust. We work with a tax attorney to help our clients." Source:
http://www.davidkwhitlock.com/CM/FAQ/What-Is-Credit-Shelter-Trust.asp:
Examples of NJ Estate Tax due
if no estate planning
Estate of $800,000 and no spouse
Your Estimated NJ Estate
Tax: $22,799.60
If Estate Value: $900,000.00
Your Estimated NJ Estate
Tax: $27,600.00
If Estate Value: $1,000,000.00
Your Estimated NJ Estate
Tax: $33,200.00
If
Estate Value: $1,100,000.00
Your Estimated NJ Estate
Tax: $38,800.00
If Estate Value: $1,200,000.00
Your Estimated NJ Estate
Tax: $45,200.00
If Estate Value: $1,300,000.00
Your Estimated NJ Estate
Tax: $51,600.00
ADMINISTRATION OF AN ESTATE
If you are named the executor, you must visit the County
Surrogate to probate the Will. You will
need the following items:
1. The Death Certificate
2. The Original Will
3. Names and Addresses of decedent's, next of kin and list of
beneficiaries
4. Minimum of $130.00 for Surrogate fees
A NJ state inheritance tax
return must be filed if real estate is left and the tax may be required on the
transfer of real or personal property within eight months after death.
Call our office to schedule a "confidential"
appointment 732-572-0500
Kenneth Vercammen &
Associates.
2053 Woodbridge Avenue
Edison, NJ 08817
www.centraljerseyelderlaw.com
Kenneth A. Vercammen is a Middlesex County, NJ trial attorney
who has published 125 articles in national and New Jersey publications on
Probate and litigation topics. He often lectures to trial lawyers of the
American Bar Association, New Jersey State Bar Association and Middlesex County
Bar Association. He is Chair of the
American Bar Association Estate Planning & Probate Committee.
He is a highly regarded
lecturer on litigation issues for the American Bar Association, ICLE, New
Jersey State Bar Association and Middlesex County Bar Association. His articles
have been published by New Jersey Law Journal,
ABA Law Practice Management Magazine, and New Jersey Lawyer. He is the Editor in Chief of the New Jersey
Municipal Court Law Review. Mr. Vercammen is a recipient of the NJSBA- YLD
Service to the Bar Award.
In his private practice, he has devoted a
substantial portion of his professional time to the preparation and trial of
litigated matters. He has appeared in
Courts throughout New Jersey several times each week on contested Probate
hearings, many personal injury matters, and Municipal Court trials.
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