Free Report on
Wills and eliminating the NJ Estate Tax
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.
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 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.
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, the state must step in to administer the
estate. The result can be lengthy delays
before the rightful heirs receive their property. And because the state has no instructions
from the deceased, no charitable gifts will be made.
distribute property at death, the state must step in to administer the
estate. The result can be lengthy delays
before the rightful heirs receive their property. And because the state has no instructions
from the deceased, no charitable gifts will be made.
IF YOU HAVE
NO WILL:
NO WILL:
If you leave no Will or your Will is declared invalid because
it was improperly prepared or is not admissible to probate:
it was improperly prepared or is not admissible to probate:
* State law determines who gets
assets, not you
assets, not you
* Additional expenses will be
incurred and extra work will be required to qualify an administrator
incurred and extra work will be required to qualify an administrator
* Judge determines who gets
custody of your children
custody of your children
* Possible additional State
inheritance taxes and Federal estate taxes
inheritance taxes and Federal estate taxes
* If you have no spouse or close relatives the
State may take your property
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.
more complicated-and the law makes no
exceptions for persons in unusual need or for your own wishes.
* It may also cause fights and lawsuits within
your family
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.
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:
WHICH YOUR ATTORNEY MAY INCLUDE IN A
WILL:
1ST: DEBTS AND TAXES
2ND:
SPECIFIC BEQUESTS
SPECIFIC BEQUESTS
3RD: DISPOSITION TO SPOUSE
4TH: DISPOSITION OF REMAINDER
OF ESTATE
OF ESTATE
5TH: CREATION
OF TRUSTS FOR SPOUSE
OF TRUSTS FOR SPOUSE
6TH: CREATION OF TRUST FOR
CHILDREN
CHILDREN
7TH: OTHER
BENEFICIARIES UNDER 21
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.
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:
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
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
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
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?
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.
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.
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.
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.
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.
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.
$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.
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?
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.
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.
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.
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.
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 $600 for each
trust within a Will. A separate stand alone Trust has a minimum fee for $2,500.
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 $600 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. 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.
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. 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.
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?
Reduce NJ Estate Taxes?
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.
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.
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.
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.
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:
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
of $800,000
Your Federal Estate Tax: 0.00
Your State Taxable Estate Value: $740,000.00
Your Estimated State Estate Tax: $22,799.60
If Estate Value: $900,000.00 Your State Taxable Estate Value: $840,000.00
Your Estimated State Estate Tax: $27,600.00
If Estate
Value: $1,000,000.00 Your State Taxable Estate Value: $940,000.00
Value: $1,000,000.00 Your State Taxable Estate Value: $940,000.00
Your Estimated State Estate Tax: $33,200.00
If Estate
Value: $1,100,000.00 Your State Taxable Estate Value: $1,040,000.00
Value: $1,100,000.00 Your State Taxable Estate Value: $1,040,000.00
Your Estimated State Estate Tax: $38,800.00
If Estate Value: $1,200,000.00 Your State Taxable Estate
Value: $1,140,000.00
Value: $1,140,000.00
Your Estimated State Estate Tax: $45,200.00
If Estate
Value: $1,300,000.00 Your State Taxable Estate Value: $1,240,000.00
Value: $1,300,000.00 Your State Taxable Estate Value: $1,240,000.00
Your Estimated State Estate Tax: $51,600.00
ADMINISTRATION OF AN
ESTATE
ESTATE
If you are named the executor, you must visit the County
Surrogate to probate the Will. You will
need the following items:
Surrogate to probate the Will. You will
need the following items:
1. The Death
Certificate
Certificate
2. The Original Will
3. Names and Addresses of decedent's, next of kin and list of
beneficiaries
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.
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
"confidential" appointment 732-572-0500
Kenneth Vercammen
& Associates.
& Associates.
2053
Woodbridge Avenue
Woodbridge Avenue
Edison, NJ
08817
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.
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.
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 many personal injury
matters, Municipal Court trials, and contested Probate hearings.
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 many personal injury
matters, Municipal Court trials, and contested Probate hearings.
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