There are a few states that collect inheritance taxes after someone dies, and New Jersey is among them.
If you are an heir to a deceased New Jersey resident, will you have to pay an inheritance tax on the assets you receive? Not necessarily.
Will the inheritance tax laws in New Jersey affect you?
3 important discussions to have with an aging parent
When you were a child, you relied on your parents for virtually everything. As your mother or father reaches the final stages of life, though, you may need to become the caregiver. While it can be challenging to watch a parent age, you can likely ease the transition.
As you probably know, planning is an effective way to minimize many of the consequences of aging. After all, with a comprehensive strategy, you help your parents remove much of the uncertainty that often accompanies aging. Here are three important discussions you should have with your aging mother or father.
Does being on Medicaid limit nursing home choices?
Part of estate planning for your parents is finding out where they will stay for the remainder of their days. They could stay in their own home and receive care, they could move to an assisted living facility or they could go to a nursing home.
Of course, all these options cost money. Your parents may qualify for financial assistance from the government in the form of Medicaid. However, you may worry that being on this program will limit their facility choices. They cannot afford a luxurious place, but with so much elder abuse happening, neither do you want for them to be in a questionable nursing home. What should you do?
How to start talking about estate planning with your parents
Estate planning involves creating a comprehensive plan that encompasses end-of-life financial and health care directives as well as tools for asset distribution and management after death. As an adult child of elderly parents, facing the reality of your parents' eventual death can be difficult and painful.
No one necessarily wants to talk about issues that involve death, and yet, avoiding the topic can lead to big trouble for you as a family member after your parents pass away. Lack of proper estate planning can lead to many unnecessary and costly expenses as well as bureaucratic and legal hassles and conflicts. The best way to avoid this confusion and difficulty is to start the estate planning conversation well before your parents age to the point of incapacitation or death.
Advanced health care directive checklist
There are many provisions in an estate plan that may come into effect well before you pass away. Health care directives are essential in any estate plan, which is why nearly 37 percent of Americans include them, according to Reuters. With such directives, you can clearly state what services you want to receive at the end of your life, and the directives can help greatly with reducing the amount of pain and uncertainty that comes if one of your family members has to make those decisions independently.
To begin, you can give someone power of attorney over any health decisions. This gives someone the power to make the final say. However, you also want to include directives, so that person has a guide to go off of to know what you would want.
The benefits of irrevocable living trusts
Regardless of whether you are just beginning the estate planning process, or you have had plans in place for years, you may have heard the term “irrevocable living trust” thrown around and found yourself wondering exactly what it means.
Essentially, an irrevocable living trust is a legal arrangement you can create as a method of leaving assets to a named beneficiary. An irrevocable living trust differs from a revocable living trust in that you cannot change it after its creation, but it can be a solid estate planning tool that enables you protect your assets and save on taxes. Once you fund the trust, you no longer maintain direct control over the assets you place inside, but you do, however, maintain control when it comes to the guidelines that govern the trust.
Preempting elder financial abuse
Like many retirees in New Jersey and elsewhere, you hope that you will live a long and healthy life with your mental faculties intact. However, as you know, not everyone makes it to old age with a mind as sharp as it was in their twenties. While it is possible that you may avoid mental or physical incapacitation, it would be wise to prepare for it in case it happens.
If you do end up developing a cognitive disorder like dementia or Alzheimer’s disease in your golden years, your finances – and your loved ones’ inheritance – may be in peril. There are many unscrupulous people who prey on vulnerable elderly people, and they largely focus their intents on relieving them of their assets. According to the National Adult Protective Services Association, approximately one out of 20 seniors in America are the victims of financial abuse. You might become the target of one or more of the following common scams or abusive practices:
- Fraudulent salespeople who go door-to-door offering roofing or landscaping services, then take a deposit and never return
- Letters or emails claiming you won the lottery or a sweepstakes but need to pay a “processing fee” before receiving the funds
- Requests for donations from false charities or other companies, which may progressively get more and more pushy about getting money from you
- IRS scammers saying you will be arrested if you do not pay unpaid taxes immediately
- Caregivers, family members or others coercing you into granting access to your bank account, signing over a power of attorney or making them the sole beneficiary of your will
3 financial topics to talk about with your aging parent
You may have trouble talking to your aging parent about his or her finances. Maybe your parent is secretive about his or her money, so you procrastinate the discussion year after year. But if you wait too long to have this conversation, your parent may end up in a crisis and you will have no idea what his or her wishes are, let alone the location of any important documents.
It is important to bring up this topic with your aging parent while being reassuring. Here are some essential financial topics you should broach with your aging parent.
Helping your elderly parent with Medicaid planning
As your parents age, health issues can become costly and difficult to sustain. Adult children of aging parents are often saddled with a double financial and emotional burden: that of raising their own children while facing the complex and challenging issues of helping their parents to age gracefully and plan for their estate after death.
Medicaid planning is one piece of an overall estate planning and end-of-life asset distribution strategy. It is important for you to understand how Medicaid planning works and how you can help your elderly parent access this healthcare assistance.
What is planned impoverishment?
Many people in the United States are living longer. For example, half of the infants born in 2007 may live to the ripe old age of 104. However, this extended lifespan does not always translate to the financial means to pay for it, nor does it mean quality of life. It can be frustrating to save for retirement for years and pay off your house only to lose all of what you have to mounting medical bills as you age, and there will be nothing for your heirs.
So, it makes sense that you would want all of the resources possible to preserve your quality of life while still being able to leave a fair inheritance to your children and grandchildren. Planned impoverishment is one way to do that.
