Most pet owners think of their cat, dog, bird or other pet as a family member, not just a pet. Estate planning unfortunately usually does not include those beloved pets and therefore they are not provided for in the event of your death.
Providing for your pets' well-being after you're gone
Who needs to think about estate planning?
It is not uncommon for New Jersey residents to assume they do not need an estate planning because of what they believe to be an insufficient amount of property to worry about. However, estate planning is a way of ensuring that people's assets are distributed according to their wishes when they pass on. Anyone with any items of value will want to have an estate plan in place.
The process of administering an estate
Administering an estate in New Jersey begins with locating a will. The items that the will controls, or probate assets, and the person who will be in control of the distribution of these assets will be named in the will as the executor of the will. In some cases, the deceased party may leave behind a trust document. However, there are cases in which there is no will or trust document left. In these cases, an administrator will need to handle the estate administration based on the prior estate planning.
ATRA adds more options for estate planning
New Jersey residents may be aware that many of the tax benefits originally included as part of the Economic Growth and Tax Relief Reconciliation Act in 2001 were made permanent this spring through the enactment of the American Tax Relief Act of 2012. Although seemingly merely a confirmation of existing laws, the permanent structure and additional tax provisions it put in place can affect certain estate planning strategies.
A revolution is underway in estate planning
Changes to the tax law in 2012 are changing the way people should be planning their estates. There are many, however, who are not aware of the extent to which these changes require a new approach. The main effect of the 2012 law is that income taxes have become a higher burden than estate taxes. Additionally, as an individual's income rises, their tax burden increases. The top tax rate has increased to 39.6%. Qualified dividends and long-term capital gains have increased to 20%. A new Medicare tax of 3.8% on investment income has been imposed by Obamacare. Itemized deduction and personal exemption phase outs have been restored.
How to avoid mistakes in estate planning
New Jersey residents may be interested in knowing that estate planning is not always easy. Mistakes in the process can cause issues when it becomes time to distribute a person's assets. However, there are some steps that can be followed to help avoid those mistakes.
College savings can help with estate planning
While no parent ever wants to consider the fact that they may pass away and leave their children behind, considering what might happen to college savings funds upon the death of a parent may be imperative. Those who are dealing with estate planning issues may want to consider what would happen to their child's college savings if they passed away.
An overview of trusts for New Jersey residents
Estate planning may seem daunting to some New Jersey residents because it can be complicated. An estate plan may require consideration of a person's personal preferences, cash flow, retirement needs, taxes, insurance and investment wishes, both currently and in the future. A basic understanding of how trusts work can help make the process seem less complicated.
Be aware of how the inheritance tax could affect family finances
New Jersey taxpayers expecting an inheritance may also receive something else less pleasant along with it - a hefty inheritance tax. A recent article by The Motley Fool discusses the inheritance tax some states charge to generate additional revenue for themselves. According to the article, New Jersey charges taxes in the 11 percent to 16 percent range. Five other states also charge an inheritance tax, but New Jersey tops the list.
