As more Americans reach retirement age and live further into the years beyond it, the issue of asset protection is becoming more important to a larger cross-section of the population. Once you are no longer working regularly, your savings, investments and other retirement funds may become your only source of income. With the right planning and savings during your career, that can be a substantial pool of resources, but it does need to be protected.
For many people, inheritance taxes can impose a substantial burden during a time of grief where there is enough stress and change to navigate already. They can seriously impact one's ability to ensure that one's heirs and beneficiaries are well provided for, and they also create financial planning hurdles that often need to be overcome. While creative solutions like moving across state lines to avoid inheritance taxes have become increasingly popular, family trusts are often more secure, more predictable, and easier to manage in the long run.
Medical care is expensive, and this gets even truer as people get older, especially if they develop a serious illness or have to move into a nursing home. In these situations, even people who have set aside a significant amount of assets for retirement may have a hard time paying for their medical care.
New Jersey residents who want to set up trusts for their descendants face a myriad of new laws and regulations that may affect how they plan for trust dispositions. Estate planning is not becoming a simpler process; rather, with the changes brought about by the so-called "fiscal cliff" deal as well as the new Medicare tax on passive income, it is becoming more complex.Many strategies that worked in the past, such as investing in IRAs and irrevocable trusts to shelter income for future generations, may no longer be the best approach. Today, a "spray" trust or a "decanting" option, designed to assist the heirs or the trust's creator respectively, may be a better approach than sealing off assets.
As our regular readers know, Congress made some permanent changes as part of its "fiscal cliff" remedy that have given estate planners more certainty than they've had in years. The permanent changes, it so happens, are quite favorable from an estate tax and gift tax perspective.
Say you have a second spouse, and you want to ensure that he or she receives a significant amount of your estate after you die. Seems simple enough, right? Just include in your will the amount you want your spouse to inherit.
Our New Jersey readers may have heard of the troubles regarding Whitney Houston's estate, particularly with respect to her daughter Bobbi Kristina. Houston left a total of $20 million in trust to her now 19-year-old daughter, and this has been a source of contention in the family. Whitney Houston's mother, Cissy Houston, and her sister-in-law, Marion Houston, have filed a petition as executors of her estate urging a Georgia probate court to put restrictions on Bobbi Kristina's inheritance payments.
In our last post, we began speaking about specific ways to keep your estate out of probate. Probate, depending on the state one is in, can be a time-consuming process and expose one's family affairs to legal battles open to the public eye.
Because probate can be an expensive and time-consuming process, one of the goals of estate planning may be finding ways to keep one's estate out of the probate process. Probate, as our New Jersey readers may know, is a court supervised legal proceeding in which a will is validated and its terms carried out.
In our previous post, we began looking at some things to take into consideration when selecting a person to manage trust assets. As we've already mentioned, the size and complexity of trust assets can be a large factor in determining who will be the best selection. Another consideration is whether any family members would be able to perform the task of managing trust assets.