I speak to a lot of parents who don’t have a will. When I ask them the reason why they don’t have a will, the predictable answer is “We can’t decide on who to choose as a guardian for our children.”
Yes, this is the most common dilemma that parents face when confronting the will issue. The usual scenario is that you disagree about the parenting styles of your siblings, your parents are too old and you don’t want to burden your friends with the responsibility of raising your children. So, how do you break the logjam and reach a compromise?
By recognizing that the solution is a compromise and that there presently is no perfect solution. The perfect solution may become apparent in a few years, but you can’t wait to see if that perfect solution will present itself. You really need to act NOW to protect your children. After all, do you have that crystal ball that tells you when you will die?
So, how do you choose a guardian when you don’t like your choices? Make a list of all possible persons and what qualities they have that would make them a good guardian. Think about parenting styles, emotional makeup, age, relationship with your children, location, and whether that person has other children. Have your partner make a similar list. Then sit down together and go over both lists. Is there anyone who is named on both lists? If not, then rank each person on your list from best to worst and have your partner do the same with his/her list. Whoever is closest in rank on both lists is your best candidate.
You should speak to the top candidates to find out whether they would have any objection to becoming your children’s guardian if the worst happened. If one of the candidates is unwilling to act as guardian, cross that person off the list and move on to the next one.
Remember that your will is not engraved in stone. You can change your mind about whom the guardian will be even after you sign your will and create a new will. But if you don’t act to sign a will and something happens to you, it will be a judge who doesn’t know you or your family who will decide your children’s fate. Now was that unknown judge making the choice for you part of your decision-making process? Making a will and naming a guardian for your children is one of the best ways to give you peace of mind about your children’s future. Protecting your children is your main job as a parent.
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Thursday, June 25, 2009
Friday, June 19, 2009
What is a Probate Asset and What is a Non-Probate Asset?
When talking to your lawyer about creating a will and how you will distribute your estate, your lawyer should ask about all of your assets and categorize some of them as “probate assets” and others as “non-probate” assets. What does she mean when she says this?
A probate asset is one that is held in your name or in a tenancy in common with another person (or persons). These are the assets that are distributed through your will and the distribution is supervised by the court through the probate process.
A non-probate assets is one that is held in a joint tenancy with a right of survivorship, an account that has a “payable on death” or “transferable on death” designations, life insurance, and retirement accounts (IRAs and 401K accounts). These assets have specific rules as to who will inherit these assets from you and are not subject to the terms of your will.
Many clients that I have counseled wish to leave their estates in equal shares to their children. I have to ask them about all of their assets and how they are titled to show them if their desire to leave equal shares to their children is being accomplished. For example, if you have a joint bank account with the child that lives near you and helps you with your banking and there is $100,000.00 in that account, the money in that account goes directly to that local child, outside of probate. If you own another account that is transferable on death to a second child who lives across the country and that account has $25,000.00, that $25,000.00 goes to the second child. Then, you propose to put in your will that you will leave your estate of $500,000.00 to your two children in equal shares. Will your two children receive the same amount of money?
No they won’t. The first child has the $100,000.00 from the joint bank account plus $250,000.00 from the assets that are distributed through the will, for a total of $350,000.00. The second child who lives far away gets $25,000 from the “transferable on death” account plus $250,000.00 from the assets that are distributed through the will, for a total of $275,000.00. That’s not equal.
Of course, you may not want to distribute your assets to your heirs equally. Maybe you wish to give one child more because the other child is financially wealthy and only one child needs your money. Or, perhaps, one child has been taking care of you for the last 10 years and you feel that this child should inherit the majority of your estate.
By knowing how whether your assets are “probate” assets or “non-probate” assets, your estate planning lawyer can help you achieve your goals.
A probate asset is one that is held in your name or in a tenancy in common with another person (or persons). These are the assets that are distributed through your will and the distribution is supervised by the court through the probate process.
A non-probate assets is one that is held in a joint tenancy with a right of survivorship, an account that has a “payable on death” or “transferable on death” designations, life insurance, and retirement accounts (IRAs and 401K accounts). These assets have specific rules as to who will inherit these assets from you and are not subject to the terms of your will.
Many clients that I have counseled wish to leave their estates in equal shares to their children. I have to ask them about all of their assets and how they are titled to show them if their desire to leave equal shares to their children is being accomplished. For example, if you have a joint bank account with the child that lives near you and helps you with your banking and there is $100,000.00 in that account, the money in that account goes directly to that local child, outside of probate. If you own another account that is transferable on death to a second child who lives across the country and that account has $25,000.00, that $25,000.00 goes to the second child. Then, you propose to put in your will that you will leave your estate of $500,000.00 to your two children in equal shares. Will your two children receive the same amount of money?
No they won’t. The first child has the $100,000.00 from the joint bank account plus $250,000.00 from the assets that are distributed through the will, for a total of $350,000.00. The second child who lives far away gets $25,000 from the “transferable on death” account plus $250,000.00 from the assets that are distributed through the will, for a total of $275,000.00. That’s not equal.
Of course, you may not want to distribute your assets to your heirs equally. Maybe you wish to give one child more because the other child is financially wealthy and only one child needs your money. Or, perhaps, one child has been taking care of you for the last 10 years and you feel that this child should inherit the majority of your estate.
By knowing how whether your assets are “probate” assets or “non-probate” assets, your estate planning lawyer can help you achieve your goals.
Wednesday, June 10, 2009
Married Women and Money
Women make many of the day-to-day decisions about how their family spends money. Yet, many women don’t take the time to learn about financial management. Nor do they take the lead in creating an estate plan. With the falling economy, rising health care prices, and growing need for long term care insurance, it's more necessary than ever for you to take responsibility for your own retirement and estate planning.
Why is it so critical for you to become financially savvy? Women live longer lives, on average, than men. A married woman might outlive her husband by 20 years. If she is a stay-at-home mom, she may not have her own social security history and may not have her own retirement funds. Women tend to earn less than men, leaving them with fewer resources later in life.
So in the long run, ladies, you will bear the burden of not knowing what your and your husband’s financial status is. Where should you start?
Although it is not as common as it used to be, there are still women who do not know even how to write a check. Do you? Do you know in which banks all the checking and savings accounts are? Do you review bank statements or does just your husband access them to make sure the bank hasn’t made any errors?
Do you look at the credit card statements? Do you know how much you owe and how much your husband owes? Do you have a budget so that you know whether you are living beyond your means?
Have you and your husband sat down to discuss how much money you have accumulated and how to invest it? If he were to die tomorrow, would you know who your investment advisor is or what your money is invested in?
Have you made arrangements with life insurance on the lives of you and your husband to protect you and your children? Have you researched the costs of care in your old age and whether long-term care insurance or some other means would be needed to pay for those costs?
Do you have a will, a financial power of attorney, and a health care advanced directive? Even if you would appoint your husband to handle all of these matters for you, have you thought about and written down who would act as a back-up if both of you were in an accident together?
If you have minor-age children, have you written a will that appoints a guardian for them? Even if you don’t love your choices, would you rather that a judge that doesn’t know your family choose your kids’ guardian for you?
Yes, you are busy, you don’t have time, these subjects are too dry and morbid, your husband is very happy to take care of everything so why should you worry about money? Death, divorce, disability – you can be alone and hopelessly bewildered about your financial situation without any warning. Don’t let this happen to you. Take some time now, a little bit at a time, to learn about money, in general, and the money that you and your husband have. Read books or magazines, talk to your friends, and consult with experts. You will never regret it.
Why is it so critical for you to become financially savvy? Women live longer lives, on average, than men. A married woman might outlive her husband by 20 years. If she is a stay-at-home mom, she may not have her own social security history and may not have her own retirement funds. Women tend to earn less than men, leaving them with fewer resources later in life.
So in the long run, ladies, you will bear the burden of not knowing what your and your husband’s financial status is. Where should you start?
Although it is not as common as it used to be, there are still women who do not know even how to write a check. Do you? Do you know in which banks all the checking and savings accounts are? Do you review bank statements or does just your husband access them to make sure the bank hasn’t made any errors?
Do you look at the credit card statements? Do you know how much you owe and how much your husband owes? Do you have a budget so that you know whether you are living beyond your means?
Have you and your husband sat down to discuss how much money you have accumulated and how to invest it? If he were to die tomorrow, would you know who your investment advisor is or what your money is invested in?
Have you made arrangements with life insurance on the lives of you and your husband to protect you and your children? Have you researched the costs of care in your old age and whether long-term care insurance or some other means would be needed to pay for those costs?
Do you have a will, a financial power of attorney, and a health care advanced directive? Even if you would appoint your husband to handle all of these matters for you, have you thought about and written down who would act as a back-up if both of you were in an accident together?
If you have minor-age children, have you written a will that appoints a guardian for them? Even if you don’t love your choices, would you rather that a judge that doesn’t know your family choose your kids’ guardian for you?
Yes, you are busy, you don’t have time, these subjects are too dry and morbid, your husband is very happy to take care of everything so why should you worry about money? Death, divorce, disability – you can be alone and hopelessly bewildered about your financial situation without any warning. Don’t let this happen to you. Take some time now, a little bit at a time, to learn about money, in general, and the money that you and your husband have. Read books or magazines, talk to your friends, and consult with experts. You will never regret it.
Monday, June 1, 2009
Have You Made These Estate Planning Mistakes?
If you don’t have a will, durable power of attorney and health care proxy (or advanced health care directive), you’ve made the first estate planning mistake. You need these three (3) documents to protect your family and your assets in the event you are incapacitated and for when you die.
Have you made any of these other mistakes?
1. You have not updated your will in 20 years and are not even sure where it is located.
Most people’s life circumstances change and their estate planning needs are no different. You should at least have your estate planning lawyer review your estate planning documents every 2-3 years to make sure that the documents still carry out your wishes and to ensure that changes in the estate tax laws do not mean that you will be paying federal or state estate taxes that were not in effect when your will was originally drawn up and you owned fewer assets. If you don’t know where your will is located, it is as if you never wrote one. Get a new one done and place it in a secure place. Make sure your executor knows where the will is kept.
2. You rely on joint tenancy as an estate planning tool, especially adding your children to your deed or bank accounts.
Joint tenancy can create problems you have not thought of. Frequently, you think of adding a joint tenant as a way to avoid probate. It does accomplish that goal when you die, but there are immediate consequences while you are alive. Although you may have added a child or all of your children as a convenience but they have full ownership interests and can thwart your needs and desires while you are alive.
3. You did not provide for a successor in interest if one of your fiduciaries dies before you or cannot serve.
If you have not named successor executors, trustees, health care proxies, and agents-in-fact, you may wind up having named none of those critical fiduciaries. Suppose you named your spouse as your executor, if you are both in a car crash, you die and he is unconscious, then he cannot act as your executor. If you haven't named a back-up, then the court can appoint whoever it thinks is most appropriate, even if you would have hated that choice. If your son is named as a trustee for your grandchildren’s trusts and he dies before you, then when you die, any interested person can petition the court to act as trustee. You must name at least one and maybe two backups in case there is a nasty surprise when you need these persons to act on your behalf.
4. You have a will but no advanced health care directive or durable power of attorney.
With all of us living longer than ever, many of us are also living in an incapacitated state longer. There are more Alzheimer’s disease patients, more cases of senior dementia, and more years of just slowly getting more frail and unable to take care of ourselves. We can’t pay our bills, decide whether we are unable to live on our own, or make the proper health care decisions. You may unexpectedly suffer an early heart attack, stroke, or be in an accident. Every person over the age of 18 needs a will, durable power of attorney, and advanced health care directive. You don’t have to be an old person to need someone to help you out when you can’t act for yourself.
There are many other estate planning mistakes that can cost you in time, stress, and money. Consult an estate planning lawyer to help you create your estate plan, have your estate planning documents signed, and have them reviewed every few years. That way, you will protect yourself and your family the way you would want to.
Have you made any of these other mistakes?
1. You have not updated your will in 20 years and are not even sure where it is located.
Most people’s life circumstances change and their estate planning needs are no different. You should at least have your estate planning lawyer review your estate planning documents every 2-3 years to make sure that the documents still carry out your wishes and to ensure that changes in the estate tax laws do not mean that you will be paying federal or state estate taxes that were not in effect when your will was originally drawn up and you owned fewer assets. If you don’t know where your will is located, it is as if you never wrote one. Get a new one done and place it in a secure place. Make sure your executor knows where the will is kept.
2. You rely on joint tenancy as an estate planning tool, especially adding your children to your deed or bank accounts.
Joint tenancy can create problems you have not thought of. Frequently, you think of adding a joint tenant as a way to avoid probate. It does accomplish that goal when you die, but there are immediate consequences while you are alive. Although you may have added a child or all of your children as a convenience but they have full ownership interests and can thwart your needs and desires while you are alive.
3. You did not provide for a successor in interest if one of your fiduciaries dies before you or cannot serve.
If you have not named successor executors, trustees, health care proxies, and agents-in-fact, you may wind up having named none of those critical fiduciaries. Suppose you named your spouse as your executor, if you are both in a car crash, you die and he is unconscious, then he cannot act as your executor. If you haven't named a back-up, then the court can appoint whoever it thinks is most appropriate, even if you would have hated that choice. If your son is named as a trustee for your grandchildren’s trusts and he dies before you, then when you die, any interested person can petition the court to act as trustee. You must name at least one and maybe two backups in case there is a nasty surprise when you need these persons to act on your behalf.
4. You have a will but no advanced health care directive or durable power of attorney.
With all of us living longer than ever, many of us are also living in an incapacitated state longer. There are more Alzheimer’s disease patients, more cases of senior dementia, and more years of just slowly getting more frail and unable to take care of ourselves. We can’t pay our bills, decide whether we are unable to live on our own, or make the proper health care decisions. You may unexpectedly suffer an early heart attack, stroke, or be in an accident. Every person over the age of 18 needs a will, durable power of attorney, and advanced health care directive. You don’t have to be an old person to need someone to help you out when you can’t act for yourself.
There are many other estate planning mistakes that can cost you in time, stress, and money. Consult an estate planning lawyer to help you create your estate plan, have your estate planning documents signed, and have them reviewed every few years. That way, you will protect yourself and your family the way you would want to.
Monday, May 18, 2009
Long-Term Care Insurance
After the Baby Boomers take care of their parents’ in their last years, they start to focus on how they will pay for the care that they will need when they are old and infirm. Are you in your 50s or 60s? Do you have a plan for paying for the care that you and your spouse will need in your later years? Do you have any idea how much it will cost?
Health insurance or Medicare will not pay for someone to help you get dressed or bring you to the bathroom. Medicaid will not pay for those types of services unless you are absolutely poverty-stricken. Assisted-living in New Jersey can cost over $100,000. If you or your spouse get Alzheimer’s disease, you can be looking at 5-10 years of needing care. Do you have that kind of nest egg?
Long-term care insurance is usually obtained when you are healthy and don’t need it. As a matter of fact, you must pass a physical exam for an insurance company to offer you the insurance. If you can’t pass the physical or you are past the age limit, the insurance company may not want to insure you. Or they may charge you such a high premium that you cannot afford it. That is why the insurance agents urge you to start thinking about it when you are in your 50s.
Long-term care insurance is not for everyone but it is worth it to talk to an insurance agent who specializes in this type of insurance. You want to ask them about what type of coverage you are buying (nursing home only or it will also pay for care in your home or adult day care centers). Will the coverage start immediately or will you have to wait before the insurance starts paying. Typically, different waiting periods mean different premiums like getting a high deductible on your car insurance. How much per day does the policy pay out and will that amount pay for the total costs? This issue is hard to evaluate since you are buying coverage that you may not use for 20 or 30 years. Who knows how much your care will cost so far in the future. Many policies come with inflation riders. If you don’t get an inflation rider, you may be paying a large chunk of the long-term care out of your own pocket. How long will your policy pay out? You can choose a set number of years or until you pass on. Obviously, the longer the insurance policy pays out, the higher the premium. Will you need to be hospitalized before the insurance coverage starts? Many times, you need help when you can’t remember things and walking or feeding yourself becomes too difficult.
Compare policies to see which offers the coverage you want and has the best premium to pay for the coverage. It is possible that you will never need long-term care insurance. But there are many scenarios in which this type of policy will be very needed. And assume that, unless you are very wealthy, you will not be able to save enough to pay for your care. For those of you thinking that your children will take care of you, please think through the scenario of your child taking you into the shower and washing you, taking you to the bathroom and wiping your bottom. Many of us don’t want our children to see us that close and personal. Until another alternative comes along, long-term care insurance should be at least considered, even if you decide that it’s not right for you and your family.
Health insurance or Medicare will not pay for someone to help you get dressed or bring you to the bathroom. Medicaid will not pay for those types of services unless you are absolutely poverty-stricken. Assisted-living in New Jersey can cost over $100,000. If you or your spouse get Alzheimer’s disease, you can be looking at 5-10 years of needing care. Do you have that kind of nest egg?
Long-term care insurance is usually obtained when you are healthy and don’t need it. As a matter of fact, you must pass a physical exam for an insurance company to offer you the insurance. If you can’t pass the physical or you are past the age limit, the insurance company may not want to insure you. Or they may charge you such a high premium that you cannot afford it. That is why the insurance agents urge you to start thinking about it when you are in your 50s.
Long-term care insurance is not for everyone but it is worth it to talk to an insurance agent who specializes in this type of insurance. You want to ask them about what type of coverage you are buying (nursing home only or it will also pay for care in your home or adult day care centers). Will the coverage start immediately or will you have to wait before the insurance starts paying. Typically, different waiting periods mean different premiums like getting a high deductible on your car insurance. How much per day does the policy pay out and will that amount pay for the total costs? This issue is hard to evaluate since you are buying coverage that you may not use for 20 or 30 years. Who knows how much your care will cost so far in the future. Many policies come with inflation riders. If you don’t get an inflation rider, you may be paying a large chunk of the long-term care out of your own pocket. How long will your policy pay out? You can choose a set number of years or until you pass on. Obviously, the longer the insurance policy pays out, the higher the premium. Will you need to be hospitalized before the insurance coverage starts? Many times, you need help when you can’t remember things and walking or feeding yourself becomes too difficult.
Compare policies to see which offers the coverage you want and has the best premium to pay for the coverage. It is possible that you will never need long-term care insurance. But there are many scenarios in which this type of policy will be very needed. And assume that, unless you are very wealthy, you will not be able to save enough to pay for your care. For those of you thinking that your children will take care of you, please think through the scenario of your child taking you into the shower and washing you, taking you to the bathroom and wiping your bottom. Many of us don’t want our children to see us that close and personal. Until another alternative comes along, long-term care insurance should be at least considered, even if you decide that it’s not right for you and your family.
Wednesday, May 13, 2009
Why Do I Need to Know About Asset Protection and How Do I Use It In My Estate Planning?
We love our children and want to make sure that they are taken care of even after we’re gone. That’s why so many of us want to leave an inheritance to our children. But how do we protect them from spending it on expensive cars, extravagant vacations, and extended shopping sprees?
Even if you don’t have a large estate to hand down to your children, how do you think an extra $50,000 or $100,000 would change their lives? Do you think that they would all invest the money wisely so that your grandchildren will have college funds and your kids will have comfortable retirements? Or do you think one or more of them will immediately run out to buy a fancy car or several pairs of expensive shoes?
Asset protection is the legal way to put assets beyond the reach of those who would like to take them away from their owners. Your estate planning lawyer knows of different ways to shield money from your children’s wasteful spending habits. In other words, you can protect your kids from themselves. That’s one reason for asset protection.
Another reason that you may want to explore asset protection tools is that your child’s spouse can go after your child’s inheritance in the event of a divorce. Typically, assets inherited by one spouse during the marriage cannot be claimed as a marital asset to be divided during a divorce settlement. However, typically, while the marriage is going well, your child will want to share his inheritance with his spouse and kids (your grandchildren) and will spend part or all of it for the good of his family. Or maybe he will commingle his inheritance with his family’s other investments so that the inheritance can no longer be considered a separate and distinct asset of your child. All of your children may seem to be in happy marriages right now but who can say what will happen in 5 years? In 10 years?
Another possible concern that you may have about your child losing the money you pass on to him is if he is sued. Does one of your children own his own business? People sue businesses all the time and your child has to follow all the rules of limited liability to ensure that only the company assets are at risk and not his personal assets as well. How does a business owner make sure that his personal assets aren’t at risk if his business is sued? Is the business a corporation or a limited liability company? These forms of running a business are the starting point for ensuring that your child’s personal assets don’t get seized by someone suing his business. Is your child a doctor or lawyer who could be sued for malpractice? Then, he may possibly get sued individually for malpractice and his personal assets are at risk.
Even if your children don’t own their own businesses, they can get sued for any number of reasons. If your child is in a car accident and the judgment is bigger than the amount of insurance he carries, the judgment can be satisfied from your child’s personal assets (including the money you leave to him). If someone slips and falls on his lawn and then sues, the injured person can collect against any of your child’s personal assets.
In order to be effective, asset protection techniques must protect against liability, must not be in your child’s name, and must be done at the right time. Talk to your estate planning lawyer about how to help your children’s spending or losing their inheritance.
Even if you don’t have a large estate to hand down to your children, how do you think an extra $50,000 or $100,000 would change their lives? Do you think that they would all invest the money wisely so that your grandchildren will have college funds and your kids will have comfortable retirements? Or do you think one or more of them will immediately run out to buy a fancy car or several pairs of expensive shoes?
Asset protection is the legal way to put assets beyond the reach of those who would like to take them away from their owners. Your estate planning lawyer knows of different ways to shield money from your children’s wasteful spending habits. In other words, you can protect your kids from themselves. That’s one reason for asset protection.
Another reason that you may want to explore asset protection tools is that your child’s spouse can go after your child’s inheritance in the event of a divorce. Typically, assets inherited by one spouse during the marriage cannot be claimed as a marital asset to be divided during a divorce settlement. However, typically, while the marriage is going well, your child will want to share his inheritance with his spouse and kids (your grandchildren) and will spend part or all of it for the good of his family. Or maybe he will commingle his inheritance with his family’s other investments so that the inheritance can no longer be considered a separate and distinct asset of your child. All of your children may seem to be in happy marriages right now but who can say what will happen in 5 years? In 10 years?
Another possible concern that you may have about your child losing the money you pass on to him is if he is sued. Does one of your children own his own business? People sue businesses all the time and your child has to follow all the rules of limited liability to ensure that only the company assets are at risk and not his personal assets as well. How does a business owner make sure that his personal assets aren’t at risk if his business is sued? Is the business a corporation or a limited liability company? These forms of running a business are the starting point for ensuring that your child’s personal assets don’t get seized by someone suing his business. Is your child a doctor or lawyer who could be sued for malpractice? Then, he may possibly get sued individually for malpractice and his personal assets are at risk.
Even if your children don’t own their own businesses, they can get sued for any number of reasons. If your child is in a car accident and the judgment is bigger than the amount of insurance he carries, the judgment can be satisfied from your child’s personal assets (including the money you leave to him). If someone slips and falls on his lawn and then sues, the injured person can collect against any of your child’s personal assets.
In order to be effective, asset protection techniques must protect against liability, must not be in your child’s name, and must be done at the right time. Talk to your estate planning lawyer about how to help your children’s spending or losing their inheritance.
Tuesday, May 5, 2009
Per Stirpes and Other Legal Terms
When you consult an estate planning attorney, she might be using legal terms that you don’t know. It is best if you ask her to explain everything so that you know that you understand everything that she is telling you. However, here are a few legal terms that she might mention and what they mean.
Estate – the assets you own less the debts that owe at the time that you die.
Per stirpes – is a method for distributing your estate. It divides a family into branches. Typically, a share of the estate will go to one of the persons in each of the branches. If that person has already died when it comes time to inherit, that person’s children will inherit the share and divide it among themselves. For example, if you leave your estate of $450,000 to your 2 children, and Child A has 1 child and Child B has 3 children, if Child B dies before you do, the 3 children of Child B will divide Child B’s ½ share of $225,000 among themselves (so each child of Child B gets $75,000). Child A will inherit the other ½ share of $225,000.
Per capita – the other method for distributing the estate of a deceased individual. If we use the previous example of you and your 2 children, and Child B has died before you, when you die, there are 4 people to divide your estate – Child A and your 3 grandchildren from Child B. Child A and the three grandchildren from Child B each take a ¼ share of your estate.
Executor – the person whom you appoint to carry out the wishes that you state in your will. The job requires that person to submit the will to the court for probate, to find all of your assets, to pay your debts, and then to distribute the estate in accordance with the terms of the will.
Fiduciary – a person who acts for the benefit of others in a trust relationship. Examples of fiduciaries are your executor (or administrator if you died without a will), trustee, and guardian of your children.
Letters Testamentary – the formal court order issued by the probate judge giving the executor the power to act on behalf of the estate.
Estate taxes – there are federal estate taxes and New Jersey estate taxes. The taxes are assessed on your estate based on the size of your estate when you die. In 2009, you can die (in most cases) without paying any federal estate tax if your estate is $3.5 million or smaller. In New Jersey, the state estate tax is assessed if your estate is greater than $675,000.
Ancillary probate – a probate proceeding conducted in a state other than the one in which you lived and where you own property. For example, if you are a New Jersey resident and you have a vacation home in the Poconos, your primary probate will take place in New Jersey and your executor will need to start an ancillary probate in Pennsylvania to get the court order that allows the transfer of your vacation home according to the terms of your will.
There are other legal terms that your lawyer will reference. If you don’t know the meaning of any term of concept that she discusses, you should ask for an explanation. After all, it’s your estate plan and you want to be sure that it carries out your wishes.
Estate – the assets you own less the debts that owe at the time that you die.
Per stirpes – is a method for distributing your estate. It divides a family into branches. Typically, a share of the estate will go to one of the persons in each of the branches. If that person has already died when it comes time to inherit, that person’s children will inherit the share and divide it among themselves. For example, if you leave your estate of $450,000 to your 2 children, and Child A has 1 child and Child B has 3 children, if Child B dies before you do, the 3 children of Child B will divide Child B’s ½ share of $225,000 among themselves (so each child of Child B gets $75,000). Child A will inherit the other ½ share of $225,000.
Per capita – the other method for distributing the estate of a deceased individual. If we use the previous example of you and your 2 children, and Child B has died before you, when you die, there are 4 people to divide your estate – Child A and your 3 grandchildren from Child B. Child A and the three grandchildren from Child B each take a ¼ share of your estate.
Executor – the person whom you appoint to carry out the wishes that you state in your will. The job requires that person to submit the will to the court for probate, to find all of your assets, to pay your debts, and then to distribute the estate in accordance with the terms of the will.
Fiduciary – a person who acts for the benefit of others in a trust relationship. Examples of fiduciaries are your executor (or administrator if you died without a will), trustee, and guardian of your children.
Letters Testamentary – the formal court order issued by the probate judge giving the executor the power to act on behalf of the estate.
Estate taxes – there are federal estate taxes and New Jersey estate taxes. The taxes are assessed on your estate based on the size of your estate when you die. In 2009, you can die (in most cases) without paying any federal estate tax if your estate is $3.5 million or smaller. In New Jersey, the state estate tax is assessed if your estate is greater than $675,000.
Ancillary probate – a probate proceeding conducted in a state other than the one in which you lived and where you own property. For example, if you are a New Jersey resident and you have a vacation home in the Poconos, your primary probate will take place in New Jersey and your executor will need to start an ancillary probate in Pennsylvania to get the court order that allows the transfer of your vacation home according to the terms of your will.
There are other legal terms that your lawyer will reference. If you don’t know the meaning of any term of concept that she discusses, you should ask for an explanation. After all, it’s your estate plan and you want to be sure that it carries out your wishes.
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