Creating an “estate” plan, whether just a simple will, advance healthcare directive or power of attorney, or even a complex plan involving trusts and layers to tax planning, is something that everyone who owns property and cares for others has to do at some point. And, given the uncertainty of death and injury in life, your plan should be created sooner than later.
If just starting out, our Automated Services allow you to create a basic will, healthcare directive, and power of attorney with limited attorney involvement and at a reduced fee.
A “simple will” should name your Executor, appoint Guardians (if you have minor children) and appoint Trustees if your will includes a trust. A trust might be optional for a surviving spouse, but if your children are under 18, property given to them must be put into a trust.
You should also consider an Advanced Healthcare Directive allowing you to state your wishes if incapacitated due to an accident or terminal illness. It will also appoint your Healthcare Representative and include HIPAA provisions to circumvent privacy laws.
The third document of a simple estate plan is a Power of Attorney. If you have someone, such as a spouse, sibling, parent or significant other, who could handle your affairs if you are unable to do so, you can appoint them as your “attorney-in-fact” using a power of attorney document. Most plans should include a “durable general” power of attorney, but there are a few other variations for specialized situations. A power of attorney does not allow the power holder to sign a new will or make medical decisions on your behalf.
Dictionary.com defines a “trust” as an arrangement whereby a person (a trustee) holds property as its nominal owner for the good of one or more beneficiaries. A beneficiary might include real persons or even charitable organizations. A trust can be irrevocable, if established at death through a will or if stated in the trust agreement. It can also be revocable, in that the person (the Grantor) who set up the trust retains the right to cancel it at any time. Each trust has different ownership, tax and creditor ramifications and you should research or discuss the use of trusts with your estate planning counsel.
Other Things to Consider. While there are variations of each, the documents discussed above pretty much runs the gamut of what is needed for a good estate plan. Even with advanced tax plans, some form of trust is used in the design. Typically, it’s the situation or personal objectives that drives this process.
If you have a child going to or in college, you should consider some additional documents. While your son or daughter may not need a will at this stage in life, once they reach 18, the university considers them an adult (as does the healthcare system) and privacy laws prevent them from dealing with you directly.
Probate is the process of submitting your will to the county surrogate after your death. Your executor is appointed, assets are then transferred, guardians and trustees appointed, and final tax returns filed. If assets, such as real estate, are being sold, tax waivers may be needed from the NJ Division of Taxation.
If you die without a will (you die “intestate”), the person appointed to handle your estate is called an administrator and the process is called administration instead of probate. Different rules apply and your assets may not pass as you intended. Also, assets must be disclosed to the court and a surety bond usually is required by the court to protect any potential creditors of your estate.
In most cases, you should have a signed will to make sure things happen as you wish. And it imposes much less of a burden on your survivors.
In many cases, a client’s situation (assets, business, family, etc…) calls for a more complicated plan than just basic wills, living wills, and powers of attorney.
They might have a relatively high net worth, own (or are a partner in) a business, or have both children and grandchildren. Children or other family members might be working in the business and they have more complicated concerns than just leaving all property to each other (typical “I love you” will arrangements).
They might want to leave property to children or grandchildren in trust.
If you are a doctor or other medical professional and are subject to HIPAA privacy laws, you have additional responsibilities in case of your premature death. A HIPAA compliant incorporates provisions that address the handling and distribution of patient files and other PHI (protected health information).
Patient files should be returned to them or their families or arrangements should be made to transfer their files to new practitioners. There have been cases where doctors have been fined posthumously and their estate has been forced to pay fines for HIPAA violations and the doctor was admonished. Families usually do not want to tarnish the reputation of their accomplished parents.
There are two primary types of charitable trusts, they are Charitable Remainder Trusts (“CRTs”) and Charitable Lead Trusts (“CLTs”). Trusts with split interests (in which one part goes to a charity and another part goes to a non-charitable beneficiary (like an individual)) must meet very specific rules in order to qualify as such.
A CRT is an irrevocable trust in which the lead or upfront interest goes to the non-charitable beneficiary and the remainder goes to the charity. A CRT is definitely more common than a CLT. A CRT is a tax-exempt entity and may be particularly useful when trying to defer gain on an asset. A charitable lead trust is an irrevocable trust in which the upfront or “lead” interest goes to the charity and the remainder goes to a non-charitable beneficiary. Both a CRT and a CLT may be set up as either an annuity trust or a unitrust.
For both these trusts, there are numerous, specific rules. If they are not followed precisely, the trust will not qualify. For example, split-interest trusts where all income goes to the lead beneficiary do NOT qualify. So, if a trust gives all the income to John or Jane for life and then the remainder to charity, no part of the trust will qualify for a charitable deduction. Contact our office for more information or free consultation.
As parents and other loved ones age, issues arise that should be addressed sooner than later. Documents such as healthcare directives and powers of attorney, as well as updated wills and trusts (if necessary), should be signed before someone is too frail (especially in mind) to do so. This might include transferring the personal residence to a trust while retaining a life estate. And it might involve the use of other trust vehicles to protect assets from government taking.
For elderly parents, you might consider our DocuBank service with an Emergency Access Card.
If you have a relatively high network or you are in a professional (such as the healthcare field) that comes with additional exposure to liability, you should consider an estate plan that employs asset protection strategies that protects what you own from both creditors and “predators”.
“Predators” are people that purposely create situations to make you liable to them and seek money through lawsuits and insurance claims. These types of plans might involve using trusts and other vehicles in various state jurisdictions and, perhaps, even in offshore locations. It should also include appropriate insurance policies with proper levels of coverage.
DocuBank is an online document vault and emergency access system that protects and makes important documents available when needed.
Access is key in an emergency situation. When you store your healthcare directives (living will, health care power of attorney) with DocuBank, you receive a personalized DocuBank Emergency Card that makes all of your emergency information and critical healthcare documents available via phone or computer.
The access card lists important medical conditions and allergy information so that they are immediately available at the hospital. The name and contact information of one emergency contact also appears on the face of the card. And when your card is used, up to three emergency contacts, along with a physician on file, are automatically notified.
While having a will may make it easier for your survivors, its not necessary in every situation. If you have no assets, are unmarried and have no children, your heirs (parents, siblings or other relatives) can probably manage if you die "intestate" (without a will). At least in New Jersey.
But, the adage goes, everyone needs something. Every adult should sign a healthcare directive (sometimes called a living will or healthcare proxy, depending on the state) that states your wishes if incapacitated in a terminal state and appoints a healthcare representative to make decisions on your behalf. Without this document, family members will have to apply to court for an order to direct care or remove life support.
Powers of Attorney are also documents that some persons need depending on the situation. They are often a part of an estate plan between spouses, but they are also used with elderly parents or between business partners.
Most small business owners cannot afford (nor does it make financial sense) to hire their own general counsel, devoted exclusively to their company. But legal issues come up fairly regularly and advice about the law is always needed. Hiring attorneys on an “ad hoc” basis does not allow counsel to have a real understanding of the structure of your company, history of dealings, agreements in place, employees, etc… And it always costs more (and sometimes gets you worse results) for the ad hoc lawyer to spend time going through your situation. The term “fractional” general counsel applies to a lawyer who, for a flat monthly fee, interacts and understands your business dealings on a regular basis. Generally, this results in less cost and minimizes any “emergency” legal issues.
Hire our general legal counsel for your business and your family for a flat monthly fee. Click below to learn more about our retainer services, along with their respective monthly fees.