Not many look forward to financial planning, especially when these discussions focus on the incapacity or death of a loved one. However, an effective estate plan can bring the comfort of order and control to what can be an emotionally and financially difficult time.
Successful estate planning requires a skilled Bergen County estate planning lawyer to weave together many legal and tax intricacies while helping each family to develop a plan that is mindful of the personalities and special needs of its members. Discussing these broad areas with an attorney together as a couple (or even with the extended family) will help ensure financial stability.
A surviving spouse or partner is often put into an unaccustomed administrative role shortly before or after the loss. Even financially savvy people are often unable to think clearly at such a time and certain decisions – including those that offer time-critical opportunities for tax savings – are unchangeable. A plan addressing the major financial issues following the loss of a spouse or partner is crucial. Initial matters to address include:
- How does the survivor access cash?
- Do the survivor’s health insurance and social security benefits require action?
- Are there time-sensitive tax decisions to be made?
- Did the loved one maintain life insurance – and if so, how to claim benefits?
Succession of Wealth and Wealth Transfers
As part of the estate planning process is the consideration that many want to leave a financial legacy. Whether this involves an inheritance to loved ones, charitable giving or a combination, many factors should be considered.
First, in many cases it is important to avoid providing lump sum gifts. Instead, consider using a trust. Trusts are monitored by a trustee who distributes the assets based on a predetermined agreement. Trusts often contain spendthrift clauses, a further layer of protection preventing the beneficiary from misusing the funds and sheltering it from the beneficiary’s creditors.
The federal and state tax consequences of various gifts should also be considered as part of a thorough estate plan. Tax laws are increasingly complex and can (and have) dramatically changed over time. For example, while the federal exemption amount from estate tax is currently $5,000,000, as of January 1, 2013 that amount is scheduled to be reduced to $1,000,000.
Although these tips outline some initial considerations in the estate planning process, a successful and complete estate plan requires the guidance of an experienced estate planning lawyer.