If you have a living trust in place, why would a person need a will? The answer straightforward : You need a last will to address what is to be done with any asset that you may have unintentionally left out of your living trust. Some examples of how this could happen: You buy property, (say a house), then die or become incapacitated before you can transfer the property into your trust. You co-own a bank account with someone else with rights of survivorship (say a child). The co-owner predeceases you and you forget to name a new co-owner. Your credit card company returns money to you for a trip that was canceled because of your death and it needs …
Medicaid Gifting Rules and the Annual Federal Gift Tax Exclusion Are Unrelated: Don’t Be Confused!
I’ve written numerous posts about Medicaid gifting and the misconceptions surrounding the annual gift tax exclusion rules. Generally, I’m asked the question whether New Jersey Medicaid looks at the gifts a person gives to his/her kids if the gift is valued under $15,000 each year. It’s the person’s understanding these gifts won’t have an impact on their qualifying for Medicaid benefits if they ever need a nursing home. Beware! These folks are incorrect. They are confusing the Medicaid gifting rules and the annual exclusion for federal gift tax purposes. Let me explain. The $15,000 referred to above is the annual federal estate tax/gift tax exclusion. That’s the amount that you may give away each year, to as many individuals as …
A DNR (Do Not Resuscitate) Order is Legal in New Jersey Without a Terminal Illness
We’ve all heard about a “Do Not Resuscitate Order” (DNR) but probably don’t know (precisely) what it means, or how it applies to you in real life. A DNR order alerts emergency personnel that you do not wish to receive Cardiopulmonary resuscitation (CPR) in the event of a medical emergency. It is a medical order that must be signed by a doctor. DNR orders are used primarily by people who are already critically ill and feel strongly that they do not want life-prolonging treatment when close to death. If you do not have a DNR order, emergency medical personnel must use all available measures, no matter how invasive, to save your life. Awhile back a client wanted to create …
No Contest Clause in Will Can Be (Un)enforceable in New Jersey
Many clients want to avoid challenges to their Last Will and Trust. They are generally concerned about some family member who is “all about the money”. They’re thinking their Will should include a no-contest clause to protect their good kids from greedy or unstable siblings, other children, etc. Perhaps over the years there’s been hints that assets in the family really came from other donors, etc. Parents envision others going after what he/she thinks is theirs and making the lives of beneficiaries miserable after the person is gone. Unfortunately (or fortunately, depending upon your position) a no-contest clause is not enforceable in New Jersey. Also known as an in terrorem clause, it specifies that any interested party who contests an …
Can You Exclude Your Ex-Spouse as the Guardian for Your Children After Separation/Divorce in Your Will/Trust?
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Guardianship and Estate Planning Attorney A client was referred to me by another attorney. She was the victim of domestic abuse and is currently in the process of getting divorced. She wants to prevent her husband from gaining custody of her children should she pass away. Her divorce attorney advised her that the father would have parental rights in the event of her death, regardless of what her Will says and that she would be wise to obtain a court order regarding same as part of her divorce. I was asked for my opinion. There is a reported New Jersey Supreme Court decision Watkins v. Nelson, 163 …
A Granddaughter Does Not Owe Gift Tax on Money She Inherits for College Tuition
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Planning Attorney I’m always asked about gift taxes when clients want to give away property to a loved one while alive or upon death. This frequent question generally involves gifts for college, a wedding or other major life event. The short answer is no gift tax is owed, but you will have to file a gift tax return (IRS Form 709) if you give a person more than $15,000 in any one year. The amount in excess of $15,000 will be deducted from your lifetime unified gift and estate tax exemption, currently $11 million in 2018. That’s not even a reality for 99.5% of Americans. If …
Can You Gift Real Estate to a Minor Under the Age of Eighteen (18) and if so, How?
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Real Estate Attorney I was recently asked if there was a simple, ironclad way to transfer title to real estate in New Jersey to a 13 year old minor child. A “minor” means an individual who has not attained the age of 21. Many people assume that a grantee (the person to whom ownership is transferred) must be at least age 18 or 21 years of age in order to legally own real estate. What is the status of a deed transfer to a 13 year old and does that status change when he or she reaches age 18/21? Surprisingly you don’t have to be an adult …
Be Careful About How Often You “Roll Over” Your IRA
By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Estate Planning Attorney A long-standing rule about how many IRA-to-IRA “rollovers” a taxpayer can make in a single year has changed, generally speaking. Read this post to avoid unnecessary taxes and penalties. A rollover means moving funds from one IRA to another. The longstanding rule has been that taxpayers may roll over multiple IRAs in a single year. The Internal Revenue Service had interpreted the limitation of one rollover a year to apply separately to each IRA a taxpayer may own. So the taxpayer could roll over IRA A in February, IRA B in May and IRA C in October without the rollover being treated (and taxed) as an …
The Marital Deduction: A Valuable Estate Planning Tool
By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Estate Planning Law Attorney The federal estate tax marital deduction is one of the most important estate planning tools available to a married couple. The basic marital deduction rule is that, upon the death of the first spouse, the value of any interest in property passing to the surviving spouse is deducted from the decedent spouse’s gross estate. This means that the amount passing to the surviving spouse escapes taxation in the decedent spouse’s estate. There is no limitation on the value of property that can qualify for the marital deduction. By transferring sufficient assets to the surviving spouse in the proper manner, estate tax liability upon the first …
Sick of New Jersey’s Obscene Taxes? Then Consider Changing Your Domicile to Florida
By Fredrick P. Niemann, Esq. of Hanlon Niemann, a NJ Elder Care Attorney Sick of New Jersey’s high taxes and anti-business politics in the state legislature? Then join the growing list of ex-patriots leaving the garden state for Florida and the Carolinas. The most important factor in determining when your domicile has changed from New Jersey to Florida is your state of mind — what you feel inside. It has been stated often that your domicile is the place you always intend to return to whenever you leave. Here’s a story to illustrate my point. I received a telephone call from a woman who attended a seminar. She proudly stated that she had become a Florida domiciliary over the past …