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Cherry Hill NJ Probate & Estate Administration Law Blog

Avoid these four estate-planning mistakes

We've covered estate-planning statistics in previous blogs, so it's probably no surprise to our readers that over half of all adult Americans don't have a will. Common estate-planning misunderstandings are one reason this is the case, and even once you get around to planning, you might make more common errors that can lead to financial loss or extra work and worry in the future.

One common error is simply not thinking that you need a will or other estate planning document. Some people think that wills are for the wealthy, but in reality wills can help anyone protect assets and legacies. Even if you have nothing you think should be passed on to your heirs right now, if you have minor children estate planning is critical to stating your wishes about their care should something happen to you.

Considering all your assets, even your time share

One of the biggest challenges for those who are dealing with estate planning can be ensuring that they consider all of their assets when making a will or other plans. While most people who get this far with estate planning have the major assets such as homes, real estate and active cash accounts covered, it's easy to forget about inactive assets or smaller items. One thing you might never think about, for example, is a time share.

Time shares aren't always seen as valuable assets because of the way they are depicted on television sitcoms. Often, time shares are seen as something you are coerced or tricked into purchasing and something that you'd really like to be rid of. In reality, though, many people quite enjoy their time shares and get a lot of benefits from vacationing out of state or out of country.

Getting your way with an incentive trust

Over your life, you worked hard to build wealth and gather assets. You might not want to leave them behind when you pass simply so they can go to waste. If you know that your heirs aren't great with money or you think they are shying away from success, you might create an incentive trust to encourage them to do something desirable.

For example, if you are worried about whether your child will ever finish college, you can create a trust and make him or her the beneficiary. Instead of tying the payout from the trust to an age, you can tie it to college graduation. You might even be able to set a time limit: If your child graduates college by the time he or she is 27 years old, the assets in the trust go to them. Otherwise, the assets might go to a favorite charity or other heirs.

Why is a Roth IRA beneficial to estate planning?

Both traditional IRAs and Roth IRAs offer some benefits when it comes to taxes and estate planning, but a Roth IRA comes with one benefit the traditional retirement account doesn't. Both plans let you put money away for retirement while reducing your tax burden, and you can use them both to pass some assets on to heirs without going through probate.

The way you avoid probate through a retirement account is to designate a beneficiary specifically for that account. You do this by completing a beneficiary form with the institution that holds your account. In many cases, the institution has you complete the form as part of setting up the account, but if you don't remember doing so, you can double check to ensure you have a beneficiary designated. You can also make changes to your beneficiary designation as needed -- check with your financial institution for information on how, when and how often you can make such changes.

Can you avoid the probate process?

Probate processes can be time consuming and expensive, especially when a dispute arises about a will. Probate is also a matter of public record, which isn't something everyone wants -- you might want to keep some information about your assets and your heirs out of the record, and you can do that. While you can't always avoid probate completely -- your estate itself will likely undergo the process -- you can keep certain assets out of probate.

By placing certain assets in a revocable living trust, you could avoid many probate issues. You can use the trust to distribute assets to family members or others both during and after your lifetime, and you might even be able to put the bulk of your property in the trust for almost no reliance on the probate process. This can become a complex task that has to be handled perfectly to reduce the risks of problems, which is why working with an experienced estate lawyer is a good idea.

Don't assume anything about your heirs

Assumptions can be very dangerous when it comes to estate planning. You definitely want to have open lines of communication with your heirs. Talk about your plans, their desires, and what legal steps you're going to take to officially put everything in place. Talking it out in advance can help to avoid issues in the future.

One assumption that people often make is that leaving property to an heir is a gift, something they'll be happy to take on. However, assets may come with responsibilities. They may not actually want those responsibilities.

Understanding whether estate taxes are required

When someone passes away, the last thing you want to consider is the tax man. While it's not a pleasant task, someone has to handle the debts and liabilities of an estate, including any remaining tax burdens. That someone is usually the executor, and if you find yourself in that role, seeking legal assistance with the job can be a good idea. If you are, instead, the person planning for the estate, then an estate professional can help you do some work now to relieve your administrator of some future burden.

In either case, you should understand what tax requirements might apply to your estate. One requirement for any estate is that a final income tax filing be submitted. If a person had any income in their last or partial year of life, then an income tax return needs to be filed with all appropriate entities come April.

How does a trust end?

If you are in the process of creating an estate plan, you may wonder if a trust is right for you. With many types to consider, this could be the document that works best for you and your loved ones.

Of course, you can't move forward with this until you have answered all your questions. Here is one of the most important to address: When does a trust end?

What is a beneficiary silent trust?

A beneficiary silent trust is a type of trust that allows for the creator of the trust to dictate that the beneficiaries of the trust not be given notice of the trust's creation or the assets held within. There are many reasons why a trust creator may want to designate a trust as quiet or "silent," but for it to be legally recognized, the trust may need to have several specific features.

The creator should include or at least reference the specific statutory language within the body of the trust instrument that expresses clearly the desire to withhold certain information from beneficiaries. This will protect the trustee from accusations of bad faith. It may be particularly useful to include a letter from the creator of the trust expressing why it is in the best interests of the relevant beneficiaries for the trust to be kept silent to them.

Legal marriage means new estate law options for LGBT couples

The ruling that marriage is legal for same-sex couples opens a great many chapel doors for ecstatic brides and grooms, but it also opens a variety of legal doors that are worth considering. Whether you're planning to keep your relationship as is or you're opting to tie the knot, now's a good time to have a serious conversation about the future.

With legal marriage possible, lesbian, gay, bisexual and transsexual couples might need to consider estate planning. In many cases, the same laws governing married different-sex couples in this area are now relevant for LGBT couples.