If your estate is valued in excess of the estate tax exclusion amount, you are going to have to consider ways to reduce the taxable value of your estate. At the present time this figure is $5.12 million, but it is scheduled to be reduced to just $1 million at the end of the year.

Many people who must seek estate tax efficiency are also interested in contributing to charitable causes. One way to achieve both aims would be to create a charitable remainder unitrust.

With these trusts you name a non-charitable beneficiary who will receive annuity payments from the trust annually. These payments must equal between 5% to 10% of the annual valuation of the trust. In the majority of cases the grantor of the trust will act as the non-charitable beneficiary.

When you are creating the trust you also decide on a charitable beneficiary. This charity will assume ownership of the remainder that exists in the trust after its term has expired. (You decide on the length of this term when you create the trust).  The remainder amount must equal at least 10% of the overall value of the trust.

Creating the trust shifts the assets used to fund the vehicle out of your estate for estate tax purposes. Capital gains responsibility could be spread out during the trust term, and there is a charitable deduction to be had as well.

If the possible creation of a charitable remainder unitrust interests you, reach out to discuss the details with a licensed and experienced Somerset County estate planning lawyer.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

A lot of people choose to utilize revocable living trusts to arrange for the eventual transfer of their assets to their heirs. There are numerous advantages to doing so, and one of these would include the ability to include an incapacity component.

If you were to become incapacitated at some point in time without making any advance preparations, interested parties could petition the court to appoint a guardian to act in your behalf. You may not have a choice with regard to who this individual is, and this potential lack of control is quite disturbing to many people.

Within your revocable living trust you could appoint a disability trustee who would be empowered to handle your finances in the event of your incapacitation, eliminating the need for a guardianship proceeding.

There are those who are under the impression that you do not need to have a Will if you do use a revocable living trust as your primary vehicle of asset transfer. In fact, you should have a pour-over will as well if you intend to use a revocable living trust to direct your resources to your loved ones.

With a pour-over Will, you record your desire to have any remaining assets that remained in your possession when you passed away directed into your trust. This is an efficient way of accounting for these remaining resources.

To obtain more information about revocable living trusts and pour-over Wills, don’t hesitate to pick up the phone to arrange for a consultation with a good Middlesex County NJ Estate Planning lawyer.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

When some people think about marriage images of a fresh-faced childless couple who have never been married before come to mind. However, in reality a very high percentage of marriages do not fit this description. Upwards of half of all marriages end in divorce these days, and more often than not people who get divorced eventually remarry.

In the majority of these cases at least one of the people entering the marriage has children from a previous marriage. This creates a particular estate planning scenario.

It is very likely that you want to provide for your new spouse after you pass away. But at the same time, your children are probably going to be a priority as well.

There are no assurances with regard to how your new spouse will plan his or her estate after you die. So, you may not want to leave everything to your spouse directly with no type of controls in place that protect your children.

One course of action that would be available to you would be the creation of a qualified terminable interest property trust. With these vehicles you provide income for your spouse for the rest of his or her life. But, you name your children as the beneficiaries who will assume ownership of the assets in the trust after the death of your spouse.

The best way to devise a plan for the future as a parent entering into a new union is to sit down and discuss the matter with a professional. Should you be seeking answers, don’t hesitate to pick up the phone and arrange for a consultation with a licensed and experienced central New Jersey estate planning lawyer.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

It is wise to consider the recipients when you are planning your estate. On the surface it can seem as though estate planning involves a pie that you are slicing up so that you can give pieces of this pie to the people on your inheritance list. However, the slices can be delivered in various different ways and the best way may vary depending on the proclivities of the person receiving the slice.

Some people don’t respond very well to receiving a large influx of money that they did not earn. We can all envision an arrogant or overly self-satisfied individual who could have developed these traits as a result of receiving a large inheritance. This is something that most people would not want to facilitate.

But short of this a sincere and relatively humble person could experience an underlying sense of conflict if he or she was to come into sudden wealth that was not earned. Granted, this may be a pleasant problem but it can be troubling to many people and we have all seen examples of high-profile individuals who had plenty of financial resources live troubled lives.

One thing you may want to consider if you have concerns about spoiling an heir would be to provide for this individual via the creation of an incentive trust. With these trusts you include conditions that must be met before distributions will be made. These conditions can guide the beneficiary toward a path of personal achievement.

For example, you could allow for distributions that are tied to academic or career benchmarks. You have the control and you can stipulate anything that you think would be useful to the beneficiary in the long run.

Incentive trusts can provide a solution for some people. Don’t hesitate to pick up the phone to set up a meeting with an experienced Somerset County estate planning lawyer if you would like to learn more about them.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

One of the reasons why it is advisable to reach out and develop an ongoing relationship with an estate planning attorney is because of the personalized attention that you will receive. Each individual is different, and every family has a different dynamic. Everyone is going to pass away someday and the wise individual is going to plan ahead intelligently.

The only way to do this effectively is with professional guidance, and in fact it is very likely that you are going to have to update your estate plan over the years. When your attorney gains an understanding of your situation while devising an initial plan he or she will be well-positioned to make the appropriate recommendations as things change in your life.

Your attorney may examine your situation and recommend a revocable living trust. These vehicles provide for an efficient transfer of assets after your passing, but you have total control of them while you are still alive. You may choose to serve as the trustee and the beneficiary while you are living and you can make changes as you see fit. As the name implies, you can even dissolve the trust if you choose to do so.

In addition to the control and flexibility that revocable living trusts provide, you can also include incapacity contingencies and this is part of the appeal as well.

The creation of a revocable living trust is an option that is available to you. To explore this and other estate planning instruments, simply take a moment to arrange for a consultation with an experienced, dedicated central New Jersey estate planning lawyer.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

One of the aspects of elder law that is moving to the forefront of the consciousness of many estate planning attorneys is that of incapacity planning. When you examine the dominant trends you see a confluence of two major factors that make incapacity planning totally essential to the modern estate plan.

For one thing, the elder population is growing and people are living longer than ever. Some 10,000 people are filing for Social Security every day, and the segment of American society that is at least 85 years of age is growing faster than any other. This is the first fact to keep in mind.

The second factor to consider is the high rate of dementia cases among the oldest old. It is estimated that about 50% of people who have reached the age of 85 are suffering from dementia. Dementia can strike with varying degrees of severity, but it is very common for dementia sufferers to become unable to make sound financial and medical decisions for themselves.

If you do not take the appropriate steps to appoint decision makers of your own choosing to act in your behalf in the event of your incapacitation, the state can appoint a guardian to act in your behalf without your consent.

The way that estate planning attorneys can help you avoid this would be to include durable powers of attorney in your estate plan. In this context the “durable” designation makes the document valid even after the incapacitation of the principal.

Most plans will include a durable medical power of attorney and a durable financial power of attorney to address each of these separate areas of decision making. Since the the person who is best suited to handle your finances may differ from your preferred medical decision maker you can indeed name two different attorneys-in-fact in the two respective documents.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

Though it could be suggested that you should have an estate plan in place as soon as you become an adult in the eyes of the law, as long as you are single and sans significant assets you can probably put it on the back burner. But once loved ones are depending on your income to maintain their standing of living an estate plan does become essential. This is true when you get married and your spouse is relying on you, and it becomes doubly important when you have children. If you and your husband or wife were to be killed suddenly in an auto accident, who would care for your children? Where would the financial resources come from? These are the questions that you need to answer in your estate plan.

You can address the matter of who will be raising your children on a day-to-day basis by naming a guardian in your will. As for the financial side, most young couples have not had enough time in the working world to amass financial reserves that are sufficient enough to provide for the needs of their children for ten, fifteen, or twenty years. Life insurance is the solution, and the way that the proceeds can be handled in behalf of dependent children is though the creation of a testamentary trust.

A testamentary trust is created via terms elucidated in your last will and testament; as the name implies it is a trust within a will. You name the trustee and this person will administer the assets in the trust, which may be largely comprised of insurance policy proceeds, until the children become adults per your wishes as stated in the will. Clearly the role of the trustee is an important one. He or she must administer the trust for its duration, and it can be a time consuming affair that involves ongoing interaction with the probate court. So it is important to choose your trustee carefully and make sure that this person is fully aware of the totality of the responsibility that he or she would be undertaking.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

The estate tax is scheduled to come back with a top rate of 55% in 2011, and over the years this rate has fluctuated but it is generally somewhere in the vicinity of 50%. Many people question the fairness of a tax that sucks up half of the wealth that you have accumulated throughout your lifetime, especially considering the fact that you paid plenty of other taxes along the way. Because this tax is so devastating to the value of your assets, estate planning attorneys recommend strategies that can help you avoid the estate tax, and one of these involves the creation of a generation-skipping trust.

With these trusts you name your grandchildren as the beneficiaries, skipping a generation, as it were. The assets that have been placed in the trust are not subject to estate tax, but they are subject to the generation-skipping transfer tax. However, there is an exemption that should be in the vicinity of $1.4 million in 2011, so you can avoid this tax as well if the value of the trust does not exceed this exclusion amount.

Though they are not the named beneficiaries, your children can benefit from the trust. They can receive cash distributions, live for free in a home that has been placed in the trust, and in fact, they can even control disposition of assets to parties other than themselves through a special power of appointment. They can enjoy this access and control, but creditors, former spouses, and other potential claimants cannot target assets that have been placed in the trust.

To maximize the long term utility of generation-skipping trusts, your children can create one of these as well, naming their grandchildren as the beneficiaries. By employing this strategy generation after generation your family can avoid the estate tax and keep the wealth that has been built over the years intact and in the family.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

In 2011 the estate tax is going to be in force, and what is especially noteworthy about it is the change in the exclusion. When the tax was last in effect in 2009 the exclusion amount was $3.5 million, meaning that only the portion of your estate that exceeded that amount was subject to the tax. If your estate was worth less than this, you owed no estate tax. In 2011 the exclusion amount has been reduced to just $1 million, so those with estates valued between $1 million and $3.5 million are now in the crosshairs of this federal levy that carries a maximum rate of 55%.

Your most valuable asset may well be your home, and due to this change in the exclusion it may be your residence that pushes your estate’s value above $1 million. So if you can remove the value of your home from your estate without losing anything in the process you could effectively escape estate tax liability. If you are in this position, you may want to consider the creation of a qualified personal residence trust.

With these vehicles you place the home into the trust and name your children or whoever your heirs are as the beneficiaries. You can then continue to live in the home rent-free without skipping a beat, but the value of the home has been removed from your estate. When you draw up the trust you state the term during which you will be living in the home, and this is considered to be your “retained interest.” It should be noted that if you were to pass on before this term was up the property would revert back into the estate.

There is a gift tax applicable to the transfer of the home, but the fair market value of the home is not used to calculate gift tax liability. The actuarial value of your retained interest is deducted from the taxable value. If this amount does not exceed the lifetime gift tax exemption of $1 million, the property was passed on to your heirs free of the gift tax and the value of your estate has been reduced for the purposes of estate tax efficiency.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

If you are on the outside looking in it may seem as though wealthy people who are planning their estates feel akin to jolly old St. Nick, capable of making the financial dreams of their loved ones come true. It would be disingenuous to suggest that being able to provide for your family after you pass on is not a blessing of sorts, but it’s not without its pitfalls.

We have all seen reports of the children of very wealthy people struggling in various ways throughout their lives, and there are those who have met tragic ends. There are also countless others who may not have been especially tortured who simply never reached their true potential because they saw no reason to work toward anything.

One possible solution that is often put to good use is the incentive trust. These are trusts like any other with your heir as the beneficiary, but you place stipulations that must be met in order for funds to be distributed. You can place any stipulations that you want to as long as what you are requiring is not illegal.

For example, you may set up the trust to make distributions as long as the beneficiary stays in college and provide for a lump sum distribution upon completion of graduate school. To promote a work ethic and a career path you could stipulate that the balance of the trust will be distributed in four benchmarks five years apart as long as this heir remains employed.

Should you have a family member who has a problem with self destructive behavior you could put stipulations in place that act as an incentive to avoid this activity. For example, you could allow for distributions contingent upon the results of ongoing drug testing and/or completion of a rehabilitation program.

Incentive trusts are not a panacea, but they are an option and something that you have in your estate planning tool kit should you feel as though creation of such an instrument may be able to provide you with some peace of mind.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.