Blog & Resources

Any transfer of assets at death involves a variety of tax consequences, but estate planning for a married couple where one spouse is not a United States citizen involves unique taxation issues and planning. Couples who find themselves in this unique circumstance should consider the benefits of an estate plan that includes a Qualified Domestic Trust (QDOT).

In 2012, the federal estate tax provides a credit of $5,120,000, meaning that the first $5,120,000 of any estate not diminished by taxable lifetime gifts will pass free of the federal estate tax.¹ This exemption is scheduled to fall to $1,00,000.00 in 2013². Further, Section 2056 of the Internal Revenue Code contains the “marital deduction,” which provides that any property left to a surviving spouse following a decedent’s death is not taxed until the surviving spouse’s death. These provisions give married couples options for deferring estate tax payments until after the surviving spouse’s death.

Today, people utilize the Internet and social media more than ever before, raising new issues for estate administration. Many people receive bank, credit card, and utility statements electronically, and practically everyone has a Facebook account. Electronic mail and Facebook may hold important information for a personal representative seeking to administer an estate.¹ Obtaining access to that information, however, is a brand new area in probate law.

In some cases, the personal representative may know the password to the decedent’s email, Facebook, and Twitter accounts. In these cases, accessing bills and statements as they come in is relatively easy. But is a personal representative² authorized to access these accounts? In situations where the personal representative does not know the password, how can they obtain it?

Only a little over three months remain to maximize estate tax and gift tax opportunities that are scheduled to disappear in 2013. There is still time, but if you are going to act you need to start working with your estate planning lawyer soon.

Never have the Gift Tax and Estate Tax exemptions been higher than they are currently. The Federal Estate and Gift Tax Exemptions are currently $5,120,000.00. If congress takes no actions, these exemptions fall to $1,000,000.00 in 2013. This change exposes to taxation an additional $4,120,000 to those who die or gift in 2013 vs. 2012, increasing the tax due by hundreds if not millions of dollars.¹

A revocable trust, or its more popular name a “Living Trust”, is an increasingly popular estate planning tool. The Living Trust serves many useful purposes, but many people are told that one purpose is to reduce taxes. This is not true. A Revocable Trust does not reduce income taxes, estate taxes, gift taxes, generation skipping taxes or inheritance taxes. In short, there is no tax advantage gained by a Living Trust. If someone is trying to sell you on the idea of forming a Revocable Trust based on tax savings, run away!

Some trusts do create various tax benefits. So why does a Living Trust provide no tax benefit?

Any number of reasons may cause a contest. Sometimes a will contest stems from the deceased’s discomfort with death and taxes, so issues that should have been addressed during lifetime are left unresolved and can only be settled in the Surrogate’s Court. Some Will contests are due to bad drafting by attorneys not trained and experienced in wills, trusts and estate planning. Sometimes dishonest actions by dishonest people cause will contests. As veteran Will Contest Attorneys we get to see the good, the bad and the ugly side of people. From Sussex County in the North, to Cape May County in the south, greed will often raise its ugly head when a person with assets is in a weakened state and susceptible to undue influence.

The parties to a will contest may vary. Our will contest lawyers have represented heirs, descendants, family members who were excluded or received reduced amounts in the Will and charities or other non-profits who the deceased promised a share of the estate. If charities are involved, the attorney general may also become a party to the contest.

Most people are honest, but some people are not.

As New Jersey Challenge Attorneys, we focus our litigation practice exclusively on Will Challenges, Will Contests and other estate disputes. Over our many years as Will Challenge Lawyers we have seen the dishonest things that some people will do; including forging wills and using undue influence on people to sign wills.

Time Limits, 4 months or 6 months: If you feel a Will Challenge need be made, act quickly or you may lose your chance for challenging the Will. If you are a New Jersey resident, you only have four months to file your petition or if you are a non-New Jersey resident you have only six months. If you delay, you are bared from filing your Will Challenge and a wrong might go undiscovered. It would be even better if you contact us prior to the Will being filed, as our Will Challenge Lawyers might be able to prevent the Will’s even be filed with the Surrogate.

Many New Jersey residents will die without a Will. Many will die unexpectedly before they can prepare a Will, but most people simply just don’t get around to writing a Will. If you die without a Will in New Jersey, you are said to die “Intestate”, or without testamentary documents. It is not true that if you die without a Will in New Jersey that your assets pass to the state. Instead, a set of rules decide who is in charge of your estate and to whom your assets pass.

Surrogate’s Court: If a New Jersey relative of yours dies without a Will (“Intestate”), and you wish to represent that person’s estate, you must get permission though the Surrogate’s Court. Each county has a Surrogate’s Court, so the first step is to determine which Surrogate’s Court has jurisdiction over the estate. For example, if the deceased was a resident of Camden County but died in a Berks County hospital, it is the Camden County Surrogate’s Court that has jurisdiction over the case. At times a person becomes ill and moves just prior to death. For example, if a person lived her entire life in Gloucester County, but became ill and moved to her daughter’s house in Atlantic County two months before she died and she would have never moved but for the illness, the Gloucester County Surrogate’s Court has jurisdiction over the estate.

In my previous article I introduced you to the basic understanding of Generation Skipping Tax; its origins, purpose and theory. This Article will take you a little deeper into the actual tax terms and how it is applied. My hope is that after reading these articles my clients will have a working knowledge of the Generation Skipping Tax and, with as much enthusiasm a non-tax geek can have, embrace planning techniques that help reduce or even avoid the Generation Skipping Tax.

Prologue

This is the first of a series of Articles about the Generation Skipping Tax, one of the more complex taxes that most people will come up against and which is often overlooked in Estate Planning. The goal is to introduce the non-practitioner to the concepts of the Generation Skipping Tax so the planning options and techniques which we will explore together will make more sense. I find that some clients have avoided estate planning techniques which would save their families potentially millions of dollars, because they are uncomfortable with their understanding of the taxes being discussed. My hope is that after reading these articles my clients will have a working knowledge of the Generation Skipping Tax and, with as much enthusiasm a non-tax geek can have, embrace planning techniques that help reduce or even avoid the Generation Skipping Tax.

I. Standard of Care for Fiduciaries:

A. Prudent Person Standard: The standard of care to which a fiduciary is held in Pennsylvania is that of “common skill, prudence and caution as a prudent man, under similar circumstances, would exercise in the management of his own estate.” In re Estate of Denlinger, 449 Pa. 393, 396, 297 A.2d 478, 480 (1972); In re Musser’s Estate, 341 Pa. 1, 9-10, 17 A2d 411, 415 (1941); In re Estate of Lohm, 440 Pa 268, 269 A.2d 451 (1970); In re Estate of Lerch, 399 Pa. 59, 159 A.2d 506 (1960).