Trusts and Estate Taxes Archives

December 10, 2024December 9, 2024

Asset Protection Strategies for Your Wealth

Safeguarding your wealth is about more than just accumulating it—it’s about ensuring it remains in your family’s hands. Asset protection strategies are a critical component of comprehensive estate planning, helping you shield your assets from potential claims while staying within the bounds of the law. Done right, these strategies can secure your legacy for future generations rather than letting it be diminished by taxes or creditors.

For over forty years, SCC Legal has been a trusted partner for New Jersey families, providing tailored estate planning solutions designed to protect what matters most. In this article, we’ll delve into the importance of asset protection, explore two effective tools to strengthen your strategy, and show how SCC Legal can guide you every step of the way.

What Is Asset Protection?

You work hard to build financial wealth, but there are many instances where your assets can be attached, including a civil lawsuit, a divorce, if you file for bankruptcy, or other creditor actions. Asset protection refers to a strategy that protects certain valuable assets from creditors, while giving you financial peace of mind. Trusts and retirement accounts are two of the vehicles you can use. Think about the current and future scenarios that might affect your wealth and include an asset protection strategy in your estate planning process with the assistance of experienced attorneys in your state.

Asset Protection Trusts as a Strategy

When you are looking for an asset protection trust, consider irrevocable trusts rather than revocable living trusts. They protect your assets from creditors while offering tax advantages. There are several types of irrevocable trusts, including Charitable Remainder, Special Needs, Irrevocable Life Insurance, Spendthrift, Bypass (Credit Shelter), and Qualified Personal Residence. However, it is important to know that once you create the trust, you cannot modify it, and a third-party trustee, whether a business or financial professional, takes full responsibility for your trust’s management.

Asset Protection Strategies: Retirement Accounts

Retirement accounts are a great way to protect your financial assets. They are generally exempt from bankruptcy under federal law, with the exception of inherited Individual Retirement Arrangements (IRAs), and offer significant tax advantages for your financial portfolio. IRAs up to one million dollars are protected from bankruptcy in New Jersey, while 401(k)s and pension plans are safe from creditors and bankruptcy. However, retirement accounts are considered marital property and subject to equitable distribution if you divorce. Consult with a financial expert and your estate planning lawyer before making a final decision, as laws might change.

Asset Protection Tips from SCC Legal in NJ

The type of asset protection you select depends on individual circumstances. Further asset protection tips include transferring assets to your spouse’s name or adding more funds to an employer-sponsored retirement plan. Pay down your mortgage and look into life insurance, annuities, and homestead exemptions. Choose a group of attorneys specializing in estate litigation, estate planning, Last Wills and Testaments, business, and real estate law to protect your assets and rights. SCC Legal has the knowledge you need.

For more information on estate planning and trusts in NJ, or if you want to discuss asset protection strategies from a legal standpoint, please contact our team at SCC Legal today or visit us at: https://www.scclegal.com/

November 11, 2024November 20, 2024

Charitable Remainder Trusts: Maximize Your Giving

Charitable remainder trusts (CRTs) are one of the estate planning devices people use to fulfill their family’s philanthropic vision while receiving tax savings. The key to making trusts work for you and your loved ones is to work with an adviser who understands your objectives and financial situation. SCC Legal has all the required expertise. We take the time to explain and recommend the trust fund vehicles appropriate to your circumstances.

In this article, we explain how CRTs work, highlight the types of charitable trusts, the benefits of charitable remainder trusts, and who can receive income from these vehicles.

How Does a CRT Work?

There are several types of charitable trusts, and charitable remainder trusts are one of the most popular. So, how does a CRT work? You set up an irrevocable trust and transfer the assets you want to donate to your preferred charity into the trust, making it a charitable remainder trust. The charity must be a U.S. charitable organization qualified by the Internal Revenue Service and could be a public charity, nonprofit organization, or private foundation. The charity or its investment manager serves as a trustee and pays the donor or someone the donor nominates an income. It can be for a lifetime or a predetermined number of years.

Types of Charitable Trusts

The types of charitable trusts include charitable lead trusts (CLTs) and charitable remainder trusts (CRTs). With a CLT, the charity benefits first and receives an income for a specified time, while the donor gets an immediate charitable tax deduction on their tax return. There are two sub-trusts in the CRT category: charitable remainder annuity trusts (CRAT) and charitable remainder unitrusts (CRUT). When the trust makes regular payments of a fixed amount to the non charitable beneficiaries, it is deemed an annuity trust, while a unitrust pays out a percentage of the trust’s value.

Benefits of a Charitable Remainder Trust

The IRS highlights several benefits of a charitable remainder trust. It helps you to plan major donations to your preferred charities while you or a nominee receive a predictable income over a specific period or for life. There are several tax-related benefits, as it may allow you a partial charitable deduction based on the value of the charitable interest in the trust. Donors might also defer income taxes on the sale of assets transferred to the trust. The property placed in such a trust is also excluded from your estate as it relates to determining estate tax.

Who Can Receive Income From a CRT?

Charitable remainder trust income goes to one charitable and at least one living non-charitable beneficiary. The IRS states payments continue for the life of one or more beneficiaries or a specified term of up to twenty years. The remainder of the trust must pass to the qualified charitable organization at the end of the payment term and must be at least ten percent of the initial net fair market value of all property placed in the trust.

For more information on estate planning law and trust funds, or if you want to discuss charitable remainder trusts in NJ, please contact our team at SCC Legal today or visit us at: https://www.scclegal.com/

February 7, 2023January 31, 2023

Reasons To Set Up A Trust

There are many benefits to setting up a trust, both for you and your family. A trust is a component of an estate plan which allows you to transfer or gift a portion of your assets without completely losing control of them. This is done by transferring them to a third party, called a Trustee. The Trustee will then administer the assets as you instructed to the beneficiary or beneficiaries. Here are several reasons it’s beneficial to set up a trust, compiled by our estate planning attorney in Fairfield, NJ.

Trusts May Offer Tax Benefits

While trusts are not only for wealthy individuals, one benefit is that a trust can reduce estate taxes for people who have substantial estates. When you transfer some or all of your assets into a trust it can reduce the overall taxable amount from your estate. There are several different ways to do this via setting up a trust, so we recommend you speak with your estate planning attorney to discuss your options and decide what’s best for you.

A Trust Is Very Specific

Sometimes people pass away and leave ambiguous instructions in their wills, or their estate plan can be contested in court. When you create a trust you have complete control over who receives your assets, and on what terms they are able to receive them. For example, if you want to gift your child $20,000 but only want them to have access to the money once they graduate from college, a trust allows you to do this.

Possibly Avoid A Probate With A Trust

Probate is the legal process by which a will is “proved” in court, and a judge must declare that the will is a valid representation of the deceased’s wishes. Most trusts don’t go through the probate process at all, allowing your assets to be transferred smoothly to your designated beneficiaries. Probate can be expensive and time-consuming, so avoiding it is recommended.

Ultimate Protection

If you want a guarantee that your spouse and your children will be taken care of after your death, consider creating a trust. Divorce, remarriage, and blended families are very common, but complications can arise when it comes to inheritances. Creating a trust ensures that the rightful inheritances go to the beneficiaries, even if their family circumstances change in the future.

If you’d like to learn more about setting up a trust and how it can benefit you and your family, or if you have any other estate planning questions, please contact our team at SCC Legal today and visit us at: https://www.scclegal.com/

October 4, 2022October 6, 2022

Intestacy Law – What Your Loved Ones Will Go Through if You Die Without a Will

If you die without having a will, the legal term for this is dying intestate. You may think that most people who have valuable assets to pass on already have detailed estate plans in place so their families know what to do after they pass. However, dying intestate happens more often than you’d imagine. Here’s what could potentially happen to your surviving family members if you were to die intestate.

What Does Dying Intestate Mean?

Dying intestate means you have passed away without leaving notarized, legal instructions about what to do with your assets. Ideally, when a person passes away, they will have an estate plan in place that gives detailed information about how their money, cars, properties, businesses, and other valuables should be distributed to their loved ones. Most people want to leave these assets to their children, grandchildren or other surviving family members.

Who Gets What if There is No Will?

If you pass away without a will, your assets will be distributed according to your state’s law of intestacy. New Jersey’s law of intestacy has different stipulations for a variety of family situations, such as passing away with a spouse and children from the same marriage, passing away with a spouse and stepchildren, passing away with a spouse and no children, or passing away with no spouse and no children. Speak with an estate planning attorney to learn more about the intestacy law, specific to your state.

What is The Administration Process?

The administration of your estate, in line with your state’s intestacy laws, will take place in the County in which you were a resident at the time of your death. The Surrogate Court will appoint an administrator who will review your estate and follow the intestacy laws until all of your assets have been distributed as required by law.

How To Avoid Burdening Those You Leave Behind

Dying intestate can be a burden to your family because they aren’t in control of the process. It can also be a very emotionally difficult time, and dealing with the court and the administrator can add undue stress and frustration while your family is dealing with your loss. We recommend having a comprehensive estate plan in place to avoid dying intestate.

For more information about what happens if you die without a will, or if you’d like to speak with us about creating an estate plan, please contact our team at SCC Legal today. You could also visit our website at: https://www.scclegal.com/

October 19, 2021September 23, 2021

Requirements for a valid will in New Jersey

Creating a valid will is an important part of the estate planning process. Our NJ estate planning attorneys have dealt with many cases where someone thought their will was valid, but unfortunately, due to certain laws and technicalities, their will is considered invalid. This is especially frustrating for the family of the deceased because their loved one is no longer around to help clear up any confusion and fix the problem.

Continue reading “Requirements for a valid will in New Jersey “

August 1, 2021July 28, 2021

Your legal rights as a trust beneficiary

A trust is a legal document that transfers a person’s assets to their designated beneficiaries when they pass away. Although the process may seem straightforward, if you’ve been named as a beneficiary in a trust, it’s important to know your trust beneficiary rights and to ensure the trust is distributed properly.

Continue reading “Your legal rights as a trust beneficiary”

June 22, 2020June 4, 2020

The Basics of A Trust Administration – What You Need To Know

A trust administration happens when any settlor passes away or becomes incapacitated, and since there was a living trust involved, there would be a trust administration. A living trust contains language that spells out what happens when a settlor becomes incapacitated or when one or both of the settlers have died. That language requires specific actions by the backup trustees, sometimes the surviving spouse, in the case of marriage.

The administration part is when the attorney works with a surviving spouse or the backup trustees to follow the directions written in that trust and make sure the trustee follows the law’s requirements. For example, if someone has died and they have a living trust the assets that were in that individual’s trust must be given to the next in line beneficiaries. Or in the case of a married couple on the first death, family trust assets must be allocated or given to a sub-trust for the use of the surviving spouse.

A trust administration acquires an experienced attorney in this critical time; there are state, federal and county guidelines and rules that must be followed to save time and money. Often some deeds and forms are time-sensitive, and delay can cause serious problems, unnecessary expenses or missed tax savings opportunities. Plus, the surviving spouse or other beneficiaries want assurances that they will receive what they are supposed to receive in a timely, efficient, and cost-effective manner.

What is the first step?

The first step usually involves the attorney reviewing and explaining the trust to the backup trustees or surviving spouse as the case may be. This is true whether there’s an incapacity of a settler or a settler has passed away, then the attorney outlines the plan of action based upon the trust language. The surviving spouse or backup trustee must understand the process so they can make informed decisions, think of all this like a team each person working toward the same goal.

What does the surviving spouse or backup trustee usually need to bring to the first trust administration meeting with the attorney?

Typically, let’s use the death of a spouse as an example, the surviving spouse would bring in the original trust plan, about four or five death certificates, and a list of the future beneficiaries’ names, addresses and contact numbers as well. It’s also a time saver if the backup trustee is a surviving spouse and has a list of trust assets and the deeds or statements that go with each trust asset.

SCC legal is an estate planning attorney in New Jersey and our offices can go through this process with you step-by-step. We clearly outline the goals and duties to make sure everything is clear and understandable so the trust administration is wrapped up in a timely, efficient, and economical manner. We can also prepare additional estate planning documents, such as your Last Will and Testament, Health Care Proxy/Medical Directive, Power of Attorney documents and trusts. For more compassionate legal guidance and a free consultation, please contact us or visit our website at https://www.scclegal.com/

October 21, 2019October 4, 2019

What is the Role of a Trust Protector

A trust can fulfill many useful estate planning goals, from providing for your family and planning for your golden years to protecting your hard-earned assets from taxation. One of the roles that you might consider adding to your trust is a trust protector. Here’s some insight into this position, from an estate planning attorney in New Jersey.

What is a Trust Protector?

A trust protector is a person you appoint to watch over your trust in the long-term, specifically to ensure that the trust or the goals of the trust aren’t compromised or negatively affected by changes to laws or the circumstances surrounding the trust. They are usually an independent third party who specializes in this field, for instance, your estate planning attorney.

What Do They Do?

The role of the trust protector is usually to oversee irrevocable living trusts, which are trusts where the grantor cannot simply make changes to the terms of the trust, as they are permanent. Of course, no one can see into the future and, if something should happen that affects the ability of the trust to fulfil its goal, the trust protector – and only the trust protector – can step in and take action.

This is a very important role in the event of something like a crash in the stock market. If investments are falling alarmingly, it can be viewed as an emergency situation. Beneficiaries and grantors can’t access these assets directly to protect them, but the trust protector can.

The extent to which a trust protector can act depends on the powers that the grantor of the trust bestows on them, so it differs from trust to trust and depends a lot on what you, the grantor, permits. Some trust protectors can remove and replace existing trustees, settle disputes between trustees and/or beneficiaries, alter trust provisions, approve or veto investment decisions, or approve or veto discretionary distributions. Essentially, they are there to provide objective and expert oversight.

In addition, this role can be expanded to provide assistance to grantors and beneficiaries, as you can empower them to modify your trust according to your wishes as grantor without having to formally amend the trust documentation, they can modify the trust after your death to keep it in line with your original goals (for instance, adding a new grandchild as a beneficiary), and maintaining the legal protection and tax benefits that caused you to create the trust in the first place.

Advice on Trusts, Wills, Power of Attorney and More from Your Estate Planning Attorney in NJ

At Sedita, Campisano and Campisano in New Jersey, estate planning attorney Frank Campisano is ready to assist you with all your estate planning needs, whether you need to make a business succession plan, Last Will and Testament, Power of Attorney, Medical Directive, a Living trust or to minimize inheritance tax on your estate.

Contact us today and let us deliver expert estate planning advice to take care of all your wishes – whether your estate is big or small. For more information, please visit our website at https://www.scclegal.com/

March 4, 2019February 27, 2019

What are the Tax Implications for a Trust?

One of the primary goals for estate planning is to minimize taxation on your estate, ensuring that your assets got towards caring for your family and not towards the state. One of the most effective tools used in estate planning is a trust. Here’s some insight into how family trusts are taxed, from an elder law attorney in New Jersey.

Grantor vs. Non-Grantor Trusts

Trusts fall into two categories that are especially relevant when talking about taxation. A grantor trust often allows the person creating the trust the right to withdraw assets from the trust – so, most revocable trusts are grantor trusts. This means that the trust does not have to file its own tax return. Instead, the grantor much include any income from the tax in their own, individual tax return and pay accordingly.

If a trust does not allow this (an irrevocable trust, for example), then it will have to file a tax return that can mean that the trust itself pays tax and that those beneficiaries earning an income from the trust will have to pay tax as well. This can become incredibly complex – for example, if they trust has to pay out it’s income to a beneficiary, then it is entitled to certain deductions, while remaining income that stays within the trust gets taxed to the trust directly.

Always Get Expert Advice When Creating a Trust

If you’ve looked into creating a trust for your family, then you know that there are many different trusts out there to meet a vast range of goals. These trusts can also be tailored to your specific needs, which makes them even more complex. This makes it essential that you work with an experienced professional to develop a trust that achieves your goals and that you are completely aware of how taxation will impact this trust, so that you can make the best possible informed decision.

Speak to a Leading Elder Law Attorney in NJ Today for Compassionate Advice

If you would like assistance in understanding and accessing your Medicaid and Medicare benefits, speak to Frank R. Campisano today. Experienced in elder law, compassionate and committed to his clients, you’ll receive the highest quality legal expertise and guidance that will help you secure better care. In addition, you can also prepare additional estate planning documents, such as your Last Will and Testament, Healthcare Proxy, Power of Attorney documents and trusts. For more compassionate legal guidance and a free consultation, please contact us or visit our website at https://www.scclegal.com/

July 24, 2017July 1, 2017

A Crummey Trust may benefit your estate plan

Trusts are fast becoming a popular means of protecting assets from taxation and probate while benefitting heirs, and there are many different types of legal trusts available for achieving this. One such example is a Crummey Trust. Here is some insight into this useful tool, from a leading estate planning attorney in New Jersey.

What is a Crummey Trust?

This is a trust that allows a parent to make gifts to his or her children that are excluded from gift or estate taxation as long as they are equal or less than the permitted value. At the moment, this is $13,000 per year, but is subject to change at any time.

What are the advantages of this type of trust?

While gifting is a great tool for benefitting your heirs during your lifetime in a tax-free way, the problem is that for minor children, $13,000 is far too much for them to handle responsibly. Most parents would prefer that this money goes to their child at a more suitable age where they can use it well, but would also like to get the benefits of starting the tax-free gifting process as early as possible.

The Crummey Trust solves this issue by allowing parents to gift the annual amount to their children every year, tax-free, but stipulate at exactly which age their child or children are allowed to access the funds. The trustee is able to invest the money within the trust and the children will have the full benefit of the asset at an age designated by you.

In traditional trusts, the child has a “present interest” in the gifts which can mean that they can withdraw and spend funds as they wish, and the Crummey Trust negates this. This is done by giving the child 30 days in which to withdraw the money and use it (in order to maintain the “present interest” of the child), but once this time period lapses, the money can only be withdrawn when the child reaches the designated age. In addition, if the child does decide to withdraw the funds, they can only access the most recent amount deposited within that time period, not the full amount of the trust.

Find the trust that’s the right fit for your needs – Speak to your NJ estate planning attorney

You deserve a legal solution that is uniquely tailored to your needs, so speak to New Jersey estate planning attorney Frank R. Campisano today. Whether you want to create a Crummey Trust for your child, a Last Will and Testament or are interested in updating more complex estate planning documents such as Medical Directives and Powers of Attorney documents, he can ensure that the right legal documentation is developed in order to meet your specific wishes.

For peace of mind estate planning or advice on creating your Last Will and Testament, please contact Frank R. Campisano or visit our website today at https://www.scclegal.com/