Wyatt explained that the practice is focused on Estate laws; wills, guardianship, probate and the like, and works with partner Dana Bennett.
One of the most common questions asked of him is; “How much are my kids going to pay in taxes?”
In 2017, the Federal estate state tax was raised to $11.4 million, per person, ($22.8m for a married couple) before taxes are assessed. If you’re over that amount, the rate is 40%.
“New Jersey, for the first time in almost 100 years has no estate tax. However, NJ has an inheritance tax. That is a tax on an estate of any size if it is inherited by a non-charity or non-spouse, brother, sister or even a friend. These people will pay an inheritance tax of rates between 11% and 17%,” said Wyatt.
“Should I retitle my house to the name of my children?,” came up as a strategy to protect assets if one goes into a nursing home. The US government has a five-year look back for Medicaid which is the period that assets must have been transferred from the date of application for Medicaid benefits.
Wyatt replied, “You can, but it doesn’t mean you should. Chances of going into a nursing home for more than 100 days that Medicare pays for during any point of their life is 18%, a little less than 1 in 5. The average nursing home stay is a little less than 2 years.”
Wyatt discussed risks and the downside of this strategy including the loss of control and capital gains tax implications.
Wyatt talked about the scenario of dying without a will, legally referred to as intestate.
Put it simply, it’s a nightmare. Someone has to go to the courthouse and apply to become the “Administrator.” The court appoints this person. “They are giving this administrator the power to liquidate bank accounts, sell real estate, to have access to kinds of confidential and personal information. You don’t know if this person is trustworthy or even capable of this job. A Surety bond insurance is required which you (the estate), pay a premium for. There can be all kinds of problems that can come up if the wrong person is appointed,” said Wyatt. The administrator will cost the estate about 7% of the estate’s value.
Bottom line: Get your will written. It’s a lot less expensive than paying the fees and putting up with the hassles.
An explanation of executors was examined with Wyatt driving home the point that it is a very difficult job. He strongly recommended against the naming of co-executors. “Almost 100% of the time, you always have one person who winds up doing the bulk of the work. You’re not really doing much by naming two, just creating headaches.”
Bottom line: Name on executor.
Estate planning is to avoid any intra-family fighting and make it clear so that there are no question marks as what should happen when the last parent passes. This can become more complicated with second marriages, a widowed spouse getting married, second homes, “snow birds” and the children’s interests on "blended" families.
Planning your estate allows you to know exactly what’s going to happen; who’s going to get what, how’s it going to be divided and who’s in charge.
Want to sleep at night with the comfort that you’ve done the right thing by your family? Of course you do.
Bottom line: Don’t put it off. Call the law firm Bennett & Wyatt and start your plan!
What works? Networking works!
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