Your child’s transition to adulthood is an important time in life. If your child has reached age 18, particularly an adult child traveling to attend school or work, critical legal changes have occurred. At age 18, your child is an adult under New Jersey law, even if they are still living at home. Your adult child now controls their own medical and financial decisions, and a parent’s access to information is restricted. Several documents are available to address these changes and appoint agents to assist your child during this stage of life.
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How Do I Get a Guardianship
The purpose of this article is to discuss the general process for being appointed the guardian of a loved one or other family member. The process can be simple or complicated depending upon a multitude of factors. This article will discuss the general process; whereas future articles will explore issues that can arise which may render the process more complicated. It is important, however, to understand the general process of obtaining a guardianship before more complex issues can be explored.
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Important Estate Related Proposals and Changes for 2022
This year has brought several interesting changes and important proposals that can affect many estate plans. We have held seminars covering two major issues:
- the IRS Proposed Regulations affecting qualified retirement plans and IRAs; and
- the Administration’s proposed changes to the Federal Estate and Gift Taxes.
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The Internal Revenue Service (IRS) Issues Proposed Minimum Distribution Rules
The Internal Revenue Service (IRS) recently issued much anticipated proposed regulations that clarify and revise some of the required minimum distribution (RMD) rules for qualified plans (i.e. 401ks, 403bs, etc.) and individual retirement accounts (IRAs). While the proposed regulations are subject to further action in the late Spring of 2022, they contain a few important potential changes for both spouse and non-spouse beneficiaries.
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The Annual Exclusion for Gift Taxes has Increased to $16,000 – What Issues Should I Consider?
In 2022, the annual exclusion for Federal Gift Taxes increased to $16,000 per person per year. Although there is near-universal acceptance of the importance of gifting, there are several issues you should consider before making any gifts. The manner in which gifts are made can have a major impact on your beneficiaries. This is particularly true if the recipient is under 21 years of age, and it can be an acute issue if the recipient is a minor under the age of 18. Outright gifts to children and grandchildren have their own drawbacks, including limited control over the gifts made, exposure to creditors, divorce, and other issues involving the beneficiary. For these reasons, trust options should be considered to afford greater protection and structure for your intended beneficiaries.
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Gift and Estate Tax Changes
Throughout 2021, Congress and the Executive Branch proposed tax code changes that – had they ultimately passed – would have significantly changed various estate planning techniques. Some proposals would have sidelined a number of established estate planning strategies while other proposals could have increased the frequency of use and usefulness of others.
Some proposals would have reduced the estate and gift tax exemption amount from its current level of $12.06 million per taxpayer to $3.5 – $6.85 million per taxpayer, depending on the source. Although there is certainly no guarantee that such a proposal will not be made in the future, we can nevertheless focus for now on what we do know about the law as written today and what steps we can take to address the coming changes.
The Refunding Bond and Release
If you are beneficiary of an Estate, at some point you will be asked to sign a Refunding Bond and Release prior to receiving your bequest from an Estate. The logical question that will arise is what exactly you are being asked to sign. The purpose of this blog is discuss generally what a Refunding Bond and Release is and how it relates to your distribution from the Estate.
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Do Not Forget the Importance of Gift Provisions in a Power of Attorney
Gift provisions in a power of attorney can limit both agents and guardians, and restrict their ability to make gifts if a need arises. For this reason, powers of attorney should be carefully drafted to include appropriate gifting authority. A recent New Jersey Appellate Division case underscores the importance of including gift authority in a power of attorney and the impact any restrictions can have on gift planning.
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Now is a Good Time to Make Your Estate Plan
Living in the time of COVID-19 has heightened everyone’s anxiety. With all of the uncertainties in life, implementing estate planning documents that provide for you and your family can afford some level of relief. Estate planning documents allow you to designate agents to assist with your affairs, while providing structure to assist loved ones as they navigate through turbulent situations. Working with an attorney can help to address questions you will have about your estate plan and will offer personal guidance through this process.
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Don’t Forget New Jersey Taxation of IRAs, 401(k)s and 403(b)s
The federal tax treatment of IRAs, ROTH IRAs, 401(k)s, and 403(b)s has been the subject of countless books, articles, seminars, and commentary. But, there is precious little regarding the New Jersey state income taxation of these accounts, which is often vastly different. Understanding New Jersey taxation rules is important, not only for distributions made to the account owner during lifetime, but also as part of the owner’s overall estate plan.
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