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.…

Continue Reading Gift and Estate Tax Changes

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.
…
Continue Reading Don’t Forget New Jersey Taxation of IRAs, 401(k)s and 403(b)s

Last week, Aretha Franklin passed away at 76 due to advanced pancreatic cancer. This week, reports have been coming in claiming that the Queen of Soul had died without a Will or Trust. According to her long-standing attorney, Don Wilson, he had requested that she establish a trust numerous times, but she never got around to creating one.

Unfortunately, Aretha Franklin is far from the first notable individual to pass without establishing a Will or Trust, many of whom often happen to be significant celebrities and musicians. Perhaps immense fame comes with a sense of immortality. But, the sad truth is that two-thirds of estates are administered without a Will or a Trust.

The process of signing a document that identifies your beneficiaries, your executor, and the guardian for your minor children—if you have them—is not particularly difficult or overly time consuming. If anything, taking the time now will save you and your loved ones a lot of stress in the long run. Failing to properly establish this document means that you are choosing to allow state law to make those decisions for you.…

Continue Reading Aretha Franklin is Reported to Not Have Left Behind a Will

What would you do if you won the lottery? That is the big question we ask ourselves as the anticipation builds for the $1.5 billion Powerball drawing. After all, there’s nothing wrong with imagining what we would do if we held a winning lottery ticket or hit the jackpot in a casino.

But for the winners, there are some real concerns. Most importantly is how to protect your asset – the winning ticket. The jackpot will be paid to the person who carries the ticket into the State Lottery Commission office. If you are the lucky owner of the winning ticket, keep it in a safe place. Take time-stamped pictures of the ticket to document your ownership. It is often recommended that you sign the back of the ticket to prevent anyone else from redeeming it. Unfortunately, signing the ticket may limit your other planning options, but it may be the best protection from theft.

Before redeeming the ticket, you also need to decide whether to choose a lump sum or annuity payout. That decision isn’t as simple as it sounds. A $1.5 billion lottery jackpot is really the sum of $50 million annual payments over the next 29 years. The lump sum payout is $930 million – 62% of the advertised jackpot. Neither option is bad, but you must consult with tax and investment professionals to analyze the options. In simple terms, the annuity payout only yields around 2.2% annually, but the annuity allows you to pay the income tax liability over 29 years, instead of paying it all up front.…

Continue Reading Are You Prepared to Win the Powerball Jackpot?