Avoid These Costly Estate Planning Mistakes (Part 2)

5930043516_b171ee1d18_z

As we talked about last week here on the Veitengruber Law blog, there are quite a few common (and several less common) estate planning mistakes that can easily be avoided in order to minimize stress as well as time and money loss.

Today we’ll discuss several more gaffes that you would be wise to proactively thwart during the process of creating your will and other estate planning documents:

  • Mismanagement of life insurance – Oftentimes, life insurance benefits end up being paid to a beneficiary at a less than optimal time (i.e. the person isn’t emotionally ready to handle the money yet). This can lead to rapid-fire spending of money that was intended to support the beneficiary for years. Additionally, it’s important to ensure that you have enough life insurance, so that your loved ones will be sufficiently taken care of.
  • Failing to keep your will updated – A good rule of thumb is to review your estate plan after: the birth (or adoption) of a child, the death or divorce of anyone named in the will, a significant change in your income (or that of your beneficiary), and upon any significant changes in your overall health and well-being. Keep an eye out for any tax law changes that may affect your will, as well.
  • Grossly overestimating your liquidity – It takes a significant amount of money to settle an estate, so you’ll need to make sure you have enough cash available so that your executor will be able to pay all of the expenses, like: state death tax, federal estate tax, state and federal income tax, probate/administration fees, maturing debts, maintaining the welfare of family members, and transfer tax. Talk to your estate planning attorney about which of these costs will affect you.
  • Bequeathing assets directly instead of via trustTrusts ensure that your assets will be passed to your beneficiaries at appropriate times/intervals.
  • Leaving it all to one person (typically a spouse) – Oftentimes, the surviving spouse or beneficiary has never had to deal with a large sum of money before and simply isn’t equipped to handle it all.  Not to mention that leaving all of your assets to your spouse means you’ll miss out on skipping generations and helping your grandchildren out.
  • Disorganized (or lack of) records – The executor of your will is going to have plenty to deal with already; don’t make it worse by making your financial documents hard to locate. Simply keep all important documents that will be needed by your executor in a safe deposit box, and ask your NJ estate planning lawyer about death rules regarding said box.

As you can see, there are a veritable plethora of errors just waiting to be made during the estate planning process. We felt it was important to point quite a few of them out to you so that you can be aware of potential mistakes before you even get started. Consider printing this list, along with last week’s blog post, and bring them with you when you begin the planning process with your New Jersey estate planning attorney. If you’d like more information, or would like to set up a consultation today, call George Veitengruber, Esq. at (732) 695-3303. Check out our Facebook page, too, and get your consultation FREE of charge, just for “liking” us!

Photo credit: Images Money (flickr)

Advertisements

Avoid These Costly Estate Planning Mistakes (Part 1)

5299199423_f8de99f3ee_zImage: PhotoSteve101

It’s a task no one really wants to sit down to, but estate planning is an extremely important undertaking that we all must take responsibility for, so that our family and loved ones know our intentions should we become incapacitated, or should we pass away.

Having a clear and specific estate plan (also known as last will and testament or simply “will”) in place guarantees that your wishes shall be honored in a variety of possible outcomes that may or may not come to fruition. During such a stressful times, clear direction about your wishes is a gift you will give your loved ones.

With that being said, there are some mistakes you can make when setting up your estate plan that are preventable.

  • Lack of planning – Having no plan whatsoever is the biggest mistake you can make. If you don’t have a will in place, set up an appointment with your NJ estate planning attorney as soon as possible.
  • Wearing blinders – Some people go into the estate planning process intending to plan for their loved ones after they pass on. Period. End of story. It’s important to look at all of the potential outcomes that your estate planner presents you with, so that your family will be prepared no matter what happens to you. (permanent disability, mental incapacity, etc)
  • Going it alone – There are people out there who feel they can handle writing up their own will. It’s true that not all cases will need the help of an attorney, but most people have difficulty looking at the big picture when it involves their own future demise. An experienced estate planning attorney in New Jersey is practiced and knows exactly what questions to ask you, and has all of the paperwork that covers any and all possible scenarios, like assigning Power of Attorney, and creating a Health Care Directive, should you become unable to make decisions on your own behalf.
  • Forgotten passwords – It often goes unnoticed that your spouse or closest family members may not have access to your online accounts when you pass away or become unable to make decisions. This can leave your beneficiaries unable to access some valuable accounts and benefits. Including a list of all of your online financial information, including the passwords, should be shared with your estate planner.
  • Non-documentation of jointly owned property – Your estate planning attorney will know the ins and outs of tax implications of jointly-held property, and how they apply to the death of one of the parties. A solid estate plan will help your family members from enduring a tax nightmare, and will help them avoid double taxation on the property.
  • Choosing the wrong executor – The executor of your estate must be able to collect all of your assets, pay off any of your debts, and then discharge any remaining funds to your heir(s). This is a very important responsibility, and one that requires a person who has no conflict of interest. It may seem simple to assign an executor, but an attorney can help you choose an unbiased third party.

These are only several of the very easy-to-make mistakes that can occur during the planning of your estate. If you’d like more information on how to set up your own estate plan with the help of a professional, contact George Veitengruber today.

To learn more about what mistakes to avoid during the estate planning process, stay tuned next week for Part 2.

 

I Filed for Bankruptcy: Can I Still Receive My Inheritance?

6508063707_411847378f_z

If you have recently filed for or been through bankruptcy, you may be wondering what the “rules” are on any money that you earn or receive after the bankruptcy has been discharged.

The Bankruptcy Court has implemented some rules regarding monies acquired after bankruptcy in order to prevent fraud. Anytime someone individually or as a business files for bankruptcy, a bankruptcy estate is created. A bankruptcy estate includes all of the assets that the debtor possesses at the time the bankruptcy case is filed with the court. “The Estate” becomes the legal owner of all of these assets and properties, which gives the Bankruptcy Court control over them.

If you’re wondering what assets/property are included in the bankruptcy estate, Section 541 of the bankruptcy code is where to look. All inclusions and exemptions are listed in that section. All assets that are included in the bankruptcy estate will be controlled by your bankruptcy trustee, and can be used to pay off creditors to whom you owe money.

Within Section 541 of the bankruptcy code is a section known as the “windfall provision.” [Sec. 541(a)(5)]. This section states that, “within 180 days following the date of bankruptcy filing, the bankruptcy estate includes any bequest, devise, or inheritance; acquisition of property resulting from a property settlement agreement via divorce; and proceeds as a beneficiary of a life insurance policy or other death benefit plan.”

In layman’s terms, if you file for bankruptcy (focusing on Chapter 7 here; Chapter 13 can be slightly more complicated) and receive an inheritance within the 180 days following your filing date – that money will be subject to the bankruptcy estate and must be used to pay back your creditors.

On the other hand, if your spouse, parent, or other close family member should unfortunately pass away within the 180 days period, with you as the beneficiary on a term life insurance policy, that money will be exempt from creditors, and thus you would likely receive at least some of that windfall.

Why only ‘some’? Under the federal exemption scheme, monies received from a life insurance policy are considered exempt only to the extent necessary to provide the beneficiary/debtor and his dependents with a reasonable amount of support. So, you’re not going to strike it rich, but you should be able to receive some of the money.

Proceeds that may be left to you directly via a Last Will and Testament are subject to the bankruptcy estate (if within 180 days since the date of filing), minus any of these specific proceeds that aren’t considered exemptions.

Generally, income that you generate after filing for bankruptcy is yours to keep, but there are exceptions to even this rule. For more information about what monies will become property of the bankruptcy estate, call George Veitengruber to set up an appointment. Getting a free consultation is as easy as “liking” Veitengruber Law on Facebook. We look forward to meeting you and getting you on your way to financial freedom.

Image Credit: EJP Photo

I Want to Get Out of Credit Card Debt – For Good!

467945766_14291ed6d1_zImage Credit: mlinksva

As Independence Day is right around the corner, how great would it be to set a plan into motion to get free from all of your credit card debt – once and for all?

The truth of the matter is that credit card debt is extremely easy to get into, and that much harder to dig yourself out of. High interest rates and soaring balances on handfuls of different cards mean that you may have some significantly tough work ahead of you. The good news is: it CAN be done. If things are particularly dire, you may need to hire a NJ attorney who has a lot of experience dealing with debt resolution. However, you may be able to make some impressive strides on your own, by following some hard and fast rules.

First and foremost, you have to STOP paying for things via credit card. Cut up all but one card, and save that card for emergencies ONLY. Quitting the cards can be difficult, but it’s a hurdle you’ve got to get over before any real progress can be made. A word to the wise here is that it may not be beneficial to cancel out your actual accounts, even after you’ve paid them down. Opening and closing too many credit accounts can negatively affect your credit score.

Next, you’ve got to get into a payment schedule that has a little kick. Your days of making minimum monthly payments are SO OVER. Anyone with high credit card balances needs to be paying more than the minimum each month, or you’ll be likely to take those balances to the grave. In order to facilitate this, you (and your partner, if applicable) will need to revamp your entire spending budget so that more of your paycheck is going toward those credit card bills each month. Ideally, try to pay triple the minimum balance every month that you possibly can. Double is great, too.

Negotiating lower interest rates on your existing cards will help slow down the amount of money you’ll owe in compounded interest. Give your credit card company a call and let them know you need a lower interest rate because you’re trying to pay back the money you owe them. Most lenders like to hear from responsible borrowers, and you should find that most will gladly grant you a lower rate. If not, look around at some competing cards that offer 0% on balance transfers for a year (or more). Simply transfer the money from a high interest card to one with 0% for a year, and get busy paying as much as you possibly can each month. If you reach the end of the period for 0% interest and your balance still isn’t paid off, consider transferring your balance yet again – in the same manner.

By putting these strategies into motion, you will see your balances begin to decline. Keep close track of your progress so that you can feel good about your efforts, and also to remind yourself how far you’ve come so you aren’t tempted to swipe those cards anytime soon.