NJ Estate Planning for Small Business Owners

NJ estate planning

No one wants to plan for their untimely death. It’s a terrifying prospect that your family could be suddenly left without you. However, planning for your estate is an important part of being an adult. You need to designate what happens to your possessions and who will care for your children. What most people don’t realize is that planning for your business is just as important, if not more so. With careful planning, small business owners can ensure that their business endures and will help support their families for years to come.

Succession Planning

What is your plan for your company’s future without you? Do you want to pass on your business to your family to continue to run or do you want to make it easy for them to sell it? Do you have a plan for your employees and have you ensured that their futures will be safe without you? These are just some of the questions to consider.

Your family may not want to continue in your footsteps and these are conversations you will want to have with them before you start planning. While starting and growing your business may have been your dream, it might not be theirs. Make sure that if you plan to leave your business in the family that it is not a burden for them after you’re gone.

Death and Taxes, the Two Certainties in Life

Tax law is ever-changing and it is important to modify your plan accordingly. The good news is that New Jersey’s law recently changed and no longer imparts an estate tax (also known as the death tax) on deaths occurring in 2018 and afterwards.

New Jersey does still impose an inheritance tax, but close relatives such as parents, grandparents, spouses, and children are exempt. Other relatives will be subject to the inheritance tax which can range from eleven to fourteen percent depending on the amount inherited. These relatives can include siblings and spouses of deceased children.

There is good news when it comes to the federal estate tax as well. Businesses valued at less than 11.4 million dollars are exempt from the tax. Most small businesses fall under this valuation. If your business does meet this criterion, there are several actions you can take to minimize your tax exposure. You can develop a family limited partnership or divide the estate into several trusts depending on the size of the business.

Life and Disability Insurance

These two policies are essential for ensuring that your family and business continue to thrive without you. First you want to set up policies that will benefit your family. Then you will need policies that benefit your business. The payouts from the policies will enable the business to continue to operate during the transition between owners, enable payments to estate taxes, and/or buyout from other owners and partners in the business. Term life policies are expensive but the alternative is leaving your family and business without a safety net.

Keep Updating Your Plan

Approximately thirty percent of small business owners have no estate plan. Among those who do have a plan, the majority are over five years old. If your business is growing, your estate plan may no longer match your needs and it most certainly is not taking advantage of the ever-changing tax code. Once established, you should review and update your estate plan every three to five years. This is why it is so important to enlist the help of an experienced estate planning team like Veitengruber Law. We can help you create your last will and testament and other documents pertaining to end of life like power of attorney, living will, succession plan, and estate plan. With careful planning, you can ensure the success of your business and the security of your family in the future.

Planning Ahead Eases Death Anxiety, Say “Death-Positive” Activists

nj estate planning

For most people, the thought of death can be frightening. No one likes to think about what will eventually come at the end of their life, but it is a fact that we have to face. Life on Earth does not go on forever. Knowing that, it’s crucial to plan ahead at least a minimal amount, especially when it comes to financial matters. Not only will you be assured that money and assets will go where you’d like them to, but your family will be thankful for your initiative as well.

For the big events of life, we make lists and try to be as prepared as possible. College. Weddings. Babies. Jobs. Retirement. The end of life should be no different. Of course, we have those things like skydiving, going on a cruise, swimming with a dolphin, and visiting Italy on our bucket list, also known as things to do before we die. Just like these things compose one of life’s most important lists, so does writing a will, appointing a power of attorney (POA), and considering options for long-term care.

Innumerable, weighty decisions have to be made within just hours of a loved one’s death. With the already existent burden of anxiety and grief, a family doesn’t want to have to think about making all of these decisions after a loved one passes. In addition to financial matters, a family also needs to plan the funeral. Though we don’t want to think about it, making burial arrangements before death exemplifies concern and care for your family members. Over and over again, family members have shown gratitude and confirm the relief and comfort when a family member has pre-arrangements.

Any decision that has to be made after a person passes has the potential to cause disputes between family members. Some family members are going to feel that they have a stronger say in the decision-making process, while others will argue their point of view. Unfortunately, you won’t be there to give them your opinion. Again, by making arrangements before you pass, you eliminate the potential for many issues, before they arise.

There are a few clear-cut steps you can take to side-step some of the issues mentioned above.

1.      Power of Attorney (POA). The first and most crucial decision that you need to make is to appoint a reliable POA. It’s key that this individual is trustworthy, financially intelligent, and is someone that knows you well. When you are sick or unable to do so yourself, this person will deposit checks, take care of bills, and any other financial matters. In the United States today, people are living longer, which means that there’s a higher chance that more individuals will be living with chronic diseases as they age. Some of these diseases can impair a person to the point that they cannot take care of their money. That’s the point where a POA steps in; an individual that can take over for someone in order to ensure the highest quality of life for as long as possible.

2.      Write a will. Since estates worth up to $3.9 million are tax exempt, a will is usually sufficient estate planning for most individuals. A trust is can be produced to cut down on estate taxes and circumvent probate, but taxes aren’t as much of a concern in the current day. Also, the procedures are simpler, so probate is not as common either. Usually a will and a steadfast POA will get the job done.

3.      Living will. Since you’ve already appointed a POA, this step only involves writing a living will, or an advanced-care directive. Your POA will implement your wishes at the end stages of life. Again, when you name a POA, it needs to be someone you completely trust. If you don’t create a living will, your loved ones may run into some horrific problems. If a person is brain dead, a family needs to decide whether or not the individual should be kept on life support. If you’ve already delineated this in a living will, there will be no questions about it.

In addition to these 3 major points, as well as the funeral arrangements, there are a few other minor choices you’ll want to contemplate. Consider the option of donating organs when you pass. Also, look into life insurance if your partner or kids will need financial support without you. Finally, consider long-term care. If possible, it’s best to stay out of nursing homes, as they are incredibly expensive, but if it is a necessary possibility, then you should give it some serious thought.

The most important concept: start planning sooner instead of later (the way we should approach all aspects of life). None of the above steps will happen without conversations with children, spouses, and maybe even your own parents. It’s a tough topic to broach, but it’s absolutely necessary. A few early and simple conversations can save a lot of headache, broken relationships, and hurt feelings in the future, as well as ease your own anxiety about death.

Dying Without a Will in NJ: Who is an Heir?

dying without a will in nj

Dying without a will in NJ doesn’t mean that the state has the rights to all of the decedent’s assets. This is an unfortunate misconception, possibly because of the term given to passing away without a will: “dying intestate.”

Normally, when someone dies, an estate executor has been named in their estate planning documentation (Last Will and Testament). The executor is the person responsible for making sure all of the decedent’s assets are properly distributed as directed in their will.

However, dying without a will means that no executor has been named. So, who is going to take care of everything? It can be easy to hit the panic button when you realize that someone close to you has died without a will in place. Luckily, there are established rules for when this happens.

When no executor or executrix has been named, the New Jersey Surrogate’s Court then has the burden of selecting someone to act as such. This person is chosen from a list of the decedent’s “heirs.” Sometimes, it can be confusing and even upsetting trying to figure out if you may be an heir to someone’s estate. Since it is a big responsibility, this act is left up to the court.

An heir to a New Jersey estate is usually, but not always, a person from this list:

Surviving spouse

Surviving civil union partner

Adult child of the decedent

Adult grandchild of the decedent

Parent of the deceased

Adult sibling

Adult niece or nephew

Typically, the NJ court will select a person from the above list of heirs to act as the estate administrator. An estate administrator is able to act in the same way as a named executor or executrix would have acted. They will be charged with the responsibility of acting fairly and legally while deciding how the deceased’s property should be handled.

The heir selected as estate administrator must be sure to repay any of the decedent’s creditors from estate assets before distributing property to anyone else. If you have been selected as a New Jersey estate administrator, it is a good idea to work closely with an estate attorney so that you can avoid making critical mistakes during this time.

As estate administrator, you must be familiar with the New Jersey estate laws that dictate how an intestate decedent’s estate can be handled. The last thing you want is to discover that you’ve made a costly error and that you will be responsible for repaying it personally.

New Jersey heirs and appointed administrators can seek counsel from an experienced estate planning attorney near you to ensure that you are abreast of all of the laws that relate to dying without a will in your state.