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Should You Use a Revocable Living Trust?

By Estate Planning, Living Trust

Should You Use A Revocable Living Trust?

Maybe, it depends. They aren’t necessary for everyone and don’t save you money on taxes, but they may make things easier for you if you’re unable to take care of your stuff and your successor trustee must assist you. 

I used to believe and only use them if you were able to get everything in your trust, and most people wouldn’t do that or couldn’t do that. But now I have come around. So it might be a document as you’re getting older, and you see that things are getting harder for you. 

If stuff is in a trust, it’s easier for the trustee to act than it is through a Power of Attorney, which might make sense in many circumstances. In any case, the more you have in there, the more will be distributed at your death rather than through probate. However, I don’t think that would make much difference in Pennsylvania and New Jersey. It could be that you get your checking account, some investments, or something in there, and then you have your backup trustee help you with those things, which might be worthwhile.

What Estate Planning Documents Do I Need?

By Estate Planning, Estate Planning Documents

What Estate Planning Documents Do I Need?

What Estate Planning Documents Do I Need?

We get asked all the time what estate planning documents does someone need. So while everybody needs a Will to dispose of their assets, name guardians, trustees, and executors, most people could use a Durable Power of Attorney. That’s where you could give your spouse or a loved one the ability to make financial decisions for you in case you need to. 

An Advanced Directive specifies which life-sustaining treatment should be given or withheld should you be in a situation where your doctor thinks you have no chance of getting better and can’t speak for yourself. 

A HIPAA Waiver allows the hospital and doctors to speak to your loved ones. Most doctors or hospitals will speak to a spouse but wouldn’t necessarily speak to a partner who’s not married or even children. So those things need to be established.

A document describing how you would like to dispose of your body, such as burying it or cremating it, is not a legal requirement, but it might help your family members or the next generation know how you would like things handled. If you could alleviate their worries in any way, that would be a good consideration for your estate plan. If you are concerned about these things, give us a call at (267) 573-1019.

Why do you Have to Worry about Gift Tax?

By Gift Tax, Tax

Why do you Have to Worry about Gift Tax?


Well, you probably won’t have to worry about gift tax. Most people don’t, but the reason it’s there is so that people can’t make deathbed gifts and get rid of their estate for tax purposes.

The gift tax works in conjunction with the Federal Estate and Gift Tax. It’s all one thing. And so the reason being that you know, if technically you had $20,000,000 and some of it would be taxed at your death, and there at your deathbed, you know you’re going to die tomorrow, you give it all away to like your son and then take it all out of your estate.

The estate tax wouldn’t work if you could do that, so they make it so that if you make gifts over the annual exemption amount, which is $16,000 in 2022, you need to file a gift tax return. Gifts in excess of the annual gift exclusion amount go against your lifetime gift and estate exemption. So if you make a big gift this year, all it does is brings down the amount that is exempt later, so you still have that whole total amount and so if you are concerned about these things, give us a call (267) 573-1019.

What is the Inheritance Tax in New Jersey?

By inheritance tax, Tax

What is the Inheritance Tax in New Jersey?


Well, just like Pennsylvania, it depends on the nature of the relationship between the person who died and the person who’s receiving the money. 

Actually, New Jersey now has lower inheritance taxes for most people. It didn’t for years, but they changed that about four or five years ago. 

For most close relatives, your spouse, your children, your grandchildren, grandparents, there’s no inheritance tax in New Jersey. 

You get a little bit outside that you go with siblings or spouses of your children, then the first 25,000 dollars is exempt, and then the tax rate is 11% on the $1,075,000, then the next $300,000 is 13% and the next $300,000 is 14 % and then over $1,700,000 it’s 16 %.

What is the Annual Gift Tax Exclusion Amount?

By Gift Tax, Tax, Taxes

What is the Annual Gift Tax Exclusion Amount?


What is the annual gift tax exclusion amount in 2022? The amount is $16,000 per person, and in 2023 it’ll be $17,000 per person. 

What does that mean? It means that you can give up to $16,000 to as many people as you want, and it will not affect your future estate taxes, and you don’t have to file a gift tax return. It’s not taxable to you. 

And gifts to recipients are never taxable to them, so anytime you make a gift to the recipient, they know don’t ever pay income tax on that. Something a lot of people don’t understand. 

If you make a gift above $16,000, it doesn’t mean that’s taxable either. It just means that you should file a gift tax return. And if you do that, what will happen is it will reduce your lifetime amount, your exemption amount, lifetime exemption amount now is over $12 million per person. So most people can afford to make those gifts without having a big taxable estate at the end of their lives.

Should you File a Gift Tax Return?

By Gift Tax, Taxes

Should you File a Gift Tax Return?



Maybe. It depends, did you make gifts? 

In 2022, the annual gift tax exclusion amount is $16,000 per person, and in 2023 that amount is $17,000 dollars per person. The per person is for the recipient of the gift. So you can make a thousand gifts of $16,000 and not have to file a gift tax return, but if you make one gift of twenty thousand dollars, then you would have to file a gift tax return. 

Remember, married spouses can use two of those exclusions, so if you and your spouse decide to give one of your kids $32,000 this year or $34,000 next year, you don’t have to file a gift tax return. 

You likely won’t have to pay any tax. All it will do is reduce the amount that you can exempt at your death from the Federal Estate and Gift Tax, and at the rates that we have now, very, very few people have to actually pay those. Now that could change in the future, taxes change a lot, but right now the federal estate taxes are not a concern for most people.

If you have Charitable Intent in your Estate Plan, don’t overlook your IRA!

By Estate Planning, Wills

If you have Charitable Intent in your Estate Plan, don’t overlook your IRA!



If you have charitable intent in your estate plan, don’t overlook your IRA. 

We often see people come in and want to leave, say, twenty-five or fifty thousand dollars to a charity of their choice, and they think the right way to do that is by leaving it to them in their Will. 

That could be a good way and it could be their only way, but if you have an IRA, it might make more sense to leave that money to the charity from the IRA. 

That is because the charity doesn’t pay taxes. If you leave fifty thousand dollars of your IRA to your favorite charity that whole fifty thousand dollars goes to the charity. If you leave that fifty thousand dollars to your child through your IRA and your child is a high earner they could pay up to twenty thousand dollars in tax on that fifty thousand dollars. 

It would make more sense to funnel cash to your heir and IRA money to the charity. This is all within the confines of what you want to give away. In this case, you can maximize your giving by either giving more to the charity or more to your child and less to the IRS.

How High is the Federal Estate Tax Rate?

By Federal Estate Tax, Taxes, Uncategorized

How High is the Federal Estate Tax Rate?



Bad news – it’s 40 percent. 

The good news is that the first $12,060,000 per person is exempt from federal estate tax in 2022. 

In 2023, that amount goes up to $12,920,000, again, per person. 

If you are a married couple, you could double those amounts. So, if you are a married couple worth more than $27,000,000, then yes, that last million dollars will be taxed at a 40% rate. 

Look on the bright side, $400,000 of tax out of $27 million dollars, while no one likes to pay tax, that’s a one-and-a-half percent effective rate. I’m okay with that. 

The other thing is if you have that much money, there are all sorts of things you can do to reduce your taxable estate. All sorts of things. If you have those issues, give us a call. 267-573-1019. If you don’t have those issues, give us a call anyway because almost nobody has those issues. 

Do you need an Advance Directive?

By Advance Directive, Health Care Power of Attorney, Living Will, Powers of Attorney

Do you need an Advance Directive?



I think the answer to that question is yes. An Advance Directive incorporates two documents: a Living Will and a Health Care Power of Attorney, sometimes called a Health Care Proxy. 

A Living Will is a document in which you specify what procedures you’d want if you can’t speak for yourself. If you become incapacitated or you’re in a vegetative state, you’ll have made decisions in advance to specify what care you would want or not want, and whether you want to continue with feeding, hydration, and/or pain management. 

The Power of Attorney or Proxy part is where you name someone who can enforce your wishes and make decisions for you. Think about that for a second. If you get to your end of life and you have a document in place, where you specify who could speak for you and what they should say, it’s really helpful. To quote Martha Stewart, it’s a good thing. It takes a lot of decision-making and uncertainty out of family members and loved ones’ hands. So I think everybody should have an Advance Directive.

Do you need a Will?

By Estate Planning, Wills

Do you need a Will?



The answer to that question is yes. If you are an adult who is not destitute, you should have a Will.

In your Will, you specify who gets your stuff and if you have minor kids, who raises them. It makes things much easier for your loved ones to take care of all this if you have written it down in a properly signed and executed Will before you die.

The executor is the person who distributes your stuff according to what you want. Your guardians are who raise your minor children if you have them. If you set up any trusts in your Will, you would have a trustee, and the trustee would take care of the money in the way that you specify. If you have Wills, this all becomes much less complicated when you die.

It makes things so much easier for your loved ones and they know what you want. They’re not trying to figure out like what you would want versus what they have to do because of what the rules are.

If you don’t have a Will, the court system will decide who raises your children and the state rules of intestate succession will determine who gets your stuff. I don’t know that anybody would want that. If you want to have a say in who raises your kids and who gets your stuff, you need to do a Will.

Creating a Will is not that hard. It is not that expensive. It is not that time-consuming. People are relieved and happy when they walk out of here after signing their Will.