2011 update Wills and Estate Planning

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2011 update Wills and Estate Planning

Seminar materials

Compiled by Kenneth Vercammen

1. Federal Estate Tax increased to Estates over $5,000,000, but New Jersey taxes estates over $675,000.

2. Non-formal writings could be Wills under the New Probate Law

3. The recommendation for Self- Proving Wills

4. Revised statute requires Palimony agreements to be in writing.

5. Recent case can void Will signed under suspicious circumstances

6 Gifts permitted without Federal Estate & Gift tax was increased to $13,000 per person.

1. Federal Estate Tax increased to Estates over $5,000,000, but New Jersey taxes estates over $675,000.

After a one-year hiatus, the estate tax is reinstated for 2011 and 2012, with a top rate of 35%. The exemption amount will be $5 million per individual in 2011 and will be indexed to inflation in 2012. Estates of people who died in 2010 can choose to follow either the rules in effect for 2010 or 2011.

The Act sets a $5 million generation-skipping transfer tax exemption and zero percent rate for the 2010 year.

Portability of the unused estate tax exemption permits the executor of a deceased spouse’s estate to transfer any unused exemption to the surviving spouse without such planning. This provision is effective for estates of decedents dying after December 31, 2010.

Extending for two years (through 2011) the provision that permits tax-free distributions to charity from an Individual Retirement Account (IRA) of up to $100,000 per taxpayer, per taxable year. The Act allows individuals to make charitable transfers during January of 2011 and treat them as if made during 2010.

Many of the “traditional” tax extenders are extended for two years, retroactively to 2010 and through the end of 2011. Among many others, the extended provisions include the election to take an itemized deduction for state and local general sales taxes in lieu of the itemized deduction for state and local income taxes; the $250 above-the-line deduction for certain expenses of elementary and secondary school teachers; and the research credit.

Source:

Saul M. Simon CFP®, CFS, RFC ?Private Wealth Advisor ?Simon Financial Group ?333 Thornall St. Suite 9 B ?Edison , NJ 08837 ?Phone: 732-623-2070 ?Fax: 732-623-2088 ?simonsays@LFG.com ?www.saulsimon.com

New Jersey has an Estate Tax on amounts over $675,000. So, even if no Federal Estate Tax due, the estate must still file a Federal Estate Tax Return, plus NJ Estate Tax Return.

2. Non formal writings could be Wills under the Revised Probate Law

SENATE Law No. 708 made a number of substantial changes to the provisions governing the administration of estates and trusts in New Jersey.

The adoption of portions of the Uniform Probate Code attempted to bring greater uniformity to the rules governing testamentary and non-testamentary transfers to make most state laws similar.

The law expanded situations where writings that are intended as Wills would be allowed, but requires that the burden of proof on the proponent would be by clear and convincing evidence. Possibly a Christmas card with handwritten notes could be presented as a Will or Codicil.

To present a non-formal Will or writing requires an expensive Complaint and Order to Show Cause to be filed in the Superior Court, and a hearing in front of a Superior Court Judge.

Be careful; have a Will done properly by an experienced attorney.

3. The recommendation for Self- Proving Wills

An old New Jersey Probate law required one of the two witnesses to a Will to travel and appear in the Surrogate’s office and sign an affidavit to certify they were a witness. This often created problems when the witness was deceased, moved away, or simply could not be located. Some witnesses would require a $500 fee to simply sign a surrogate paper. My Grandmother’s Will was not self- proving, and the witness to Will extorted a $500 fee.

The New Jersey Legislature later passed a law to create a type of Will called a “Self-Proving Will.” In such a Will, the person for whom the Will is made must sign. Then two witnesses sign. Then the attorney or notary must sign; with certain statutory language to indicate the Will is self-proving.

When done properly, the executor does not have to locate any witnesses. This usually saves time and money. If your Will is not “self-proving” or if you are unsure, schedule an appointment with an elder law attorney. Some law offices ignore the revised law, and fail to prepare self proving Wills. Do not use the office in Carteret that follows 1978 laws.

The elective share provisions of the present Code has still not been changed yet. Currently, a spouse who is not given money in a Will can challenge the terms of the Will. This is called "electing against the Will by a spouse". A spouse could receive up to 1/3 of the estate, even if only married for 2 weeks. The spouse must file a caveat or lawsuit in Superior Court. We suggest a formal prenu

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Kenneth Vercammen & Associates, PC on:

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