Estate Planning
The Basic Estate Plan, Wealth Transfer Taxation Planning, & Supplemental Needs Trusts
Whether your estate plan consists of a simple will and health care directive or a complex combination of estate documents, it deals with the most important issues in your life – your health and your family. We carefully attend to the unique needs presented by each client’s life, family, and finances.
“I have found Daniel Antonelli to be professional, courteous, polite, and personable. Further, he is down to earth, easy to talk to, listens attentively to what is said, provides feedback and shows genuine interest and concern.”
– Phil W., New York, NY
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Do you have an estate plan? The answer is, “Everyone has an estate plan.” If you do not create a personal, memorialized plan, you are relying on the government to make these decisions for you. Therefore, the real question becomes, “Does your estate plan accomplish your individual goals?”
The Basic Estate Plan
We make it easy for you to create a simple estate plan that will provide certainty about your future and the future of your family. The basic estate plan consists of a Will, Health Care Directive, and Power of Attorney created to suit your individual needs.
The basic plan accomplishes the following goals:
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Living Will & Health Care Proxy
You have the right to make decisions concerning your health care in advance, and to appoint a trusted person to see those decisions through. A Living Will, also known as an Advance Directive, memorializes your health care decisions, thereby providing instructions for your health care provider to follow, even if you are not able to make such decisions for yourself. A Health Care Proxy, which is typically included in a Living Will, names a trusted individual to enforce your health care decisions. Your Living Will and Health Care Proxy only take effect if you are no longer able to make health care decisions due to illness or incapacity.
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Power-of-Attorney
You also have the right to appoint a trusted person to make financial and other non-health related decisions on your behalf, such as handling a bank account or transferring real estate, should you become unable to do so. This is accomplished through the execution of a Power-of-Attorney, in which you appoint an Agent to act on your behalf. The powers granted to your Agent can be as general or specific as you prefer.
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Last Will and Testament
By executing a Will, you can increase the certainty that your estate assets will transfer according to your wishes. This is accomplished by making specific bequests (gifts) in your Will and naming an Executor to oversee the administration of your estate, a Guardian to care for minor children, and a Trustee to safe-guard assets for any minor beneficiary.
If you would like to speak with an attorney about your estate plan, please contact us.
Wealth Transfer Taxation Planning
If an individual’s estate or a married couple’s combined estate is worth at least $1 million (NY Residents) or $675,000 (NJ Residents), then the estate, at death, may be subject to significant state estate taxes. However, with estate planning techniques, the effect of estate taxes can be greatly reduced.
Federal estate taxes may be even more significant. The Tax Relief, Unemployment Reauthorization and Job Creation Act of 2010 provides for a federal estate tax exemption of $5 million per individual. Therefore, a married couple may transfer a total of $10 million without any federal estate tax liability. The top federal estate tax rate is 35%. The unused exemption of the first spouse to pass is available to the surviving spouse. The top gift tax rate is 35% and a $5 million lifetime exemption applies to gifts made after December 31, 2010.
However, these changes are only effective for two years, through 2012. Without further legislation, federal estate taxes will return to the pre-2001 rules on January 1, 2013, which institute an estate tax exemption of only $1 million and a top rate of 55%. The lifetime gift exemption would likewise return to $1 million and a top gift tax rate of 55%.
Irrespective of the 2010 Act, surviving spouses still enjoy an unlimited marital deduction, which permits unlimited lifetime intra-marriage transfers tax-free. Transfers at death to spouses are likewise exempt from estate tax. Further, individuals are permitted to give tax-free gifts of up to $13,000 per individual, per year, per recipient.
Keep in mind, however, there are certain flexible estate planning techniques aimed at minimizing your estate’s tax burden regardless of future exemption levels. One of the major tools for married couples is a Disclaimer Trust, which is a testamentary trust, meaning it is included within a Will.
The purpose of a Disclaimer Trust is to minimize estate tax liability for a couple’s combined estate. This type of trust preserves the tax exempt portion of the estate of the first spouse to die, so such portion may also pass, tax-free from the estate of the surviving spouse. The ultimate recipients of the tax savings are the beneficiaries of the estate of the surviving spouse, usually the children.
Additional techniques to protect your assets from estate tax include strategic gifting, individual life insurance trusts, and additional techniques suited to your individual needs.
If you would like to speak with an attorney about wealth transfer taxation planning, please contact us.
Supplemental Needs Trust
A Supplemental Needs Trust, also known as a Special Needs Trust, is an estate planning technique used when leaving assets to a beneficiary who receives government benefits such as Medicaid or Supplemental Security Income (SSI). If assets were left to a such a person outright, the asset could disqualify the beneficiary from receiving certain government benefits. However, a Supplemental Needs Trust can preserve the beneficiary’s eligibility for receiving those benefits.
Supplemental Needs Trusts also often come into play in connection with personal injury settlements. If the settlement recipient receives governmental benefits and wishes to maintain those benefits while having access to the settlement funds, the individual may be able to set up a Supplemental Needs Trust to accomplish this goal.
If you would like to speak with an attorney about a setting up a Supplemental Needs Trust, please contact us.