Do you have a Last Will and Testament? If you do not, your estate will be settled by the dictates of state law and by court decisions.

Executor Chosen by the Court

If you die without a Will, a judge will select your estate executor. Although, the judge may choose the person you would have chosen anyway, the selection process could cause family disharmony.

Guardians Chosen by the Court

No one expects to die young, but if you do and you have minor children they must live with someone else. If you do not have a Will and do not name a guardian, the court system will choose a guardian for you. This could lead to your children becoming wards of the state if no family member agrees to take custody. On the other end of the spectrum, there could be several family members embroiled in a drawn-out custody battle. During this time your children could encounter instability when they most need stability and love.

No Money for Expenses

When you pass away your loved ones will have to pay for your funeral costs and court expenses. If your assets are tied up in probate, they will have to use their own money to cover these costs. If they do not have money, they may have to take out loans. When you create a Will and an estate plan, you can take measures to make sure money is readily available for your family to use immediately after your death.

Long Probate Process

Many estates have to endure probate, which is a court process used to pay your final debts and pass out property to heirs. Even with a Will. it can take a year or more. When you do not create a Last Will and Testament to express your wishes, you are setting your family up for a n even longer settlement period. With an intestate estate, state laws must be examined to determine proper heirs at law. This is a time -consuming process and can often leave a family member disinherited or cause bitterness between heirs.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

If you own your own company, you know that running a business is a complicated venture that takes loads of planning time. Besides planning to grow and expand your business, you must alsodetermine what will happen after your death.

No Business Estate Plan

If you don’t include your business in your estate plan, then it may not survive your death. If you have full or partial stake in a business, it will be considered a part of your estate upon your death. If you have not named someone to take over after you die, or if you have multiple partners fighting over your part of the business, your business may flounder while the matter is worked out in probate court. Because probate is a lengthy process, your company may be greatly affected by a large time period of indecision, disagreements and possibly mismanagement.

Dissolve the Business

If you own a family business, you may wish to pass your business along to your family members.  What if no one wants to take over? Even if a family member is running the business with you at the time of your death, he or she may wish to take the opportunity to pursue other ventures. In this case, since you have created no plan and no one is willing to take over, your company will have to be sold or dissolved.  If you plan ahead, you will already know that your business will close after your death, and you can make prearrangements to ease the process. If you do not, unwilling family members may be placed with the burden of running the business for a short time while probate works out a sale.

Passing on the Business

If someone in your family or one of your business partner’s wishes to keep the business alive after your death, he or she may face opposition from others who wish to sell the business or who also wish to have a say in running the company. If you know that you can pass the business on to a ready and willing person, say so in an estate plan. Like a guardian plan for your children, an estate plan for your business allows for an easy hand off, so your company can maintain stability.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

You’ve probably heard all the buzz about the benefits of a Living Trust, but you may be wondering how it actually works.

A Living Trust is a separate legal entity that takes ownership of whatever assets you decide to put in it. So, if you transferred your home to the trust for example, then the deed to your home would be amended to read “Smith Family Trust” or something similar.

In addition, your personal belongings, your jewelry, fine art and just about anything else you own individually can go into your trust.

Then when you pass away, the assets are distributed to your heirs according to the terms set out in the trust documents.

And this is where a Living Trust really shines.

Instead of just distributing your assets in bulk, you can get creative and set up incentives for your heirs or structure the trust so that your beneficiaries live off the income from the assets without ever actually touching the assets themselves.

This allows you to create a legacy for future generations and ensure that all your heirs are well-provided for.

To learn more about structuring your own Living Trust, give us call today.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Everyone knows that an estate plan can ensure your heirs receive the right inheritance. But did you know there are other benefits too? Here’s five things a good estate plan can for you.

1. Protect Against Disability – No, your estate plan can’t prevent disability from striking but it can certainly ensure that you and your estate are protected if it happens. Using Powers of Attorney such as an Advanced Health Care Directive and General Durable Power of Attorney can ensure that your medical wishes are followed and that your finances are handled by someone you trust.
2. Provide Incentives to Your Heirs – With the right planning tools, you can do much more than leave your heirs a lump sum estate. Instead, you can create incentives for them to excel and achieve by offering inheritance bonuses for graduating college, getting married or other milestones. You can also set it up so that your heirs’ inheritance matches whatever income they earn each year. If they want a bigger inheritance, they must find a way to earn a better living.
3. Avoid Probate – Yes, with the right tools, your estate plan can help your heirs stay out of probate court. This makes the whole property distribution process much smoother and ensures that the details of your estate remain private.
4. Sponsor A Charity – There are certain types of trusts that allow you to structure assets so that they benefit both your heirs and your favorite charity. Donating this way also provides significant tax breaks to all parties involved.
5. Protect Disabled Dependents – A Special Needs Trust can ensure that your disabled dependent continues to qualify for important government assistance programs while still enjoying the benefits of his or her inheritance.

Of course, that’s not all an estate plan can do, but it’s a good start. To learn more about how a good estate plan can make your life easier, contact our office today.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Are your  children under the age of eighteen? When you plan your estate, choosing a guardian for your minor children is one of the hardest and most important aspects. Here are four qualities to consider when you pick a guardian.

Responsible

The guardian or guardians you choose should be responsible and over the age of eighteen. When you are choosing among loved ones for the honor of raising your children, it may be easy to let emotions make the decisions for you. Avoid picking a favorite family member if you do not think they will be responsible enough for the job.

Able Bodied

A guardian must be physically able to raise your children. It may not be wise to choose your sister who already has four children of her own, or your uncle who is bed-ridden. Consider how your children will fit into the life of your guardian. When you choose older relatives as guardians, consider their age and health. It would be unfortunate for your children to go through a change to another guardian in the event of the first guardian’s death.

Good Mediator

When you choose a guardian you may have to decide between several family members. This can sometimes cause hurt feelings.  During your estate planning you should speak with all family members about your guardian choice. You may also want to leave a letter explaining why you chose a particular person. Guardians must keep your children’s interest first while still maintaining contact with all family members for the benefit of the children.

Parenting Skills

When you choose a guardian, if you have more than one possible choice, you may wish to focus on who would raise your children with a similar parenting philosophy and moral beliefs to your own. If this is not possible, you should focus on who would be the best parent even if they do not share all of the same parenting ideals you do. You can always speak with your guardian choice about your wishes for your children’s care and upbringing.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Instead of your spouse or partner being named as the beneficiary of your life insurance policy, you may choose to transfer the policy proceeds into a irrevocable life insurance trust account and name your partner as beneficiary of the trust.

Why would you want to do that?

When properly done, a life insurance trust allows you to designate what is done with the proceeds as well as what happens to the remainder of the trust funds when you pass away. Also, because the trust owns the policy, the policy is not considered part of the estate when you die and therefore, is not taxable as long as the policy transfers to the trust at least three years before your death. The policy will pass outside of your partner’s estate as well.

You can pay the policy premiums by annually gifting money to the trust. You can also increase the amount of the policy by transferring additional money to the trust, if you wish. One caveat to a trust owning your life insurance policy is that you cannot name yourself as the trustee of the trust. In doing so, the policy is counted toward estate assets, subject to estate taxes when you pass away.  Another caveat is to carefully structure the cash or assets going into the trust to avoid gift taxes.

If you don’t have a life insurance policy at the outset, you can also create a trust and transfer assets to the trust and instruct the trustee to purchase a life insurance policy. If the trust applies for and takes out the life insurance policy initially, there is no three-year waiting period before the policy is out of your estate.

An estate planning attorney can help you plan your estate using irrevocable life insurance trusts should you desire to use this tool to avoid estate inheritance taxes and give your heirs the full benefits you wish them to receive.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Many quote the adage that “you have to spend money to make money” but that’s not necessarily true. Unless you really need the items you’re thinking about purchasing, saving your money can be a great way to make money too – especially if you place extra cash in a savings account or long term investment.

Avoid Credit Card Interest

In today’s society, buying is easy. Goods are sold everywhere. Impulse buying has become a common phrase and is one of the major reasons for high credit card debt among Americans. Before you make your next “impulse buy”, consider how much you will be paying for that item if you use a credit card. If your interest is ten percent and you have over $ 1,000 in debt, you will pay one hundred dollars per year on that debt.

When you avoid frivolous spending and credit card debt, you can begin to save money. Create a monthly budget to help you. Your budget should allow for at least ten percent of your earnings to go into a savings account each month.

Earn Savings Account Interest

A savings account is the first step to creating financial security. In case of an emergency, you should save enough money for three months living costs in your savings account. Once your emergency fund is established, it will earn interest until you need it.

Find Investment Opportunities

Savings accounts are a great place to put emergency funds, but additional nest egg savings should be placed elsewhere. If all of your money is in a savings account, inflation may lower the value over time.  Look for long term investment options, such as stocks and bonds, to grow your nest egg. Investment earnings can help you pay for a house down payment, college education or your retirement.

To ensure your portfolio can help you meet your goals, you should consult a qualified financial advisor.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Even though you have your estate plan in place, it could still face legal problems  if any part is deemed invalid. What you thought was a perfectly sound  estate plan could turn into a probate nightmare for your family. So, how you do make sure your estate plan will work?

Hire an Estate Attorney

Unless you are up-to-date on inheritance, tax and other laws that govern estate preparation, you will have to become an expert overnight to create your own plan.  Writing a Last Will and Testament yourself or even purchasing a cookie cutter Will from a website can cause inheritance problems.  Such Wills may not take into account every circumstance of your estate and loved ones such as step-children or a live-in partner may be mistakenly disinherited.

Saving money is great as long as it doesn’t cost more money in the end. If you are considering creating an estate plan without the assistance of an attorney, you may create costly probate issues for your family instead. An estate attorney knows the laws and can make sure your estate plan is legally sound.

Properly Signed Documents

If any estate document is not handled correctly a court of law may deem it invalid. This is why you must take care when you sign and date your documents. Your estate attorney can help with this since he or she will know state laws regarding signing, dating and notarizing.

Regular Maintenance

If you do not keep your estate plan well-maintained, your documents and assets may face probate issues. Maintaining your estate plan simply means checking every couple years or less to see if changes need to be made. Changes in your estate may be due if estate laws have changed, you have purchased or sold property, you have new heirs, heirs have passed away, or you have married or divorced.

If you do not maintain your estate plan and you pass away with property, assets or heirs not included in your Last Will and Testament or Revocable Living Trust, your estate could face a protracted probate. And don’t forget, when you create a new Will be sure to get rid of old copies to avoid confusion.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Long term care insurance is a very important component of your financial strategy and the reasons to get an LTC policy are very compelling.

The cost of assisted living or nursing home care alone should motivate you to pay the premiums. AARP notes that approximately 60% of people over age 65 will require some kind of long term care during their lifetimes.[1] Furthermore, in a 2008 annual Cost of Care Survey AARP and Genworth Financial found that:

• The national average annual cost of a private room in a nursing home is $76,460 – $209 per day, and 17% higher than it was in 2004.
• A private one-bedroom unit in an assisted living facility averages $36,090 annually – and that is 25% higher than it was in 2004.
• The average annual payments to a non-Medicare certified, state-licensed home health aide are $43,884.[2]

You may have heard that LTC insurance is expensive compared with some other forms of policies. The annual premiums are minimal compared to real-world LTC costs.[3] Asset based LTC insurance policies have also provided a balanced approach of self-insuring a portion of the cost, helping to preserve retirement savings and income.

Contact us to learn more about the risk of long term care expenses pose to the value of your estate and how to properly plan to maximize the long term care insurance benefits.

[1] aarp.org/families/caregiving/caring_help/what_does_long_term_care_cost.html  [11/11/08]

[2] aarp.org/states/nj/articles/genworth_releases_2008_cost_of_care_survey_results.html      [4/29/08]

[3] aarp.org/research/health/privinsurance/fs7r_ltc.html                                [6/07]

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

If you’re reading all the debates about the return of estate taxes, then you’ve probably run across the “step-up in basis” phrase.

What is this mysterious step-up? And why do you care?

Actually, the step-up is what will keep your loved ones from paying large capital gains on the increased value of your estate.

Basically, the step-up rule says that assets get a new value when they pass to an heir and this new value is the one that’s used to determine if any capital gains taxes are owed when the property is sold.

Let’s say for example, that you purchased the family home for $50,000 decades ago but now it’s worth $150,000. Without the step-up, your heirs would pay capital gains taxes on the $100,000 profit if they sold the home after your death.

But with the step-up, a new value of $150,000 is given to the home and if your heirs sell it after inheriting the estate, they won’t have to pay capital gains tax on the new value.

To learn more about estate taxes and how they might affect your estate plan, contact our office today.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.