To those who have no experience with estate planning, some of the terms used can make the process seem like it’s written in a foreign language. Though unfamiliar, most of these terms are not difficult to understand. However, some terms are interchangeable and may have slightly different meanings depending on how they are used or the state in which you live. Talk to an attorney if you have specific questions about the any estate planning terminology.

Estate: If you take everything you own and lump it all together, this is your estate. Some people confuse the term estate to mean a large home or property. While this version of the word is sometimes used to describe such properties, in estate planning circles the term is more generally used to refer to all a person’s property.

Testator:  The term  “testator” is often used to refer to both males and females who create a Last Will and Testament , much in the same way “actor” is used to refer to both male and female performers.

Holographic Will: A holographic will has nothing to do with a hologram or an image. It is a kind of will in which the testator creates the will entirely in his own handwriting. Unlike other wills, testators do not have to have a holographic will witnessed by others in order for it to be legal.

Intestacy: If a person dies without a will, that person is said to have died intestate. Intestacy is the condition of an estate that is not covered by a will. To resolve who receives the estate property, each state has intestacy laws that apply in this situation.

Executor: When you create a will, you typically nominate a person who will actually redistribute property after you die. This person is known as an executor, if male, and an executrix, if female. Some states may use executor as a gender-neutral term, though the position may also be referred to as an estate administrator or personal representative.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

What a lot of people don’t realize about the new tax relief bill is that it is going to sunset or expire at the end of 2012. If this takes place without any new legislation being enacted, the estate tax exclusion is going to be reduced down to just $1 million, and the rate of the tax will return to the 2001 level of which could be as high as 55%. So, unless you’re certain that you are going to be passing away before the end of 2012 your estate is vulnerable if it is worth more than $1 million.

There are a number of ways to reduce the taxable value of your estate, and the optimal course of action is going to vary depending on the exact anatomy of your assets and the nature of your wishes. However, one approach that will work for everyone at least in part is to give tax-free gifts while you are still alive. The estate and gift tax are unified, so any portion of the $5 million exclusion that you use giving gifts will be deducted from your available estate tax exclusion. But, there are some additional gift tax exemptions that can be used that do not impact the unified lifetime exclusion.

Each person may give annual gifts totaling as much as $13,000 to an unlimited number of recipients free of the gift tax. In addition, you can pay the medical bills and tuition  for loved ones and free of gift taxation.

If you utilize these gift tax exemptions creatively and consistently you can reduce the taxable value of your estate while passing along funds in a tax-free manner to those who would otherwise be inheriting them after you pass away.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Many people believe that estate planning is not something that you have to concern yourself with until you reach the latter stages of your life. While it is true that the average life expectancy in the United States at this time is just over 78 years, this does not mean that you should wait until you reach the age of 75 to start planning your estate. There are no guarantees and each day we hear about people who pass away in accidents unexpectedly, and when you don’t plan ahead it is your family members who will pay the price.

The reality is that you should have an estate plan in place as soon as you become a responsible adult in your own right, and when you get married it becomes even more important. Most married people develop a lifestyle based on two incomes, and if one of these was to suddenly disappear it could severely impact the surviving spouse. Many people will have  life insurance to protect the other spouse in this event.  In addition, in the event of incapacity advance health care directives are a wise choice.

We would all like to think that our marriages will last forever when we are walking down the aisle, but the reality is that divorce is all too common these days. It is important to remember that estate planning is an ongoing process and your estate plan is going to have to be revisited when your life changes.  Divorce is one of these events, and you will inevitably have to make some adjustments to your estate plan should your marriage come to an end. Statistics vary, but it is safe to say that somewhere between 40% and 50% of marriages end in divorce.

Additionally, should you get remarried, you will once again have to revise your estate plan to reflect your new situation.

It is a good idea to develop a working relationship with an estate planning attorney that you feel comfortable with and recognize the fact that you will have to review and revise your estate plan on an ongoing basis as the years pass.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

We have all heard of the term “legalese” and there are indeed a lot of arcane terms that are used in the legal profession.  This is true in the specialty of estate planning as well. Though there are some that can be confusing not because they are lengthy but because they  include words that perhaps have meanings different than those same words in our daily life.

For example, many Estate Plans include both a Living Trust and a Living Will. And many Estate PLans use a Last Will to state your wishes for distribution of assets upon death.  Since the Last Will is a vehicle of asset transfer, there are those who assume that the Living Will is also used to transfer assets but the transfer must somehow take place while you are still alive.

This is understandable logic but in fact the Living Will does not transfer assets. It is used to state your medical preferences, usually centering around the issue of whether or not you would want to be kept alive though the use of artificial life support systems if you were in a terminal condition.

A Living Trust used is used to manage your assets while you are alive and  transfer assets upon your death. You fund the trust and name yourself (or you and your spouse) as both the trustees (managers) and beneficiaries so you have total control of the assets while you are alive. But you also name a successor trustee who will administer the trust in the event of your incapacitation and provide distributions to your beneficiaries in accordance with your wishes after you pass away .

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

The most common vehicle of asset transfer in estate planning is the last will, and everyone is aware of what this document is intended to achieve. In addition to the last will most modern estate plans will also include advance health care directives, and a living will.  What a living will does is elucidate your health care preferences so that they are known should you fall into an incapacitated state and become unable to express them at a time  it is needed. The issue that is at the core of living wills is usually going to be life-support systems and whether or not you would want to be kept alive via the use of artificial means should you fall into a terminal state.

There is however another type of will that is much less commonly understood, and it is called the ethical will. Ethical wills have been part of the Jewish tradition going back to biblical times. These documents are used to express thoughts and feelings that you would like to share with your loved ones after you pass away. Traditionally these renderings would include your spiritual and moral values, and the “rules to live by” that you yourself saw fit to honor throughout your life.  Ethical Wills are not written by your attorney, but rather by you.

However, the document need not be strictly instructive and didactic. Ethical wills are today recommended by many of those who work with our elders as a way to “get things off your chest” as it were and let your family know things that you may have never said out loud. You can ask for forgiveness for any transgressions that you feel as though you may have been guilty of, and perhaps offer explanations to family members with regard to things that you have done that have been misunderstood.

An ethical will can be a priceless addition to your estate plan, and composing it can be a labor of love that may have more lasting meaning to your loved ones than anything else that you bequeath to them.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Estate planning can seem on the surface to solely involve preparing your assets for distribution after you pass away.   Of course this is the primary objective.   However, there are other issues to consider.

One of the things to take into consideration is the possibility of incapacity. Everyone has heard about Alzheimer’s disease but when you hear the statistics surrounding this health challenge you may be quite surprised. Approximately one out of every eight individuals in the United States who have reached the age of 65 are suffering from Alzheimer’s, and about 40% of the “oldest of the old”, those are at least 85 years of age, have the disease. It should also be mentioned that more and more people are living to be at least 85 years of age, and in fact this is the fastest growing age demographic subset in America today.

Alzheimer’s disease is the leading cause of dementia in our seniors, and among other things dementia can prevent people from making sound decisions. To prepare for this possibility the wise course of action is to execute the appropriate powers of attorney. When you draw up a power of attorney you appoint an attorney-in-fact to act in your behalf legally, but a standard power of attorney does not remain intact upon incapacitation of the grantor.

So you want to execute a durable power of attorney that does remain intact should the grantor become incapacitated. To cover all your bases estate planning attorneys will usually recommend a durable medical power of attorney (sometimes referred to as a Medical Proxy) and a durable financial power of attorney.  Of course, you are able to name a different person to act as a representative for each of these respective purposes if you so choose.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

As a result of the passage of the new tax relief measure at the end of last year the lifetime gift tax exemption was raised from $1 million to $5 million and the rate of the tax was reduced to 35%. This brings it in line with the estate tax with which it is again unified.  What this “unification” means to you is that between gifts and your estate you can pass along a total of $5 million before you are taxed.

There are however some additional gift tax exemptions that can be used to great advantage as a way to bring the value of your estate under the estate tax exclusion amount. For one, each taxpayer is entitled to give gifts equaling as much as $13,000 to an unlimited number of recipients.  These gifts. no matter how many, are  free of  gift tax each year, and these gifts do not impact the lifetime unified exclusion discussed above.

In addition, there is an educational gift tax exemption. You can pay the tuition of students without incurring any gift tax liability, but you do have to make the payments directly to the institution and not the student. This is a tuition-only exemption so you can’t pay for books, fees, and living expenses as a tax-free gift using the educational exemption. But you could use the $13,000 annual exemption to address these other costs.   If you are married you and your spouse could give as much as $26,000 per year to a given individual.

You can also pay the medical bills for others totally free of the gift tax, and this includes the payment of health care insurance premiums. So when you combine these three different forms of tax-free gift giving in an intelligent manner utilizing sufficient foresight you can facilitate the tax-free transfer of assets to your loved ones while you’re still alive and reduce the taxable value of your estate in the process.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Any time you are interested in developing a relationship with a legal professional it is important to identify the correct resource. This is extremely important when it comes to estate planning attorneys in particular on a number of different levels.

For one, when you are engaged in estate planning there is invariably going to be a great deal of money in play. Many people will engage the same attorney to assist them with retirement planning and incapacity planning along with their estate planning efforts. This makes the financial stakes even higher, so you need someone who has the experience that it takes to take on such an enormous responsibility.

This may sound somewhat out of context to some, but the fact is that you would do well to identify an estate planning lawyer that you actually like and feel comfortable with. Depending on the details of your estate you will be discussing some rather personal matters, and you want to feel as though you can be totally forthcoming. If you call an attorney’s office and the people that you speak with aren’t willing to answer your general questions patiently and politely, look elsewhere.

Area of specialization is key when you are looking for the right estate planning attorney. There are lawyers who do not specifically specialize in estate planning who are willing to do what they can to assist you, but you would do well to avoid the dabblers and engage a dedicated estate planning specialist. To have a comprehensive understanding of the ever-changing tax laws and the myriad financial instruments that are routinely employed in complex estate planning strategies you really have to stay within this area of focus.

You can look for experience, personal resonance, focus, and expertise on your own, but perhaps the best way to identify the ideal estate planning attorney is through personal recommendations. If someone that you know and trust is willing to refer you to an attorney that he or she has had a good experience it is likely that you will be satisfied as well.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Creating your will can seem like a matter that is largely between you and your family. And though it is an emotional exercise it could appear on the surface as though there isn’t anything particularly complicated about it. There are websites glory that fan the flame of this misconception, claiming that all you have to do is purchase their handy-dandy do-it-yourself will kit, fill in the blanks, and you are then good to go. As convenient and inexpensive as this may sound to some people, the reality is that the matter isn’t quite as simple as that.

The thing about a will is that it is not going to administer itself, and it does not exist in a vacuum. Your will must pass through the process of probate, and though probate is smooth and hassle-free in the state of New Jersey the surrogate court follows certain guidelines that must be considered when your will is being created. This is one of the things about do-it-yourself will creation software that you need to beware of because there really is no single document that is appropriate for every jurisdiction in all 50 states and the District of Columbia. The appropriate document for a resident of New Jerseywill probably be quite different than a will that is intended to pass through the probate process in South Dakota.

New Jersey probate attorneys are familiar with the procedures of the surrogate court and they know exactly how to prepare a will that will be legally binding in the Garden State. When you engage the services of a probate lawyer to help you draw up your will you are not only making sure that your wishes are carried out, but you may also gain insights that enable a smoother transition than you would have thought possible before speaking with an attorney.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

The majority of people here in the United States feel a sense of patriotism and there has always been a strong underpinning of common sense grounding the populace. Everyone knows that roads don’t fix themselves, bridges aren’t built for free, and policemen, firefighters, and teachers need to get paid. So we pay our taxes quite willingly as long as the rate seems fair and we can see the ways that we benefit from our contributions. But one thing people don’t want to do is pay their taxes more than once.

This is what makes the estate tax so hard to swallow. We have all heard about the reduction in the estate tax rate down to 35% from the 55% that had been anticipated. Any reduction is great, but how in the world was the tax set at 55%? How can you justify a tax that takes more than it leaves? Since it was so high, 35% seems almost reasonable, but it really is not. If it took you your entire life to accumulate the assets in your estate, how disappointing is it for your heirs to watch more than a third of its taxable portion disappear instantly upon your death?

Plus, the resources that comprise your estate were all acquired with money that you had left over after you paid income and payroll taxes. So the estate tax is inherently an instance of double taxation. But after your children pay the estate tax, when they ultimately leave the remainder of what they inherited from you to their children, the estate tax will be levied yet again!

One response to this double and triple taxation is the legacy trust, which is also called a generation skipping trust. With these vehicles you name your grandchildren as beneficiaries rather than your children. Your children can benefit from the trust and receive cash distributions but claimants against them can’t target the trust’s assets and no estate or gift tax is due. When they die, your grandchildren assume ownership of the assets and the estate tax is levied just once though the resources were used by two generations.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.