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Middlesex County Estate Planning and Bankruptcy Legal Blog

Three tips to help in leaving inheritances

If you are in the process of creating an estate plan, or if you have already have one, deciding on how you will distribute money among beneficiaries can be a daunting task. After all, leaving a legacy is one of the most important things a person can do for his or her family. With many baby boomers poised to leave more than $30 trillion to heirs over the next 30 years, is a good problem to have.

But emotionally, the problem of how to distribute money may not be so easy given the emotional ties you have. As such, the following tips may make the process easier. 

What property do I get to keep in Chapter 7 bankruptcy?

Making the choice to file for bankruptcy is not an easy one. However, taking this step is often a prudent and beneficial choice for many individuals who are struggling with overwhelming debt. If you find yourself unable to manage your financial obligations, and New Jersey creditors and debt collectors are constantly hounding you, you would be wise to consider seeking bankruptcy protection. 

Chapter 7 bankruptcy is a popular choice for many people who file for bankruptcy. It is a relatively fast process also known as liquidation bankruptcy, which often leaves people concerned over what property they may lose if they file. You may be surprised to learn that you can actually keep many things that are most important to you.

THINK CAREFULLY IF YOU ARE CONSIDERING A LIVING TRUST

A living trust is a useful tool when you are creating an estate plan. It is imperative to know that these trusts aren't appropriate for everyone in every situation. If you are considering a living trust, you should think carefully about it because there are some instances in which this option might not be worth the time or effort.

CHOOSING THE RIGHT TRUST CAN HELP YOU AVOID TAXATION

There are many kinds of trusts that you could opt for to create for your beneficiaries. Each type has its own benefits to consider. For example, a credit-shelter trust helps you give your estate to your spouse tax-free while also stating who you want to receive the trust. When your spouse passes away, you can even determine who will receive the remaining principal tax-free.

Keep taxes in mind whether you give now or later

Did you know you could give away a substantial amount of money without paying the federal gift tax? If you plan on leaving wealth behind for your family or other heirs and you're worried about edging above the federal estate tax threshold and paying the whopping 40 percent tax, you might be looking at gifting money now to save your estate later. It's important to realize the ramifications of total gifting, though, because a miscalculation could leave your heirs on the hook for a great deal.

Differences between estate executors and administrators

In New Jersey and elsewhere, people sometimes use the terms "executor" and "administrator" as though they're interchangeable regarding the estate planning process. However, they are not the same. Generally speaking, the two titles just mentioned refer to males designated to the positions while "executrix" and "administratrix" pertain to females, but for the purpose of this post, "executor" and "administrator" refers to both. When someone asks you to be one or the other, it's crucial you understand the roles and duties assigned to each before agreeing to accept the responsibility.

Who is responsible for paying the federal estate tax?

The federal estate tax is a cut of estate value that goes to the Internal Revenue Service. When the federal estate tax comes into play, it can take a hefty bite out of the value of an estate. Luckily for most people, thresholds on this tax and numerous other factors mean that only a small percentage of people end up dealing with it, and very few estates that include small family business or farms end up on the hook for estate taxes.

How does discharge work in Chapter 7 bankruptcy?

Numerous New Jersey residents struggle to meet their debt obligations. Are you one of them? If so, you more than likely explored various debt relief options available to you. You might find Chapter 7 bankruptcy intriguing since it could provide you with a fresh financial start free from most of your debts, but what does that actually mean?.

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