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Important IRS Update: Significant Interest Penalty Increase for Tax Underpayments

The Internal Revenue Service (IRS) has recently announced a critical change that could significantly impact taxpayers who underpay their taxes. This update is particularly relevant as we approach the next tax filing season. Previously, the IRS charged a 3% interest penalty on estimated tax underpayments. However, this rate has now been increased to a substantial

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Will Inflation Hurt Stock Returns? Not Necessarily

Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks. A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns. Since 1993, one-year returns on

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Maximize Your Charitable Impact with These Four Strategies

As the year draws to a close, it’s a perfect opportunity to rethink how you give to charity. This is important for managing how much tax you pay and how much help reaches those in need. Here are four effective strategies: Need Guidance? Reach Out to Us! These strategies are just a starting point. There

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Revocable vs. Irrevocable Trusts: Choose Wisely for a Robust Financial Plan

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Category: Trusts

When it comes to financial planning, trusts play a significant role in managing and protecting your assets. Trusts come in various forms, with revocable and irrevocable trusts being the most common. Understanding the differences between these two types of trusts can greatly impact your financial planning strategy. In this blog post, we’ll explore the key differences between revocable and irrevocable trusts and how they can help you achieve your financial goals.

Revocable Trusts: Flexibility and Control

A revocable trust, also known as a living trust, is a legal entity that allows you to transfer your assets into the trust during your lifetime. The primary benefits of a revocable trust include:

1. Flexibility: You can modify or even dissolve the trust at any time during your life, giving you control over the assets within the trust.

2. Privacy: A revocable trust helps maintain privacy as the assets and their distribution are not subject to public probate.

3. Avoiding Probate: Assets placed in a revocable trust bypass the probate process, potentially saving time and money for your beneficiaries.

However, it’s important to note that a revocable trust does not provide protection against creditors or minimize estate taxes since you still have control over the assets.

Irrevocable Trusts: Asset Protection and Tax Benefits

An irrevocable trust, on the other hand, is a legal entity that you cannot modify or dissolve once it has been established. The key benefits of an irrevocable trust include:

1. Asset Protection: Since you relinquish control over the assets in the trust, they are protected from creditors and lawsuits.

2. Estate Tax Reduction: Assets placed in an irrevocable trust are no longer considered part of your estate, reducing potential estate taxes.

3. Income Tax Benefits: In some cases, an irrevocable trust can help minimize income tax liabilities.

The trade-off with an irrevocable trust is the loss of control over the assets, making it essential to carefully consider your financial goals and needs before establishing one.

Choosing the Right Trust for Your Financial Planning

Your choice between a revocable and irrevocable trust depends on your financial goals, risk tolerance, and desired level of control over your assets. If you prioritize flexibility and control, a

revocable trust may be the right choice. However, if asset protection and tax benefits are your primary concerns, an irrevocable trust may be more suitable.

Consulting with a financial planner is crucial to ensure that you make the best decision for your unique situation. Shah Total Planning is here to help you navigate the complexities of trusts and create a comprehensive financial plan tailored to your needs.

Take the first step toward a secure financial future with Shah Total Planning. Our experienced team is ready to guide you through the process of choosing the right trust for your financial goals. Contact us today for a personalized consultation and let us help you build a strong foundation for your financial legacy.

Who is Responsible for Administering My Trust or Will in New Jersey?

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Category: Estate Planning Trusts Wills

The administration of a trust and will likely fall to two different people in New Jersey, depending on how your estate plan is structured. The executor that you name in your will is responsible for carrying out those instructions inside your will. A trustee, however, plays a similar role, but typically until all assets inside the trust have been distributed to beneficiaries.

This means that a trustee might serve in their role for a much longer period of time. A child, financial institution, friend, family member, or other professional could also be named as co-trustee or co-executor. While both the titles of trustee and executor might sound relatively simple, these are substantial responsibilities, and it is important for the person who has been chosen to serve in these roles to understand this position and to feel comfortable serving in this role on an ongoing basis.

A trustee, in particular, is especially important because they are usually given some discretion over trust funds and when distributions should be made to beneficiaries. Only a trusted individual should serve in this role and someone who is comfortable communicating with any and all of the beneficiaries on your estate. The support of an experienced and knowledgeable estate planning lawyer can help to create a strategy to encompass the appointment of an executor, as well as a trustee.

Contact an experienced New Jersey estate planning lawyer for further support as you create these documents and name the important people to serve in these roles.

When Does It Make Sense to Use a Family Trust?

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Category: Trusts

A family trust is most appropriate as an estate planning tool when you live in a state where probate is very difficult. This is also beneficial for those people who are interested in keeping information about their assets and beneficiaries private, those who have a large estate or a significant number of assets and those who want to provide for the management of their assets in the event that they become incapacitated.

There are several other types of situations in which a family trust might be the appropriate thing to create with the support of an estate planning attorney. These include:

  • For divorce and creditor protection of those assets to be distributed to a beneficiary.
  • To help provide for disabled beneficiaries who still need to qualify for government benefits.
  • For the time efficiency and cost reduction benefits over the traditional probate process.
  • For tax planning options when the estate size is big enough to incur significant federal or state taxes.

A family trust can also be used in conjunction with other estate planning strategies like a will. Every person and adult family member should have a will but they leave plenty to be desired if you have a more complicated family or estate situation.

When you are looking to plan for minor children, for example, a will is a preferred estate planning tool since you can name a guardian to step in and take care of your children if something were to happen to you. Make sure that you have consulted with an experienced and knowledgeable estate planning lawyer for more information on how to align this with your needs.

 

8 Things a Trustee Might Do

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Category: Trustees Trusts

Trustees will be required to do some or all of the following tasks listed below based on the express terms outlined in the trust’s creation. When putting together a trust, you will need to think carefully about who to install in the role of trustee. This person will have important responsibilities in adhering to your terms and in communicating with beneficiaries.

Some people choose to select an attorney or a corporate entity to serve as their trustee to give them an additional bit of confidence in the management of this important estate planning strategy. Some of the tasks and requirements for a trustee include:

  • Acting as a fiduciary and protecting the distribution and investments of the trust at the highest level.
  • Investing assets when necessary if the trust dictates this as a responsibility.
  • Ensuring safety of assets and understanding the terms of the trust.
  • Distributing or administering assets to beneficiaries per the trust terms.
  • Making ongoing decisions about management of provisions of the trust.
  • Keeping track of records to prepare tax related filings and forms.
  • Communicating with beneficiaries to provide statements and account information.
  • Answering questions.

It is also possible that a trustee’s duties can change over time. If you are creating a revocable living trust and naming yourself as the trustee by default, think carefully about who should serve as successor trustee.

Having a lawyer assist you with creating and using a trust will support your overall estate planning. Keep your assets out of probate and get the benefits of privacy associated with your estate administration through a trust.

 

For What Reasons Should I Revoke My Trust?

Categories
Category: Trusts

A revocable living trust enables the creator to make changes to that trust at any point in time prior to their death. This includes revoking the trust entirely, meaning that it becomes obsolete.

There are any different number of reasons why a person may wish to revoke a trust but the most common reasons for making this change include updates in their life. For example, a divorce might prompt someone to dissolve a trust that was previously created as a joint document with a soon-to-be former spouse.

If the changes to be made to a revocable living trust are so extensive in nature that it might simply be easier to dissolve the trust entirely and to start fresh, the creator of the trust has the ability to do this. The first step in dissolving your revocable trust is to remove all of the assets that have been put inside it. This includes changing deeds, titles, and any other legal documents to reflect ownership of the asset from the trust back to the grantor of the trust or the original owner.

It is strongly recommended that when making any changes to a revocable living trust, including the dissolution of the trust completely, that you schedule a consultation with an experienced and knowledgeable estate planning lawyer.