Tag: estate planning

Wall Street Journal Taps McManus for Advice: “Separate Assets, Joint Problems”

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Andrea Coombes, reporter for the Wall Street Journal, recently spoke with McManus & Associates founding Principal John O. McManus for a story looking at married couples who keep their investment accounts separate and sometimes even their house, too, with only one spouse on the title. For these duos, their tax-deferred retirement accounts are typically owned singly, as well. A top AV-rated attorney, McManus helped Coombes examine some of the potential problems that can arise when a couple keeps assets separate, in addition to solutions to those problems.

On Sunday, Coombes’ story, “Separate Assets, Joint Problems,” was published and problems that can arise for couples who don’t merge their accounts revealed. Here are the top four problems identified in the article:

1. Those assets aren’t necessarily separate under the law.

2. Separate accounts may foster a failure to communicate.

3. Separately owned property may be at greater risk in a bankruptcy or lawsuit.

4. Separate accounts can lead to administrative difficulties.

For the third item, Coombes points out that “joint ownership can protect your nonfinancial assets if you file for bankruptcy or a lawsuit is filed against you, because creditors and plaintiffs tend to steer clear of property in which they’ll end up owning a half interest.” Property owned separately, however, isn’t automatically protected in that way, but Coombes cites advice from McManus on how to shield individually owned assets in such situations. From the article:

Joint ownership is a “very good way to serve as a deterrent for people going after some of your primary assets,” like a house, says John McManus, founder of law firm McManus & Associates in New Providence, N.J. “They don’t want that asset in a plaintiff’s action against me because they cannot easily force my wife to sell,” he says. “And now they’re stuck with a one-half interest in this property.”

However, for estate-planning reasons, Mr. McManus prefers that his clients hold assets in separate names so they can be placed in individual trusts, which can make it easier to direct where those assets end up after you’re gone. (Separate may mean each spouse owns various assets outright, or that they share ownership through a “tenants in common” designation—a form of co-ownership where each owns his or her share independently.)

For example, he says, a trust could be set up this way: “If my wife dies, she leaves me as trustee. I can spend it, I can use it as I need to, but when I die, the only place that that’s going is to our children and not to my new spouse.”

Meanwhile, the assets are protected against creditors or litigants. Mr. McManus uses his house as an example: “I’ll put my half interest in trust today,” he says, so his interest goes to his wife when he dies. “And if I’m sued, I’ve already surrendered my interest in the house, so I’m protected.”

What McManus is referring to is a completed gift of a 50% interest in the residence to an irrevocable trust. A creditor could attack the interest in a revocable trust, but a properly drafted irrevocable trust agreement with spendthrift provisions is generally not accessible to a creditor.

To get details on the other three items on Coombes’ list, check out the full story here.

McManus & Associates can help you determine whether it’s best for you and your spouse to keep assets separate (and, if so, which ones). Give us a call at 908.898.0100 to discuss.

Time for Those in The Garden State and Beyond to Dust Off Their Estate Plans

For those who don’t manage to review their estate plans as often as they should, it’s time to break a bad habit: Revisions may be in order for many in New Jersey and beyond due to new tax laws.

Changes to both inheritance and estate tax will affect estate taxation. Here are a few items that should be examined now as they relate to your wealth transfer plan:

  • Earlier this year, the American Taxpayer Relief Act of 2012 (ATRA) became law. ATRA allows you to leave an unlimited amount of assets to your spouse. Children and other beneficiaries will be excluded if your will or trust says that your spouse will be provided up to the “maximum amount permitted by law.” Also, under the ATRA, you may give up to $5,250,000 in assets to a non-spouse, such as a child or your trust, without racking up estate tax liability.
  • The taxes of many couples in New Jersey and across the nation will be affected by the striking down of a key provision in the Defense of Marriage Act (DOMA). Same-sex couples are treated as married for all federal tax purposes, regardless of where they were legally married. Additionally, New Jersey recently gave same-sex marriage the green light. Couples who were married in another state but live in The Garden State, as well as those who are just now saying their vows, should alter their wills and trusts to capitalize on these legal changes.
  • The estate-tax exemption for 2014 will be $5.34 million for individuals, up from $5.25 million in 2013.

Give McManus & Associates a call at 908-898-0100. We can help you modify your estate plan to take full advantage of the new rules.

Flickr/storebukkebruse

Flickr/storebukkebruse

Trusts & Estates/WealthManagement.com Publishes Article by McManus

wealthmanagement

 

Trusts & Estates/WealthManagement.com this week published an article from McManus & Associates Founding Principal and top AV-rated Attorney John O. McManus. The piece, “Top 10 Considerations for Estate Planning with Life Insurance,” was also be blasted out in the publication’s e-newsletter on October 30th.

The contribution shares the following 10 questions for advisors to discuss with clients:

  •  If a life insurance policy is owned by a trust, what’s the ongoing maintenance required for the strategy to succeed most effectively?
  • What are Cristofani beneficiaries and how can they make a life insurance trust even more gift tax efficient?
  • How can insurance be used to facilitate a business succession plan?
  • Term, whole life, 2nd to die–from a layman’s standpoint, what are the unique benefits of each?
  • How can ownership and beneficiary designations for a life insurance policy affect the taxable assets of the estate?
  • How do non-citizens avoid qualified domestic trust (QDOT) requirements with a life insurance trust?
  • What are some strategies to avoid the three-year look-back period when existing insurance is transferred to a trust?
  • Annual exemption gifts can fund a life insurance trust gift tax-free, but what about generation-skipping transfer (GST) tax issues? How is the trust affected?
  • When the terms of an irrevocable trust don’t reflect the wishes of the parties, what options are available?
  • How can life insurance be used as a wealth replacement strategy with charitable giving?

To find out what advice John had for each of the above, check out his full article here.

Mommy Blog Brings Estate Planning Advice to Readers

motherhood moment

Motherhood Moment, an advice mecca for moms, recently shared with readers guidance from the latest McManus & Associates’ educational conference call (we love the idea that moms can benefit from our focus series, because our practice not only provides asset protection, but helps continue a legacy of family values through generations). In a Motherhood Moment post titled, “Thrifty Thinking: Estate Planning with Life Insurance,” it’s noted that the use of life insurance in one’s estate plan can provide significant protection for loved ones, whether as a wealth replacement strategy combined with philanthropic giving or as a safeguard to cover expenses and taxes.

The post highlights the most important considerations when planning with life insurance and lists the 10 questions below for which Motherhood Moment readers should find answers:

  1. If a life insurance policy is owned by a trust, what is the ongoing maintenance required for the strategy to succeed most effectively?
  1. What are Cristofani beneficiaries and how can they make a life insurance trust even more gift tax efficient?
  1. How can insurance be utilized to facilitate a business succession plan?
  1. Term, whole life, 2nd to die – from a layman’s standpoint, what are the unique benefits of each?
  1. How can ownership and beneficiary designations for a life insurance policy affect the taxable assets of the estate?
  1. How do non-citizens avoid qualified domestic trust requirements with a life insurance trust?
  1. What are some strategies to avoid the three-year look-back period when existing insurance is transferred to a trust?
  1. Annual exemption gifts can fund a life insurance trust gift tax-free, but what about generation-skipping tax issues? How is the trust affected?
  1. When the terms of an irrevocable trust do not reflect the wishes of the parties, what options are available?
  1. How can life insurance be used as a wealth replacement strategy with charitable giving?

For more tips and tricks for families, visit Motherhood Moment here.

Motley Fool Turns to McManus to Answer, “Who Should Be Executor?”

Daily Finance

Michele Lerner, a contributing writer to The Motley Fool, this week turned to McManus & Associates Founding Principal John O. McManus to answer the question, “Who Should You Ask to Be Executor of Your Estate?” From the article:

“A common adage in the industry is to name your enemy as your executor as a means of revenge,” says John O. McManus, an estate attorney and founding principal of McManus & Associates in New York City. “It’s a thankless job. If you appoint someone you love as executor, get your house in order. Otherwise, appoint someone you do not.”

Lerner points out that many people choose their closest relatives, but “before you decide, think hard about what you’re asking this person to do.”

She goes on to share that she talked to McManus about “what it means to be an executor and how to go about choosing one.” Below are the questions for which she shares answers from McManus & Associates:

Q: What are the responsibilities of an executor?
Q: Do you need to have a financial or legal background?
Q: How much time does it take to be an executor?
Q: Should you have more than one executor or is it best to have only one?
Q: Is it best to ask someone before you name them in your will as executor?
Q: Can someone turn down the job of executor?
Q: Can you get compensated for the time you put in as an executor?
Q: Can you be sued as an executor?
Q: Is there anything an executor can do to reduce family fights over personal property?

To find all of our answers to Lerner’s questions, check out the Daily Finance article here.

Conference Call: Top 10 Considerations for Estate Planning with Life Insurance

Whether as a wealth replacement strategy combined with philanthropic giving or as a safeguard to cover expenses and taxes, use of life insurance in your estate plan can provide significant protection to your loved ones. This useful planning tool has several unique benefits, which should be considered in every wealth transfer plan. John O. McManus, founding principal of McManus & Associates, recently held a conference call with clients to review the most important considerations when planning with Life Insurance.

LISTEN HERE: “Top 10 Considerations for Estate Planning with Life Insurance”

Find answers to the questions below and more by listening to the free recording.

1. If a life insurance policy is owned by a trust, what is the ongoing maintenance required for the strategy to succeed most effectively?
2. What are Cristofani beneficiaries and how can they make a life insurance trust even more gift tax efficient?
3. How can insurance be utilized to facilitate a business succession plan?
4. Term, whole life, 2nd to die, from a layman’s standpoint, what are the unique benefits of each?
5. How can ownership and beneficiary designations for a life insurance policy affect the taxable assets of the estate?
6. How do non-citizens avoid qualified domestic trust requirements with a life insurance trust?
7. What are some strategies to avoid the 3-year look back period when existing insurance is transferred to a trust?
8. Annual exemption gifts can fund a life insurance trust gift tax free, but what about generation skipping tax issues? How is the trust affected?
9. When the terms of an irrevocable trust do not reflect the wishes of the parties, what options are available?
10. How to use life insurance as a wealth replacement strategy with charitable giving.

McManus & Associates would be happy to discuss how these strategies apply to you and yours. Give us a call at (908) 898-0100.

McManus & Associates Expertise Featured by Wills, Trusts, and Estates Prof Blog

Gerry W. Beyer

Gerry W. Beyer

Gerry Beyer, Professor of Law at Texas Tech Univ. School of Law, writes “Wills, Trusts, and Estates Prof Blog,” a member of the Law Professor Blogs Network sponsored by Wolters Kluwer. Beyer recently took a closer look at the most recent educational conference call held by McManus & Associates and posted a brief, titled “10 Most Important Considerations for Domestic Asset Protection Dynasty Trusts.”

From the post:

Jurisdictions have different laws when it comes to determining the jurisdiction of trusts and trust property. Founding Principal of McManus & Associates, John O. McManus, has shared his expertise by listing the ten most important considerations for deciding where to site your trust. Listed below are the considerations.

To read Beyer’s post and find a wealth of information on estate planning, head on over to Wills, Trusts, and Estates Prof Blog at http://lawprofessors.typepad.com/trusts_estates_prof/. 

Conference Call: Top 10 Considerations for Domestic Asset Protection Dynasty Trusts

State laws vary rather widely regarding the jurisdiction of trusts and trust assets. Certain jurisdictions have laws that are generally more favorable in their treatment of trusts for purposes of asset protection, access to trust-owned assets and creditor protection. As part of McManus & Associates’ Educational Focus Series, Founding Principal John O. McManus shares expert guidance on the top 10 things to consider when deciding where to site your trust.

LISTEN HERE: “Top 10 Considerations for Domestic Asset Protection Dynasty Trusts”

Top 10 Considerations for Domestic Asset Protection Dynasty Trusts

 During the discussion, you’ll find answers to the 10 questions below:

  1. What is a self-settled trust? When can the grantor list himself or herself as a beneficiary?
  2. How do state income taxes affect the choice of situs for my trust?
  3. What variation is there in state legislation regarding creditors and Statute of Limitations?
  4. Are certain exemptions made for specific types of creditors?
  5.  What are the standards for proving fraudulent transfers?
  6.  What role do the courts play regarding actions involving a Trust?
  7. Does the state require an Affidavit of Solvency upon the transfer of assets?
  8. How does the rule against perpetuities affect choice of situs?
  9. Discussing observations of trustee fees in each of the most favorable states.
  10. What are some of the other miscellaneous trust enhancements in the most favorable states?

We would love to learn more about your asset protection needs. Send us an email at reception@mcmanuslegal.com or give us a call at 908.898.0100.

McManus in DailyFinance: “Stop Family Feuds Over Inheritances Before They Start”

Daily Finance

Michele Lerner, contributing writer for The Motley Fool, recently spoke with McManus & Associates Founding Principal John O. McManus to take a deeper dive on a recent chapter of the firm’s educational series, “‘These are a few of my favorite things’ – Top 10 Considerations when Planning for Tangible Personal Property”.

She this week published a very interesting article based on the conversation that’s definitely worth the read. Lerner’s story, “Stop Family Feuds Over Inheritances Before They Start,” shares colorful examples, telling stats and “5 Tips to Prevent Family Fights Over Heirlooms” from McManus.

From the write-up:

“More than 50 percent of the lawsuits we see are about items that have a total asset value of less than 10 percent of someone’s estate,” says John O. McManus, an estate attorney and founding principal of McManus & Associates in New York City. “The toughest part about family fights over a piece of jewelry or a painting is that it isn’t about the value of the item, it’s about what it means to loved ones.”

McManus goes on to say:

“Fighting over personal property is the match to the tinderbox of emotions…Sometimes feuds start because of lingering resentments over who worked the hardest to take care of Mom or Dad when they were sick or even over who got the biggest scoop of mashed potatoes at Thanksgiving every year.”

To illustrate the all-too-common occurrence, Lerner shares several examples from John:

In one case, McManus says, a woman had her sister arrested for stealing less than $100 of clothing from their deceased mother’s apartment. In another case, brothers split in a lifelong feud over their father’s watch.

Lerner captures McManus’ key advice at the end of the article with “5 Tips to Prevent Family Fights Over Heirlooms”: Here’s what made the cut:

1. Make an inventory.

2. Share your list with family members.

3. Appraise your property.

4. Set up a jury system.

5. Write a personal property memo.

To get more details on each of these five tips, check out the full story here.

Conference Call: Top 10 Challenges to Estate Plans

McManus & Associates today hosted the June installment of its Educational Focus Series. Over the course of the firm’s 25 years in the field of Estate Planning, we’ve seen all manner of challenges to estate plans. From will contests to litigation, we are always aware of areas where even the slightest degree of risk might reside. Constantly working to protect against this, we are in a perpetual state of research and development to create the most comprehensive, state of the art plans that protect against even the most remote possible risks.

During this 30 minute recording, McManus & Associates Founding Principal John O. McManus reviews some of the areas of potential risk, discussing what we can learn from them. He also highlights effective strategies that the firm has created and employed to minimize risk and fortify your clients’ plans.

LISTEN HERE: “Top 10 Challenges to Estate Plans”

Top 10 Challenges to Estate Plans
  1. Will manipulated by third party and abuse of durable power of attorney. Undue influence by family members resulting in last minute changes to a will.
  2. Marshaling and valuing for tax purposes, international assets.
  3. Where has Generation Skipping Tax Exemption been utilized? You may be unaware of the significance of automatic allocation rates.
  4. Distributions to charities and notifying the attorney general/government agencies.
  5. Fiduciary’s responsibility to preserve and maintain the estate. (Stock fall in value, sale of home, house broken into, and unclaimed property.
  6. Significant gifts made during life that affect intended outcome of the estate plan.
  7. Failure to use a firm familiar with the sophistication of the planning documents to administer the estate. Failure to correctly interpret the documents.
  8. Personal property disputes after death of a loved one. Fighting in families over whether to sell or keep items to memorialize loved ones. Beneficiaries challenge distributions to surviving spouse from trust.
  9. Failure to title assets correctly. Joint accounts versus convenience accounts. Revocable Living Trusts not properly funded result in probate issues.
  10. Are there sufficient liquid assets available to continue to operate family business, preserve the family retreat and pay estate taxes?

We would be happy to answer your questions. Give us a call at 908.898.0100.