When a parent passes away, oftentimes their spouse or adult children are left to settle the estate. While debt may be the last thing on the mind of someone that loses a loved one, it is an important issue that may arise upon their passing. Many people have similar questions when it comes to estate debt: Are the beneficiaries responsible for a loved one’s debt upon their death? What happens if the assets of the estate amount to less than the debt the parent owed?
Category: Trusts and Estates
POLST and Advance Directives: You Need Both!
In December 2011, New Jersey Governor Chris Christie signed legislation that enables patients to indicate their wishes regarding life-sustaining treatment through the practitioner/physician orders for life-sustaining treatment (POLST) form. POLST is a medical order that is completed by a physician or an advance nurse practitioner (APN) and is intended for patients with life-limiting illnesses. The advance planning tool POLST should be established and utilized complementary to, not in place of, advance directives.
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Self-Settled Trusts Available for Individuals with Disabilities
By adding two words (“the individual”) from the Special Needs Trust Fairness Act of 2015 to an existing statute, special needs individuals are now able to create their own self-settled special needs trust. President Obama signed the 21st Century Cures Act approving the change and opening the door for individuals who previously could not open a special needs trust on their own.
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New Jersey Makes Changes to Uniform Trust Code
Effective July 17, 2016 New Jersey officially enacted the revised Uniform Trust Code. The act, which was introduced by state Senators Christopher “Kip” Bateman and Peter J. Barnes, III, applies to “express trusts, charitable or noncharitable, and trusts created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust.
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New Jersey Estate Tax
In New Jersey, any estate larger than $675,000 is subject to the New Jersey Estate Tax.
A New Jersey estate tax return, Form IT Estate, must be filed if the decedent’s gross estate plus adjusted taxable gifts exceeds $675,000 within 9 months of date of death. The New Jersey estate tax is either the maximum credit for state inheritance, estate, succession or legacy taxes allowable under the provisions of the Internal Revenue Code in effect on December 31, 2001 (this is called the “Form 706 Method”), or an amount determined pursuant to the Simplified Tax System prescribed by the Director, Division of Taxation (this is called the “Simplified Form Method”).
IRS Estate Tax Exclusion
For 2016, the IRS estate tax exclusions are as follows:
- the estate tax exclusion amount for deaths in 2016 is $5.45 million
- the annual exclusion for gifts is $14,000
- the applicable exclusion amount for lifetime gifts is $5.45 million
