Varian Law LLC

A Good Estate Plan Can Protect Your Assets

It can be difficult to protect your assets in our litigious society.  However, the use of quality estate planning strategies can make it easier.

Everyone should protect their assets from potential creditors, according to the Wills, Trusts & Estates Prof Blog in "Asset Protection Measures."

Estate planning attorneys have many strategies to protect assets from potential creditors, and some form of trust is typically the best option for doing this. However, there are other ways to protect assets, including utilizing retirement accounts and college savings plans.  As a last resort, liability insurance can be purchased to protect against creditors.

An experienced estate planning attorney can guide you in setting up an estate plan that fits your unique circumstances and protects your assets.

Reference: Wills, Trusts & Estates Prof Blog (May 31, 2017) "Asset Protection Measures."

New Jersey Has Change of Heart on Student Loans

Parents who cosigned student loans for their children, and who then passed away, no longer have to pay back New Jersey.

The state of New Jersey has been known for taking a hard stand on student loans.  However, it has now taken a reverse course, according to Financial Advisor in "N.J. Discharging Loans For Families of Deceased Students."

If a student passes away with outstanding student loan debt, then the federal government discharges the debt. Many private student loan companies also do this.

New Jersey, however, has been known for taking a tougher stand.

Not only would New Jersey still expect payment from the estate, it would require co-signers to pay, if the estate was unable to do so. This left many families deep in debt over the unrepaid loans of their deceased children.

The policy was roundly criticized for the burden that it left on grieving parents.

Attempts had been made to change the law and the state's policy to no avail. However, the state legislature has recently reversed course and will now discharge the debt of deceased students.

Reference: Financial Advisor (Feb. 21, 2017) "N.J. Discharging Loans For Families of Deceased Students."

Estate Planning Is Still Needed Even If the Estate Tax Is Eliminated

Estate Planning is not just about avoiding the Federal Estate Tax.

Even if the Republican-controlled Presidency and Congress eliminate the Federal Estate Tax, the need for Estate Planning will not be eliminated, according to Forbes in "Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!"

In addition to the reasons explained by Forbes in its article, there are many non-tax-related reasons why proper estate planning will remain essential.  Everyone needs some level of estate planning, and the potential repeal of the Federal Estate Tax will not change that simple fact.  The Federal Estate Tax is not, and never was, the only (or even the main) reason why everyone should engage in some form of estate planning.   

“Estate planning” is about making sure that the assets people accumulate during their lives are properly and efficiently distributed to their beneficiaries in accordance with their desires.  However, while that objective may be simply stated, in many situations the goal can be a lot more complicated to achieve than most people realize.  Comprehensive estate planning consists not only of tax planning, but also of planning for the many non-tax related and personal issues that may arise in any situation (regardless of a person’s wealth).  Among other reasons/circumstances, sophisticated estate planning is needed to reduce or avoid the application of local transfer taxes (e.g., the NJ Estate Tax and/or the NJ Inheritance Tax), for unmarried partners and other “non-traditional families”, for people who have been married more than once, and for people with (i) minor children, (ii) disabled beneficiaries (i.e., special needs planning), (iii) spendthrift or “financially handicapped” beneficiaries, (iv) closely held business interests, (v) property in more than one State, (vi) charitable objectives, (vii) complex distributive desires, (viii) significant assets that are governed by beneficiary designation forms, (ix) children from more than one relationship, (x) a desire to protect their beneficiaries’ inheritances from future creditors (such as a potential future ex-spouse), (xi) valuable illiquid assets (e.g., real estate, business interests), or (xii) an imminent long term care need (i.e., Elder Law and Medicaid qualification planning).  Despite the fact that someone may not need to be concerned about the Federal Estate Tax, the need for estate planning will always remain vital and necessary.  Even the complete and permanent (only time will tell?) repeal of the Federal Estate Tax would not signify the “death” of estate planning.

The potential for Estate Tax repeal should not deter anyone from implementing a comprehensive estate plan that addresses their many tax and non-tax related goals, and no prudent person should fall victim to the myth that estate planning would not be necessary if the Federal Estate Tax is repealed.  Professional estate planning and estate/trust administration services will always play a vital role in everyone’s overall financial plan.  

Reference: Forbes (Dec. 8, 2016) "Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!"

There are Exceptions to Attorney-Client Privilege

The Attorney-Client Privilege is important in Estate Planning, but there could be exceptions to that important rule.

The Attorney-Client Privilege is one of the key doctrines of our legal system, but there are exceptions as explained by the Wills, Trusts & Estates Prof Blog in "Treasure-Hunter's Documents Might Be in Deep Water."

This doctrine even has an important place in Estate Planning because in order to create an estate plan the client needs to be able to tell the estate planning attorney about their assets. But the client might not be willing to reveal everything if the attorney could later be forced to testify in a legal dispute.

In the case discussed, a former treasure hunter hired an attorney to create an offshore trust. The client then got financing for an expedition in which he recovered gold from a sunken ship.  However, the client then refused to pay the people who had financed his treasure hunt, and they are asking the Court to force the attorney to reveal the trust documents so that they will have an easier time recovering the money.

The Judge in the case, while not making a decision, has acknowledged that the crime-fraud exception to attorney-client privilege might apply in this case. In other words, if an attorney's services are knowingly used to commit a crime or a fraud, then the Attorney-Client Privilege does not apply.

A qualified Estate Planning attorney can guide you in creating an estate plan that meets your unique needs, and explain the exceptions to the Attorney-Client Privilege that could be applicable in the context of estate planning.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 17, 2016) "Treasure-Hunter's Documents Might Be in Deep Water."