As we speed through the 3rd quarter of 2024 and look toward 2025, the approach of a new year is a good reminder to take stock of our plans for the future. A well-considered estate plan ensures that your assets are distributed according to your wishes, provides for your final years and for your loved ones. In addition to the well-known considerations such as who you will appoint as executor, trustee, and who will serve as medical agent, below please find some lesser known factorsto consider, depending upon your age and situation.
- YOUNG ADULT CHILDREN: Many people want to appoint their children to serve as executors, medical agents, and as attorney-in-fact under a power of attorney, but at what age will they have the life experience to fulfill these roles? Well drafted documents can provide that at a designated age, 35 for example, your child can elect to serve as a fiduciary.
- LONG TERM CARE PLANNING: 70% of people turning 65 can expect to use some form of long-term care during their lives. The cost of long-term care in New Jersey and Pennsylvania can easily run $100,000 per year. Medicare does not cover long-term residential care. It may cover a maximum of 100 days after a hospital stay for recovery. Long-term care insurance can reduce some of the costs of long-term care. The cost of long-term care insurance increases as you get older. When shopping for long-term care insurance, working with a long-term care professional is essential because coverage options differ greatly.
- DIGITAL ASSETS: We live in a digital age where our assets are cryptographically secured behind user names and passwords. A digital asset is anything created and stored digitally, identifiable and discoverable, and has value. A comprehensive list of your digital accounts, including user names and passwords, stored off-line, allows for a much smoother administration of your estate. A well drafted will should provide for the transfer of your digital assets. Consider appointing a trusted individual to act as your “digital executor” if you have digital assets.
- TAX STRATEGIES: Inheritance taxes are dependent upon the relationship between the beneficiary and the decedent. New Jersey does not assess inheritance tax for transfers to direct descendants (children, grandchildren) and spouses. Pennsylvania’s inheritance tax rate starts at 4.5% for transfers to direct descendants over the age of 21 (no tax to minor children and spouses). For those who wish to leave assets to an unmarried partner, a more distant relative or friend, the amount of tax that will be paid on that bequest must be considered. An irrevocable trust transfers asset ownership from the original owner to the trust beneficiary. Because the assets are not in the original owner’s estate, they are not subject to estate or inheritance taxes at death. Another option is gifting while still alive. Provided the gift does not exceed the annual exclusion for gifts ($18,000 in 2024) no tax will be paid.
Before you celebrate 2025, contact Maselli, Mills & Fornal, P.C. to prepare your thorough estate plan. (609) 452-8411, or BBoyd@masellilaw.com.