New Jersey Protected Assets – Questions & Answers
Question 1: Assuming that someone has won a money judgment against me in court, from what assets of mine does the judgment creditor satisfy the judgment? Answer: The three basic sources which a judgment creditor may satisfy the judgment (1) income, (2) tangible and intangible personal property and (3) real property.

Limited Liability Company – Questions and Answers
Question 1: If I transfer an asset into a single-member LLC, will I have to pay any tax? Answer: No. The transfer is to yourself for income tax purposes, thus there is no capital gains on the transfer.

How A Power of Attorney Functions in Estate Planning
A Power of Attorney (POA) is a legal document giving another person or institution the right to do certain legal acts or tasks for another person (the Principal). This document may be one of the most important in an Estate Planning. It will save significant time and money if circumstances necessitate its use. A person giving another Power of Attorney can make it very broad (General POA) or can limit it to certain acts ( Limited POA).

International Planning - Questions and Answers
Question 1: What is a Variable Universal Life Insurance Contract? Answer: A Variable Life Insurance Contract is a contract (1) that provides for the allocation of all or part of the amounts received under the contract to an account which, according to applicable law or regulation, is segregated from the general asset accounts of the company and (2) the amount of the death benefit (or the period of coverage) is adjusted on the basis of the investment return and the market value of the segregated asset account. IRC 817(d).

Limited Liability Company – Questions and Answers
Question 1: Should I consider using an LLC to protect my assets? Answer: Whether or not an LLC is right for you depends on what you own, how you own it, your willingness to part with control, and your level of risk. It is beneficial to hold investment assets within an LLC. I would not suggest putting personal use property into an LLC. For example, if you own rental real estate outside of an LLC, e.g. in your name alone, the property and your other assets are open to attack from two directions. First, if a person is injured on the property and the judgment exceeds insurance coverage limits, the plaintiff may seize the real property or your brokerage and bank accounts to satisfy the judgment. Second, if a plaintiff sues you for something totally unrelated to the property and wins, the plaintiff may seize the property to satisfy the judgment

Qualified Personal Residence Trust - QPRT
Question 1: What is a Qualified Personal Residence Trust (QPRT)? Answer: The United States government permits you to leverage your gift-tax exclusions by transferring a personal residence into an irrevocable trust, retaining the right to use the property for a term of years, and passing the property to another person, or a trust for the benefit of another person, at the end of the term of years. The transfer-tax cost is based on the fair market value of the property at the time you transfer it to the trust minus the value of your right to use the property for the term of years. At the end of the term of years, the beneficiary might receive property valued at $600,000.00 for a transfer tax cost less than $100,000.00.

International Planning - Questions and Answers
Question: I have heard a lot about “offshore” schemes and scams where the client winds up in prison; are the international structures we are discussing legal? Answer: Yes. Most individuals and corporations run afoul of the law when they fail to file required forms, try to hide their assets from the IRS, try to disguise the nature of the transaction, personally use property that they legally may not, and evade paying taxes.

Irrevocable Life Insurance Trust
Question 1: I have heard that life insurance proceeds are not taxable. I have also heard that they are taxable. Which is it? Answer: Both. The beneficiary of your policy will not have to pay income tax on the death benefit, but your estate will have to pay estate tax on the death benefit if you are both the owner and insured. One way to remove the value of the proceeds from your taxable estate is by transferring the policy to another owner such as an Irrevocable Life Insurance Trust (ILIT) or by having the trust purchase a policy insuring your life. Since the trust is the owner, the proceeds will not be taxed in your estate.

Grantor Retained Annuity/ Uni Trust
Question 1: What is a Grantor Retained Annuity Trust (GRAT)? Answer: A GRAT is a trust that permits you to: (1) transfer property to it, (2) receive an annuity interest for a term of years from it, and (3) direct who receives the balance at the end of the trust term. In a low interest-rate environment it is effective for transferring assets that are expected to appreciate at a relatively low or no transfer-tax cost.

International Planning - Questions and Answers
Question 1: If I transfer property to a foreign trust, who is responsible for paying the tax on trust income? Answer: You, as the U.S. person transferor, are responsible for the income tax. Under United States Internal Revenue Code sections 671 and 679, foreign trusts that have one or more U.S. beneficiaries are deemed “grantor trusts” for income tax purposes. This means that you are responsible for the income tax. Under Internal Revenue Regulation §301.7701-7, a trust that is not controlled by a U.S. entity and that is not subject to the jurisdiction of a United States court is a foreign trust. Although there are exceptions to this rule (Reg. 1.679-4), none of them applies to the typical foreign asset protection trust.

Wills Protect Your Family
WILLS AND TRUSTS PROTECT YOUR FAMILY The primary purpose of Wills and Trusts created in your Will, but not funded until after your death, is protecting your beneficiaries from themselves and creditors. Trusts created in your Will are called Testamentary Trusts.

Planned Giving Techniques
Planned Giving Techniques Supporting your house of worship or favorite charity (exempt entity) through gifts is a great way to reduce income and death taxes. Gifts may include cash and cash equivalents, securities, insurance policies, retirement plan assets, personal property and real property. Subject to rather liberal restrictions, you may deduct annual donations of money and short-term capital gain property to charity, up to 50% of adjusted gross income (AGI). Long-term capital-gain property is limited to 30% of AGI. In subsequent years, you may deduct the value of gifts in excess of these limitations.

Irrevocable Life Insurance
CONSIDER AN IRREVOCABLE LIFE INSURANCE TRUST (ILIT) TO REDUCE ESTATE TAXES Insurance on your life will be included in your taxable estate if either (1) Your estate is the beneficiary of the insurance proceeds, or (2) You possessed certain "incidents of ownership" in the policy within three years of your death. Incidents of ownership that will cause the proceeds to be taxed in your estate include the rights to: change beneficiaries, assign the policy, pledge the policy as security for a loan, borrow against the policy's cash surrender value, and surrender or cancel the policy. A life insurance trust is an effective way to keep life insurance proceeds from being taxed in your estate.

Death Tax Planning In New Jersey
DEATH TAX PLANNING IN NEW JERSEY As of this writing, we are in a period of uncertainty regarding the future of the federal estate tax. Although the House of Representatives has repeatedly voted to end the tax, the Senate has repeatedly voted to continue the tax. Many individuals have their own ideas about what will happen, but the truth is that nobody knows. If tax planning is an issue, flexibility is the key to a successful tax reduction strategy. Even if both houses of Congress and the President agree to end the federal tax, planning to reduce New Jersey Estate and Inheritance taxes must be considered.