Evolving Your Estate Plan to Meet the Demands of Retirement

July 4, 2024

How Your NJ Estate Plan Needs to Adapt to Retirement in New Jersey

If you don’t properly plan your estate considering retirement, there is a chance that your retirement will not be as enjoyable as you may think.

Evolving Your Estate Plan to Meet the Demands of Retirement in New JerseyAfter working your entire life in hopes of one day enjoying your golden years, we all look forward to one day retiring. We think about spending our days on a boat fishing, or traveling the world. We do not think about what our responsibilities or our financial obligations would be as much as we should. We rely on a salary and a fixed rate of income coming in and we can easily determine what our expenses would be. Once we retire, we no longer have those pay checks coming in from our day-to-day jobs. Not only do we need to cover our basic needs, but the goal, in retirement, is to enjoy it. There are many considerations we don’t really think of when we are fantasizing about those long days on the beach with our spouse. For example, the tax implications of retiring in New Jersey should be a real concern for retirees.

Our estate planning attorneys at Chamlin, Uliano & Walsh can assist you with evolving your estate plan to meet the important demands of retiring in Monmouth County, Ocean County, and throughout Southern New Jersey. Contact us today at 732-440-3950  or send us a message to set up a consultation.

You Might Need To Revisit Your Estate Plan After You Retire

Let’s say you already have a retirement plan in place. When was the last time you spoke to your estate planning lawyer? It’s essential to keep yourself updated on all the new regulations and laws or to rely on an experienced attorney who keeps up to date for you, such as ours at Chamlin, Uliano & Walsh. In addition to federal taxes, New Jersey has its own inheritance and estate taxes for retirement accounts when you retire. There is also the Employee Retirement Income Security Act (ERISA) that you need to be aware of.

Advantages of Factoring Retirement into Your Estate Plan in NJ

It is important to understand the different tax implications on a state and federal level so that you can maximize your retirement investments by minimizing your tax exposure. If you do not attend to this, the tax implications can be passed on to your beneficiaries. A very efficient way of doing this is by naming beneficiaries. This will help the transfer of assets in probate tremendously.

If you were to bypass speaking to an experienced estate planning attorney, you can open yourself up to extreme tax liability, altering the amount that you or your beneficiaries would get to enjoy. In certain circumstances, and depending upon the facts surrounding your estate and retirement, it may be wise to keep your retirement funds safe from an inheritance tax in a trust or IRA. New Jersey has an inheritance tax requirement that can severely alter your funds upon your death.

The right attorney can help you establish “trusts” in order to manage the potential taxes you and your beneficiaries face, as well as control the distribution of your assets. Besides trusts, there are other options that an experienced attorney in estate planning can discuss with you, such as a stretch IRA for your spouse, or allowing your retirement account to “rollover” into a different estate planning instrument. If you choose to create an Individual Retirement Account (IRA), you can avoid probate altogether because IRAs are not subject to probate. The assets are distributed directly to your beneficiaries.

Impact of the SECURE Act on Inheritance of Retirement Accounts

Notably, the federal government passed the SECURE Act, which changed the rules for IRAs and inheriting retirement accounts. For example, the age required to begin distributions from a retirement account is now 72 years old instead of 70.5 years old. Also, the full amount to be inherited must be received within 10 years of the death. The Act also affects the federal code and changes the regulations to the distributions from 401(k)s, 403(b)s, IRAs, and tax-qualified annuities. Additionally, it removed the stretch IRA option for beneficiaries who are not your spouse. This is another reason why hiring an estate planning attorney is essential to securing your future.

NJ Inheritance Tax Specifically Affects Residents Planning their Estates And Retirements

Belmar, NJ Retirement Impacts Residents Planning Their EstatesIf you are living in New Jersey, then you know it is a special state, especially when it comes to taxes. New Jersey has its own inheritance tax and certain estate taxes that you must take into consideration when planning your estate and retirement. Inheritance tax is paid by your beneficiaries when they inherit you leave behind for them. New Jersey is one of six states with this tax.

Based on your situation, your estate lawyer can explain how each of your beneficiaries could be classified into one of four classes defined in the New Jersey tax law: Class A, Class C, Class D, or Class E. Class A is your spouse, children, grand-children, etc. Class A beneficiaries are excluded from the New Jersey inheritance taxes. Also, the decedent must be a resident of New Jersey for their beneficiaries have to worry about the New Jersey inheritance tax.

Trust Strategies for Securing Retirement Assets in Your Estate

The two main types of trusts that could be very useful in estate planning are the “conduit” trust and the “accumulation trust.” The “conduit” trust is a financial instrument that controls the distributions from an IRA after death. Specifically, the trust allows for the distributions to be stretched over the lifespan of the oldest beneficiary of the trust. The trustee will retain control over the assets over this time period while making the required minimum distributions.

The second type of trust is the accumulation trust. The accumulation trust allows for the required minimum distribution to be made and kept within the trust. The trustee could hold the distribution within the trust and accumulate over time. By doing this, you can protect your beneficiaries from potential creditors.

Thinking About Retiring In New Jersey? Receive Personalized Estate Planning Help from Chamlin Uliano & Walsh in West Long Branch

It is absolutely essential to retain the most skilled lawyer you can find when planning your estate. At Chamlin, Uliano & Walsh, our seasoned estate lawyers will work to protect your interests and the interests of your beneficiaries on both the state and federal levels. We can also discuss your unique situation in retirement and updating your estate plan to best protect your beneficiaries from any tax and creditor issues that could arise in the future after your death. It’s important to find someone you trust and someone whose guidance can be relied on. The team at our Monmouth County County law firm is on your side. We can assist you with updating your estate plan in the face of retirement in Toms River, Freehold, Neptune, Wall, Long Branch, Holmdel, Rumson, Jackson, Middletown, and throughout Southern New Jersey. Contact our West Long Branch office at 732-440-3950 for a consultation today.

Categorised in: Estate Planning