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In my last 2 weeks’ blog posts I have been discussing the issues related to leaving your assets to beneficiaries who are not U.S. citizens.  This week I want to cover a couple of recent scenarios in our office.  One involved a decedent who was a U.S. citizen, died without a will and left a husband and minor son in Africa and a daughter in the U.S.  To further complicate the matter, the husband also had children not of his relationship with his wife. Under New Jersey intestacy laws, because the husband had other children, he is to receive only a part of the estate, not all of it.  The balance goes to the decedent’s children.  Adding to this complication is the fact that the son is a minor so cannot legally receive his share.  The share of a minor typically is held in trust or possibly deposited with the Surrogate until he reaches age 18.  Being a foreign national further complicates and delays the process. In another case, the decedent had a will which left part of her estate to her sibling, a resident of Hungary.  The sibling survived the decedent but then died before receiving his distribution.  The sibling had no will.  Not knowing how the estate administration process there

In my post last week, I answered the question whether leaving assets to a non-U.S. citizen triggers any additional tax when compared to a U.S. beneficiary.  With the exception of a spouse, it generally makes no difference from an estate or inheritance tax standpoint.  There are, however, other practical considerations to take into account. For example, before an executor or administrator distributes the estate to the heirs, he or she should prepare an accounting showing what was taken into the estate, what was paid in estate debts and taxes and what each heir’s share of the remaining estate is.  It is a good practice - for the fiduciary’s protection - that each heir sign a release and refunding bond which releases the fiduciary from any liability before funds are distributed. While it is recommended that these documents be signed before a notary, that can sometimes be problematic logistically if the heir lives in a remote area not near the U.S. embassy or consulate or where a notary can easily be found.  While this certainly isn’t a reason to change one’s chosen heirs, it can lead to some delays or necessitate work arounds to insure that all documents are properly signed and acknowledged. Additionally, there may be tax

In some respects, naming a non-U.S. citizen as a beneficiary of your estate is no different than naming a U.S. citizen (with the exception of a spouse).  For example, while the amount that can be passed free of federal estate tax (there currently is no New Jersey estate tax) is currently $13.61 million, this applies only to the estates of U.S. citizens.  The amount that can be passed tax free by a non-U.S. citizen is $60,000. It is the citizenship of the decedent and not that the beneficiary that matters. The spouse is the exception because there is no marital deduction available to the non-U.S. citizen spouse.  The marital deduction provides that spouses can pass unlimited amounts to each other - even if they exceed the exemption amount ($13.61 million in 2024).  This unlimited exemption is not, however, available for transfers by a U.S. citizen spouse to a non-U.S. citizen spouse.  Estate tax on transfers can only be avoided by setting up a specific type of a trust known as a qualified domestic trust (QDOT).  Additionally, lifetime transfers to a non-U.S. citizen spouse are limited to an annual exclusion of $185,000 (for 2024) before being subject to gift tax. While New Jersey phased out its estate tax in

In this 4th post of 4, I continue to discuss the topic of a catastrophic illness or injury hitting a younger family.  We discussed the issues of long term care which may be needed for extended periods of time or for life.  Advances in medical science can save lives but a lot of care is often needed.  But, as I stated last week, many of these patients may ultimately not survive.  So what happens if someone in their 30’s, 40’s or 50’s dies without a will? As I have written about in past blog posts, without a will the intestacy laws determine who inherits.  Most people would assume that a surviving spouse will be first in line to receive all the assets, however, that isn’t always the case.  If either the decedent (person who died) or the surviving spouse has children from other relationships, then the spouse will inherit a part of the estate but the balance will go to the children. That’s where it can get complicated.  If any of the children are minors, then their inheritance may need to be deposited into court until age 18. At that age, although legally an adult, most people do not have the knowledge, experience and wisdom to handle what could

In this 3rd post, I continue to discuss the topics of sudden catastrophic illness or injury at a younger age than one might ordinarily expect - such as someone in their 30’s, 40’s or 50’s.  Advances in medical science have saved many people who 20, 30, or 40 years ago probably would have died, however, the road to recovery is a slow one and many of these patients need long term care, unable to live on their own. Younger patients typically were working full or part time supporting families with minor children who are unable to make their own decisions and support themselves because of their age.  A parent’s sudden condition which renders them unable to work or live independently, will affect their family as well.  As I explained last week, a detailed power of attorney designating someone to make financial decisions is critical to help lessen the crisis.  Difficult decisions will need to be made but at least we know the person trusted to make those decisions and guide them accordingly. If the parent has no power of attorney, and lacks the mental capacity - either temporarily or permanently - to sign one, then a guardianship proceeding is the only option.  This court intervention will certainly

In my blog post last week I talked about a scenario we are seeing with increasing frequency.  We have had a number of what we call crisis calls relating to a family member who has experienced a sudden onset of injury or illness causing the need for long term care - at a younger age than you would typically think of as needing long term care.  This might be because of a stroke, a brain aneurysm or a traumatic brain injury from a car accident. Decisions need to be made concerning health care.  Without a health care directive, this immediately becomes problematic - especially if the patient is single.  If married, hospitals will often take direction from a spouse - at least temporarily in emergencies, but eventually a legal document authorizing that person to make decisions is needed.  In the case of an unmarried patient, there may be multiple family members willing or insisting on making decisions.  But without a signed document by the patient, these individuals legally can’t act. Very quickly in a crisis, financial decisions need to be made as well about how to pay for care and what accounts need to be accessed to pay the bills.  A power of attorney needs to be in place.  If