The curtain of darkness is fallin’ And my friends are all here at my side.
Are those the sweet voices of angels
As I rise on that heavenly tide?
All hearts overflowin’ with sadness
And those words left so often unsaid
Then I could hear a voice whispering softly,
Could I have all your stuff when you’re dead?
Could I have your TV and your pickup?
And I’ve always admired your shoes.
Could I have that old dining room table?
And there’s a couple of chairs I could use.
— The Austin Lounge Lizards, Could I Have All Your Stuff When You’re Dead?
As the old saying goes, the only inevitable things are death and taxes. That goes double for estate taxes, which take effect when the dead pass on their wealth to their descendants. For those fortunate enough to have something of value to leave to heirs or relatives, it is more important than ever to understand the laws about estates. That’s where Robert Morris, shareholder at the Stark & Stark law firm comes in. As a member of the firm’s trusts and estates group, Morris helps many people deal with the thorny issues that arise from the question of what to do with someone’s stuff when they’re dead.
“What most people think about when they think about estate planning is taxes: federal taxes, estate taxes, and gift taxes,” he says. “New Jersey also imposes two estate taxes, one called an estate tax, and a separate tax called an inheritance tax, and they shouldn’t be confused.”
Unfortunately, many people do find such distinctions confusing, and the law is not getting any simpler. (One wrinkle is that federal estate taxes generally kick in after the first $5.25 million in estate value; New Jersey taxes apply to estates worth more than $675,000.) And as complicated as the laws can be, there are new social factors to consider, too. Passing on wealth is no longer as simple as leaving it all to a spouse or child. Morris says inheritance is getting more and more tangled as society changes. Many people now want to control their beneficiaries’ behavior from beyond the grave, recoiling at the thought of the fruit of their life’s work being “invested” in gin or crystal meth.
“A lot of clients are increasingly concerned not only with taxes, but with what’s going to happen to their inheritance when they pass away,” he says. “Those concerns run the gamut. For example, what if a beneficiary has a serious issue involving their lifestyle, or alcohol or substance abuse? This is what we are seeing more often. And clients are just as concerned when the children or another relative has money management issues. We draft our estate plans to help clients with those concerns.”
Morris will help people plan their own estates at a pair of seminars Wednesday, September 25 at Stark & Stark’s offices at 993 Lenox Drive in Lawrenceville. The first takes place from 2 to 3 p.m., the second from 7 to 8 p.m. Morris will discuss estate planning strategies, gift and death taxes, credit shelters, estate planning under a will or revocable trust, and living trusts. Free. To register, call 609-945-7610 or E-mail tcardullo@stark-stark.com.
Morris says the best way to plan your estate depends on individual circumstances. If, for instance, your heir is deeply in debt, you may want to leave your money in a trust rather than give it to him outright. A trust is protected from creditors. Also, if you don’t trust your child’s spouse, the spouse can’t get at the money. “And, depending on specific circumstances, you can put language in the trust that controls how distributions are made, or draft the trust to pay expenses on behalf of the beneficiary: living expenses, rehabilitation, or medical care, you could pay those as well.”
The same applies if you are trying to leave money to a special needs child to pay for living expenses. The account must be structured properly if you wish to assist the child while not disqualifying them from receiving government benefits.
The newest issue is that of recent changes to the tax code, which are too complicated to go over in this article, but which affect how people should structure their estates to minimize the amount of taxes paid. Morris says many people wrote their wills 10 to 15 years ago, when the tax code was different, and so the way their estates are structured no longer makes sense under the new legal regime.
“A lot of people planned estates under the old rules,” Morris says. “They used to leave the maximum amount they could leave estate-tax free to their kids, and create two trusts: one that would go to the kids, everything else to the spouse.” Because the maximum amount without estate tax has increased, wills written under the old rules run the risk of leaving all the money to the kids and leaving the spouse high and dry. “That may not be an effective way to plan an estate,” Morris says.
Business owners have more considerations than other people when it comes to drafting a will. They are not leaving a pile of cash, but an organization consisting of assets, clients and employees. “Business owners a lot of times haven’t thought about what happens if they become disabled or incapacitated and can’t run their business,” Morris says. “How is it handled? A lot of times, there is very little planning to address that situation. In small businesses, if the primary owners aren’t there, the bills keep coming, and how you do simple things like paying bills and getting the business through the next quarter is a problem.”
Morris says one potential solution is through powers of attorney, appointing back-ups in case the key person can’t be there, or appointing a family member or a spouse to take over. That’s not always possible, however. “If you are a doctor, you can’t go appointing a spouse to be your replacement,” Morris says.
Morris says he has seen more disputes between family members lately, though he is not sure why. “Beneficiaries are becoming more and more aggressive about enforcing their rights or filing litigation,” he says. “Probably the biggest issue is a general lack of family harmony that spills over into our area. Siblings who just don’t get along for whatever reason. This is a sensitive topic that has to be handled carefully. The pent up emotion spills over to estate planning, and if wills aren’t executed properly, it just adds fuel to that fire.”
Occasionally, a non-family member will be added into a will, though that is rare. More common is for parents to leave unequal amounts of money to the children, often to reward a child who played a role caring for the elderly parents.
The entire process goes more smoothly if a lawyer drafted the will, Morris says, although that is increasingly not the case. Many people choose “do-it-yourself” wills advertised on television. “A lot of times you’re offered an opportunity to write things into the will, and a lot of times the things that are written are not very clear.”
Morris grew up in Moorestown, where his mother was a housewife and his father was a financial advisor for UBS. He majored in finance at Penn in Philadelphia, then graduated from Vanderbilt law school in 1997. He went into practice after a four-year hitch in the Army, joining the firm of Hoagland, Longo, Moran, Dunst & Doukas. For the next nine years, he was a partner at Brennan Law Firm in Cranbury, joining Stark & Stark in July.
Morris says he entered this area of law because it is about helping people, rather than some of the more combative areas of practice. “I enjoy it a lot,” he says. “You’re trying to help people resolve their affairs in a way that is efficient, and in a way that helps them determine where their money should go, whether it is is to charity or family or both. It’s just an enjoyable line of work. Losing a loved one is a major impact on a family, and it can be pretty jarring. This is a way to make life easier for them as well.”
