Fall is a time when many families think about gathering, about the older relatives they will be seeing, and about conversations that often go unspoken. End-of-life preferences, future care arrangements, and how assets should eventually be handled are subjects that most families feel they should address at some point but regularly defer. This issue covers several of the legal and planning questions that come up most frequently in this context, along with specific developments worth tracking as we close out 2023.
The elder law and special needs planning team at Mandelbaum Barrett PC prepared this newsletter to keep clients and families current on matters relevant to elder law and special needs planning.
Year-End Estate Planning Considerations
The federal annual gift tax exclusion for 2023 is $17,000 per recipient, which means an individual can transfer up to $17,000 to any number of people this year without filing a gift tax return or using any of their lifetime exemption. Married couples can combine their exclusions to give $34,000 per recipient. For families with meaningful assets and estate planning objectives, using the annual exclusion consistently over time is one of the most straightforward and effective tools available.
In addition to outright gifts, qualified payments for educational tuition and medical expenses paid directly to the provider do not count against the gift tax exclusion at all. These direct payments offer a tax-efficient way to transfer significant value, particularly for families with grandchildren in higher education or family members with ongoing medical needs. The year-end deadline for using the 2023 exclusion is December 31, so families intending to make gifts this year should not wait.
Estate Litigation and the Importance of Clear Documents
Among the most preventable legal disputes are estate and probate litigation matters that arise from ambiguous or outdated documents. A will drafted decades ago that does not reflect the current family composition, an estate with beneficiary designations that contradict the will’s distribution scheme, or a power of attorney that was never shared with the financial institutions it needs to cover are all common sources of expensive and painful disputes.
Probate litigation in New Jersey can involve claims of undue influence, lack of testamentary capacity, or breach of fiduciary duty by an executor or trustee. These claims are difficult to defend against when the underlying documents are ambiguous or when the circumstances of their execution are murky. Clear, recently updated documents, executed with proper formalities and under conditions that cannot easily be challenged, are the best protection against disputes that consume estate assets and family relationships. Our estate litigation team handles disputes when they arise, but thoughtful advance planning remains the best way to avoid them.
Transition Planning for Special Needs Adults
For families with a child or young adult with special needs approaching adulthood, the transition from school-based services to adult services is one of the most consequential planning periods they will navigate. Services available through the school system do not automatically continue after the student ages out, and the application and waiting list processes for adult services under New Jersey’s Division of Developmental Disabilities can take years.
Planning for this transition involves multiple simultaneous workstreams: understanding what adult services may be available and when to begin the application process; establishing a special needs trust if one is not already in place; reviewing the family’s estate plan to ensure it properly coordinates with the trust; and addressing legal capacity issues for the young adult. According to the U.S. Department of Labor’s Office of Disability Employment Policy, early planning for this transition significantly improves long-term outcomes for individuals with disabilities and reduces the crisis points that occur when families are caught unprepared.
Contact Mandelbaum Barrett PC
The elder law and special needs planning team at Mandelbaum Barrett PC works with individuals and families throughout New Jersey and New York on year-end gifting strategy, estate planning, special needs trust arrangements, and the transition planning that families with special needs adults must navigate.
To speak with a member of our team, contact Mandelbaum Barrett PC today. Our elder law attorneys are ready to assist with your planning questions.