When you’re buying or selling a house, closing costs are an important factor to consider. These are extra costs that come in addition to the home’s price. While they might seem complicated at first, understanding them can help you plan your budget better. In New Jersey, closing costs can be quite varied.
If you are buying or selling a home in New Jersey, keep in mind although some closing costs can be negotiable between a buyer and seller, most are typically paid by one or the other. Before you make any decisions, it is important to consult with an experienced New Jersey real estate attorney. Call the Matus Law Group at (732) 281-0060 to schedule an appointment today.
How Much are Closing Costs in NJ
In New Jersey, the closing costs that home buyers and sellers need to bear encompass a range of expenses. For buyers, these costs generally fall between 2% to 5% of the home’s purchase price. These costs cover various charges including loan origination, appraisal, credit report, title search, and title insurance fees.
On the other hand, sellers usually face costs ranging from 5% to 8% of the sale price. The major component of these costs is the realtor’s commission, which typically amounts to 6% of the selling price. Additional costs, making up the remainder, may include fees for legal services, title transfer, and other associated expenses.
Let’s take an $800,000 home as an example. A buyer with a mortgage may pay around 3% or $24,000 in closing costs. Conversely, a seller could face up to 8% or $64,000 in closing costs, inclusive of the real estate commission.
It’s important to note that these figures are average ranges, and actual costs can vary based on factors like the type of loan, property value, sale contingencies, and local regulations. Always consult with a local real estate expert or a skilled attorney to get a more accurate estimate of closing costs.
Typical Seller’s Closing Costs
During the course of a real estate transaction, there are closing costs that are typically paid by or credited to the buyer by the seller. Typical costs paid by the seller at closing are:
Mortgage payoff, accrued interest, and recording of the satisfaction — if the seller had a mortgage on the home, this is paid off from the proceeds of the closing.
Real estate commissions
State, county, and city transfer taxes or stamps — depending on the home’s sale price, this figure is a percentage of that amount.
Well water inspection — the PWTA requires that well water is tested prior to the closing
Smoke detector/carbon monoxide certificate — the seller must obtain a certificate in compliance with New Jersey Fire Code.
Prorated adjustment for property taxes for the year.
Prorated adjustment for any homeowners association dues and transfer fees
Closing Cost Description
Explanation
Mortgage Payoff
Paying off any existing mortgage on the property.
Real Estate Commissions
Commissions paid to real estate agents for their services.
Transfer Taxes or Stamps
Taxes or stamps required by state, county, and city authorities.
Well Water Inspection
Testing well water to comply with regulations (if applicable).
Smoke Detector/Carbon Monoxide Cert.
Obtaining a compliance certificate as per local fire codes.
Property Tax Adjustment
Prorated adjustment for property taxes based on the closing date.
Homeowners Association Fees
Prorated adjustment for any dues and transfer fees (if applicable).
Typical Buyer’s Closing Costs
The buyer’s closing costs will vary depending on whether the buyer is getting a mortgage, who the lender is, and what type of loan it is. When a buyer applies for a mortgage, the lender is required to give them what is called a good-faith estimate of their closing costs. Some are paid at closing and some are paid in advance. Typical closing costs paid by the buyer are:
Costs associated with closing and title insurance such as the title search, title insurance premiums for the buyer’s policy as well as the mortgage holder’s, administrative fees charged by the closing office, and the property survey
Costs associated with the mortgage such as application fee, mortgage points, appraisal, prepaid interest, private mortgage insurance, recording fees, and other miscellaneous costs
Inspection costs such as a radon inspection, wood destroying insect inspection, roof inspection, septic inspection, and oil tank inspection as they are required or applicable
Prorated adjustment for property taxes for the year.
Prorated homeowners association dues and transfer fees
Escrow for homeowners insurance
Escrow for property taxes
Mansion tax (if applicable)
Can the Seller Pay Some of the Buyer’s Closing Costs?
Whether the seller can pay a portion of the buyer’s closing costs will depend on the lender that the buyer is using. With most loans, the seller can contribute some amount toward the buyer’s costs. Depending on the mortgage this can vary from around 3 percent to 6 percent.
In most cases, however, the market will determine whether a seller chooses to contribute to a buyer’s closing costs. If the market is very competitive, the seller will have little incentive to pay a buyer’s closing costs. Conversely, in a down real estate market, a seller may offer to offset a buyer’s costs or offer other concessions to attract buyers.
Getting the Assistance of a New Jersey Real Estate Attorney
A real estate transaction is one of the largest investments of a lifetime…and most expensive. You never want to pay more than necessary. Getting the assistance of a New Jersey real estate lawyer can ensure that. At the Matus Law Group, we will guide you through your real estate transaction, review your contract, and ensure that the lender has properly disclosed the closing costs you are paying. If you are a seller, we can make sure that your contract and title documents are properly drafted, executed, and filed. Contact us to learn more.
from Matus Law Group https://matuslaw.com/who-pays-real-estate-closing-costs-new-jersey/
extremely expensive, and nursing home care is not covered by Medicare. Although some people have the financial means to pay for their long-term care or have made arrangements well in advance, many will not be able to fund this on their own. In this case, they may look to Medicaid for help. If you are not sure if setting up an irrevocable trust in New Jersey is right for you, contact The Matus Law Group today. Our skilled New Jersey trust attorney can help you navigate the complexities of long-term care planning and guide you on whether an irrevocable trust is a suitable option for your situation, especially regarding Medicaid protection. Planning ahead is crucial to having the necessary resources in place to cover potential long-term care expenses. Contact us at (732) 785-4453 to schedule an appointment and take the first step toward securing your future and protecting your assets.
What is an Irrevocable Trust in New Jersey?
A trust is a legal vehicle that allows assets to be held by the trust, not the individual, and managed by a trustee who will direct those assets to the beneficiaries of the trust. There are two main types of trusts: revocable trusts and irrevocable trusts.
In many cases, people choose revocable trusts that can be modified over time for their flexibility. But there are cases when an irrevocable trust is extremely useful. It can offer incredible tax benefits, be beneficial if you have a disabled dependent, and can also be helpful when it comes to long-term care to overcome asset eligibility requirements set by Medicaid.
How Does the Irrevocable Trust Work?
When the trust is created, the creator will designate a trustee to manage it and also name beneficiaries of the trust. The person who creates the trust can be a beneficiary, but not a trustee.
Once the creator transfers assets into an irrevocable trust, he or she no longer controls those assets. The trust now owns the assets, and the trustee controls them. One of the benefits of this trust is that these assets are no longer part of the creator’s estate or a tax liability. The trust will pay its own taxes.
Different Kinds of Irrevocable Trusts in New Jersey
New Jersey trust lawyer
There are many irrevocable trusts that can be used to accomplish a variety of goals. The most popular in New Jersey are the following:
Bypass Trust – Married couples who have substantial estates can use this estate planning tool to reduce estate taxes on the death of their spouse. This arrangement allows the spouse who has predeceased the other spouse to transfer their property into the trust for his/her benefit. The income from trust property is available to the spouse who survives, but it doesn’t become part of the estate. It also does not attract estate taxes.
Special Needs Trust – This irrevocable trust is intended to provide for an adult or child with disabilities who are receiving Medicaid or other public benefits. A special needs trust is created to protect the eligibility of a beneficiary for benefits and ensure that they don’t lose their eligibility if there is a large inheritance.
Spendthrift Trust- A spendthrift trust protects a beneficiary who cannot manage their finances, is at high risk of creditors’ claims, or has a problem using alcohol, drugs, or gambling. The trust is managed by the trustee. Assets are transferred to the trust. The trust terms allow the trustee to provide funds on a regular basis to the beneficiary or pay monthly expenses directly.
Charitable Trust – This type of trust is for people who want to leave a charitable legacy while also minimizing estate taxes. A charitable remainder trust is a trust where the property is transferred to a charity as the final beneficiary. After that, income from the trust is distributed to another person for a specified time.
Life Insurance Trust – The proceeds from a life insurance policy often count towards the estate’s total value, which can have estate tax implications. An Irrevocable Life Insurance Trust is one that acquires the life insurance policy and names a trustee to distribute the proceeds upon the death of the grantor.
Type of Irrevocable Trust
Purpose/Use
Bypass Trust
Reduce estate taxes for married couples with substantial estates. Allows the transfer of property to benefit the surviving spouse without inclusion in the estate.
Special Needs Trust
Protects the eligibility of individuals with disabilities for Medicaid and public benefits, ensuring they don’t lose eligibility due to a large inheritance.
Spendthrift Trust
Provides financial protection for beneficiaries who struggle with managing finances, face creditor claims, or have addiction issues. Managed by a trustee.
Charitable Trust
Allows individuals to leave a charitable legacy while minimizing estate taxes. Property is transferred to a charity as the final beneficiary, with income distributed to another person for a specified time.
Life Insurance Trust
Manages life insurance policy proceeds to avoid estate tax implications. Acquires the policy and designates a trustee to distribute proceeds upon the grantor’s death.
Who Owns The Property In An Irrevocable Trust
Assets conveyed into the trust are transformed into trust property. Trust property comprises all the assets that the grantor, the trust’s creator, transferred into the trust while alive, as well as assets for which the trust assumes a beneficiary role following the grantor’s passing. This may encompass real estate and personal possessions, whether tangible or intangible, such as bank accounts or financial interests.
In irrevocable trusts, the property is exclusively owned by the trust itself. Legally, the property belongs to the trust and is registered in its name. The grantor, trustee, and beneficiaries lack any form of ownership rights concerning the trust property. From both a legal and financial perspective, the grantor has no connection to the assets, and the trustee—responsible for managing the trust assets for the beneficiaries—does not possess ownership of the trust property. While the trustee has control over the assets, their responsibility is to prioritize the well-being of the beneficiaries, following the instructions provided by the grantor during the trust’s establishment.
When it comes to understanding the intricacies of property ownership within an irrevocable trust, legal guidance becomes crucial. At The Matus Law Group, our seasoned New Jersey trust attorneys can provide invaluable insights into the legal framework surrounding irrevocable trusts, with the aim of protecting and managing your assets properly. Contact us to schedule a consultation and secure your assets with confidence.
How Does a Revocable Trust Help With Medicaid Asset Eligibility Requirements?
In order to receive Medicaid benefits, an applicant must fit into Medicaid’s narrow eligibility requirements for assets and income. Many have too many assets to qualify for Medicaid. In that case, individuals may choose to “spend down” income and assets to qualify. Fortunately, assets placed in an irrevocable trust are no longer “countable” by Medicaid.
Medicaid will review your assets when determining eligibility. Many assets will be counted against their 2021 cap of $2,000, and others will not. When you place assets in an irrevocable trust, they are considered “non-countable” assets since the trust now owns them, and you don’t. Other non-countable assets include:
● Your primary residence and rental properties
● Personal property including furniture and jewelry
● Home improvements
● Life insurance
● 401K and IRA accounts
● Assets you have attempted to sell in good faith
● Pre-paid burial services
Why You Shouldn’t Gift These Assets to Your Children Instead?
It may seem like the obvious solution to transfer your assets to your children now. But if you are doing this for purposes of qualifying for Medicaid benefits, Medicaid has a five-year look-back period for anything that is considered a gift. The transfer of any assets to qualify for Medicaid must be completed at least five years prior to be protected.
In addition, there are advantages to naming your children beneficiaries of the trust instead of gifting them the assets now.
● In the case of a divorce or death, the spouse may have rights to those assets.
● Creditors cannot seize the assets in the trust.
● The trust will provide legal accountability for the family.
If you have more questions concerning irrevocable trusts and how they can ensure your long-term care, you should discuss this with a professional estate planning attorney. The estate planning professionals at The Matus Law Group would be happy to discuss any of your estate planning needs during a consultation.
For more than 20 years, The Matus Law Group has been advising residents of New Jersey in all matters of estate planning and special needs planning services for both children and adults. The Matus Law Group is an experienced team of attorneys who can help you and your family plan for life, protect and care for loved ones with special needs, cope effectively with disability and death, and preserve inheritances for future generations.
Top 5 FAQs about Irrevocable Trusts for Long Term Care
Since the Deficit Reduction Act of 2005, trusts have become an increasingly popular tool for asset protection in long-term care planning. This legislation increased the look-back period from three years to five years for gifts to individuals but maintained the five-year look-back period for gifts to trusts. Therefore, a gift to a trust has the same five-year look-back as a gift to an individual.
1. Why use a trust for long-term care instead of gifting assets to a child?
There are many reasons a trust is preferable for asset protection in long-term care planning than an outright gift to a child. First, a child may suffer through a divorce and lose some of the gifted assets to a former spouse.
Second, a child may predecease the spouse with the child’s spouse or descendants ultimately owning the property. Third, if a child receives the assets, and later has problems with creditors, the child’s creditors may be able to seize the gifted assets. With a trust, many of these issues can be avoided. In addition, a trust can provide some legal accountability among the family members.
2. How does the Trust work?
The creator of the Trust names a Trustee to handle the investment of assets held by the trust and make distributions of trust assets as detailed in the trust document.
The trust will also name beneficiaries of the trust. These individuals are entitled to distribution of trust income and/or assets. If the trust is drafted properly, the trust assets may be protected from a beneficiary’s creditors.
The Trust may have different beneficiaries during the creator’s lifetime and at the creator’s death. In most cases, an individual should wait at least five years before filing a Medicaid application after transferring assets to an irrevocable trust.
3. What type of Trust will not count as an asset for Medicaid or the Veterans Administration?
The Trust must be irrevocable. If the creator of the trust can revoke or amend the trust, it is considered a countable asset of the creator of the trust. Furthermore, the creator of the trust generally should not be a beneficiary of the trust. If the creator of the trust can receive income or principal from the trust, Medicaid will count as a resource whatever the creator/beneficiary can obtain from the trust.
4. Who can be a Trustee?
In most cases, a child of the creator serves as trustee, but other individuals or corporations may serve as Trustee. It is important that the creator of the trust or his or her spouse never serve as Trustee.
If the trust creator has control over the assets of a trust, Medicaid will count the trust assets as countable resources of the trust creator. Control is tantamount to ownership.
5. What assets may fund a trust?
Almost any asset can be used to fund a trust for long-term care planning, including real estate, stocks, bonds, cash, even a personal residence. An important exception is retirement assets, such as an IRA or 401(k) which cannot be transferred to a trust, in most cases, without incurring income tax liability. Please note that certain assets, such as a personal residence, may require unique provisions in the trust document to maintain property tax advantages.
If you are concerned about protecting your assets in case of a need for long-term care, contact us now and we are happy to sit with you for a peace of mind session to review all of your options.
from Matus Law Group https://matuslaw.com/irrevocable-trust-new-jersey-long-term-care/
Our population is aging. According to an article published by the United States Census Bureau entitled “The Graying of America,” “In less than two decades, the graying of America will be inescapable: Older adults are projected to outnumber kids for the first time in U.S. history.”
As our loved ones age, they can develop physical or mental disabilities that may require other parties’ intervention to ensure that their personal affairs are handled responsibly so they can live out their lives comfortably. But there are legal limitations to what others can do for these individuals.
Guardianships and conservatorships offer others the legal capability to take over specific responsibilities for individuals. Both are aimed at the elderly or individuals over the age of 18 with mental or physical disabilities. Although they are similar, there are some essential key differences between the two. The primary difference is that a guardian will make decisions on behalf of the person, and a conservator will make decisions and manage the person’s finances and estate. In many cases, both the guardian and the conservator will be the same person. If you are not sure if a guardianship or conservatorship is best in your situation, call The Matus Law Group at (732) 281 – 0060 to speak with an experienced New Jersey guardianship attorney today.
Guardianship
The courts will appoint a guardian for a person who has become incapacitated and can no longer make their own decisions. This will often happen in the case where a loved one has dementia or Alzheimer’s. When a loved one is no longer able to care for themselves, an interested party will file an application and provide medical evidence that they are no longer competent to manage their own affairs.
A guardian will be responsible for acting solely and selflessly in the best interest of the person needing care. They will be responsible for decisions concerning where that person lives, their medical care and treatment, and all other daily matters in the care of that person.
The guardian is usually a spouse but can also be other family members such as a son or daughter or even a trusted family member. There are also cases where court may appoint other individuals or entities, such as lawyers, agencies, or private organizations.
Conservatorship
A conservator acts as a guardian of the estate instead of the person and will manage their financial affairs, assets, and income. A conservatorship is typically set up for an aging family member, but a conservator may also be a friend, a lawyer, an organization, or an agency. A conservatorship does not require that the individual be incapacitated and it can be completely voluntary.
The conservator is responsible for managing a conservatee’s assets, paying for their education, support, and maintenance, paying their debts, and collecting monies that are due them. A conservator will need to file for government benefits for the individual such as Medicaid, Medicare, or Social Security and will be required to prepare regular accountings of all these financial matters. The conservator will be required to participate in the estate planning for the individual but cannot write a will on their behalf.
A guardian and a conservator may be the same person. This is known as plenary guardianship. In the case where the guardian and conservator are different people, the guardian will have the primary control.
If you have more questions regarding guardianships and conservatorships, get the guidance of a skilled elder law attorney in New Jersey. For over two decades, The Matus Law Group has helped New Jersey residents create guardianships and conservatorships for their loved ones. Contact us or call us at (732) 281-0060 to get any of your questions answered.
Difference Between Guardianship and Conservatorship
Guardianship and Conservatorship, while similar, serve different purposes. A guardian, appointed by the court, is responsible for a person who has become incapacitated, often due to conditions like dementia or Alzheimer’s. The guardian makes decisions about the person’s living arrangements, medical care, and daily routines. Guardians are typically spouses or other family members, but can also be other individuals or entities.
On the other hand, a conservator primarily manages the financial affairs of an individual, overseeing their assets, income, and debts. This role does not necessitate that the person under care be incapacitated, and the arrangement can be voluntary. Conservators are responsible for filing for government benefits on behalf of the individual and providing regular financial accountings. Conservators are also involved in the individual’s estate planning, though they cannot write a will for them.
While a guardian and conservator can be the same person—a situation known as plenary guardianship—there can also be distinct individuals serving in these roles. In such cases, the guardian typically has primary control. Understanding these roles is essential for planning for the future of loved ones who may need assistance.
Working with an Experienced New Jersey Guardianship Attorney
Understanding the differences between guardianship and conservatorship is crucial when considering the best course of action for your loved ones. Both options offer valuable protections but serve different needs. As with any legal process, the laws surrounding guardianship and conservatorship can be complex and vary from state to state, requiring careful consideration to navigate.
With a guardianship lawyer’s in-depth knowledge of the state’s laws and their extensive experience, they can guide you through the legal processes involved in establishing guardianship or conservatorship. At The Matus Law Group, our team of New Jersey guardianship attorneys may be able to help evaluate your unique circumstances and provide counsel on the best course of action, ensuring that your loved one’s needs are met and their rights are protected. With a New Jersey guardianship lawyer on your side, you can have peace of mind knowing that you are making the best decisions for your loved ones. Contact us today at (732) 281 – 0060 to schedule a consultation.
Aspect
Guardianship
Conservatorship
Purpose
Appointed for an incapacitated person
Manages financial affairs and assets
Decision Making
Makes decisions regarding daily care and living
Manages finances, pays debts, and collects funds
Incapacity Requirement
Requires the person to be incapacitated
Can be voluntary, doesn’t require incapacity
Decision Scope
Covers daily care, medical treatment, and living
Focuses on financial matters and asset management
Responsible Party
Usually a spouse, family member, or trusted person
Can be a friend, lawyer, organization, or agency
Government Benefits
May apply for government benefits on behalf of the person
May file for benefits such as Medicaid, Medicare, or Social Security for the individual
Accountings
Not required to prepare regular financial accountings
Required to provide regular accountings of financial matters
Estate Planning
Cannot write a will on behalf of the individual
Participates in estate planning but cannot draft a will
from Matus Law Group https://matuslaw.com/guardianship-vs-conservatorship-in-new-jersey/
