When should I write my will?
The simple answer is whenever you want to have control over the distribution of your estate, appointment of guardians for minor children, and appointment of fiduciaries to handle the administration of your estate. Otherwise, intestacy laws will control the disposition of your assets. This means the state legislature has determined who will succeed to your financial interests, a Court will decide who will administer your estate and a Court will appoint the guardian for your children.
The estate administration process, though simplified in New Jersey, is more cumbersome for heirs and relatives when one passes away without a will. A will is a fairly inexpensive way to make sure that your desires are met and that your grieving family will have the simplest and least costly administration of the estate.
- A will allows individuals with minor children to designate whom they would like to succeed to the care of their most precious asset.
- A will may allow families or individuals with more than 5.49 million dollars (under current federal law and subject to change) in assets (including life insurance and real estate) to reduce potential estate tax liabilities.
- A will allows small business owners to manage the transition of their companies.
- A will allows for specific assets to be given to specific people – it makes sure Aunt Sally inherits the coffee table she loves so much.
- A will allows you to determine who administers your estate.
Finally, a will should be reviewed every few years or at the time of any life change, i.e. birth or adoption of a child, change in marital status, change in wealth, etc.
How do I handle the administration?
The death of a loved one is one of the most difficult times for a family. Emotions are running high and it can be difficult to know what critical decisions need to be made with regard to the decedent’s estate. Estate administration involves managing the affairs of the estate and implementation of the decedent’s estate plan. If the decedent died intestate (without a will), estate administration will include compliance with the intestacy laws of New Jersey and may involve a more complicated administration. The following are some terms, explanations, and issues with which you should be familiar so you will be able to ask the right questions during the estate administration process.
- PROBATE – Process during which a will is submitted to the County Surrogate for a determination of its authenticity and acceptance as the valid Last Will and Testament of the decedent.
- SURROGATE – County official responsible for administrating wills, estates and trusts, as well as, the appointment of fiduciaries.
- EXECUTOR – Person named in the will responsible for carrying out the instructions set forth in the will.
- TESTAMENTARY TRUST – Trust created by a will which sets up a separate entity to administer the property of the decedent. A trustee is the person named to administer the trust.
- CONTEST – Legal process through which an interested person challenges the validity of a will or a provision therein.
- NEW JERSEY STATE INHERITANCE TAX – State tax requiring the estate to pay tax when certain classifications of beneficiaries receive property under a will. There are currently four classes of beneficiaries, two of which are exempt from inheritance tax.
- NEW JERSEY ESTATE TAX – State tax imposing a tax on estates with assets over a certain specified value. Currently, a New Jersey Estate Tax will be due from all estates with total assets exceeding $2,000,000.00.
- FEDERAL ESTATE TAX – Federal tax imposing a tax on estates with assets over a certain specified value. Currently, a Federal Estate Tax will be due from estates with total assets exceeding $5,490,000.00.
Estate administration is an involved process that requires attention to details and many administrative steps. The assistance of an experienced professional can make the administration process less stressful and streamlined thereby.
Should I create a living will?
A living will is, in fact, a misnomer. We refer to the document as an Advance Directive for Healthcare, which title more accurately describes its purpose. An advance directive is a document which deals with issues that are only relevant during a person’s lifetime, and more narrowly, during a time when a person is unable to make or communicate medical decisions for themselves. It is a very personal document and one should take time and care to insure that it accurately reflects his or her desires. Most people do not discover what an advance directive is until they are going into the hospital for a procedure, a time which is usually mired by emotions and stress – the worst time to be making decisions of this nature. Therefore, we encourage our clients to prepare an Advance Directive for Healthcare along with their other estate planning documents.
Following we will set forth some issues which should be addressed in the Advance Directive for Healthcare:
Advance Instruction – If you are unable to communicate your wishes to a physician because of your then current medical state, what do you want your loved ones and your physicians to know? Again, this is a very personal document and should be treated as such. The document could be very specific, or set forth broad principles. There is no right or wrong answer – it is what you want that matters.
Appointment of Medical Durable Power of Attorney – If you are unable to communicate your wishes to a physician because of your then current medical state, who do you want to communicate your wishes? This person or these people should be people who know and understand your desires and will implement them if you are unable. They will work with your physicians and have access to your medical information. Your physicians will look to them to make the decisions that you would make if you were able to make them.
An Advance Directive for Healthcare is just one document in the arsenal of planning documents a person may utilize to effectuate their wishes. The assistance of an experienced professional may be useful in making your decision.