Creating an estate plan is a lot like getting into better shape. We all know we should do it, but never take the first step as the task seems too daunting.
Let's face it: We all know that a Last Will & Testament is important. You need to ensure that your chosen heirs receive the property you want to leave to them. In your Will, you name an executor, who will have the power & responsibility to pay your debts and distribute your estate as you direct.
Without a Will, the State dictates your heirs. Usually, your spouse and children will split your legacy. If you are single, the assets will go to blood relatives, even if you preferred a close friend or charity to inherit. Without a Will, your heirs will have to post a bond, potentially costing thousands of dollars, with the Surrogate to make sure that the assets are properly disbursed - even if you have only one heir, who gets everything. Yet, only 43% of adults in the U.S. have a Last Will & Testament according to a 2011 Harris Interactive survey.
It is important to remember, that an "estate" is not just something that rich people leave behind when they die. Estate planning affects all economic levels and involves many different concerns:
Tax Avoidance - While most people will never pay federal estate tax, New Jersey imposes both an Inheritance Tax and an Estate Tax starting at $675,000.
Minor Children - Provision for their welfare by naming a guardian and trustee; otherwise, the court will decide who raises them and manages the assets you leave to them until each child is 18 years old.
Asset Allocation - Not all assets pass as part of a probate estate. Jointly owned real estate, bank accounts, retirement accounts and life insurance pass to those named in those documents. Proper allocation is important to ensure your assets pass as you intend and for purposes of tax avoidance.
Durable Power of Attorney - Estate planning is not only about taking care of your survivors. A complete estate plan should also insure that your wishes regarding your money prevail even if you become too sick to make your own decisions. Otherwise, even your spouse or child will have to go to court to be appointed Guardian at a cost of thousands of dollars in order to manage your assets and pay your bills. That's right, your spouse or child is not automatically authorized to manage your business affairs, including bank and other financial accounts. You will need a Guardianship granted by the court
Advance Medical Directive - AIso called a "Living Will," you may have signed one during your last hospital visit. But, it is only effective for that visit and expired when you were discharged. In an Advance Medical Directive, you name a health care agent, who makes sure that doctors and other medical professionals carry out your wishes, if you are too sick to speak for yourself, and in it you state the type of medical procedures that you want or do not want. It also covers nursing home care and hospice care. Once again, your spouse or child is not automatically authorized to manage your health care or make medical treatment decisions for you if you are unable to do so. Once again, a Guardianship will be required.
Funeral Arrangements - Sometimes everything you want to tell your survivors does not belong in your Will. If you want to describe what type of funeral arrangements you desire, you need another way. For example, in New Jersey, if you do not have a spouse, cremation is not permitted unless ALL family members consent. You can avoid a family fight at your funeral by specifying your arrangements and naming the person in charge in a document called a Designation of Funeral Agent.
Not all of the above will be issues for all people. Maybe, asset allocation or tax avoidance are not areas of concern in your particular case. Even so, an attorney's advice should be secured in order to be sure. After all, its not what you know that can hurt you, its what you think you know, but do not. At a minimum, a simple Will, Durable Power of Attorney and an Advance Medical Directive are cost effective ways to protect yourself and your family and save the thousands of dollars that will have to be spent, if you do not have these documents.
Probate Administration - Our office also assists executors, administrators and families sort out the probate process in order to smoothly pay the debts of the deceased, collect the assets and distribute the assets to the heirs as required by the Will or statute.
Contact my office when you need a Toms River, Ocean County estate planning attorney.
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