New Jersey Estate TaxesThe New Jersey estate tax was revised on July 1, 2002, and…
Estate Planning in New Jersey
Estate Planning in New Jersey
You can save a lot of money and potential chaos and hard feelings among those closest to you by preplanning how you want your assets managed when you are incapacitated, and how your property will be divided at your death.
Powers of Attorney
In New Jersey, you can sign a durable power of attorney to appoint someone to handle your assets if you become incapacitated. At a minimum, a power of attorney should include the power to:
Manage and transfer all assets
Deal with the IRS
Make gifts on your behalf
Create and amend any trusts you set up
You don’t need to transfer any assets at the time you sign a power of attorney, but it’s a good idea to keep the person you’ve chosen informed about your ongoing financial matters.
You can also appoint a Durable Power of Attorney for Health Care to make health care decisions for you when you’re unable to do so yourself. This person can provide informed consent for treatment, or even refuse treatment for you.
Dying Without a Will
If you die without a will (known as dying “intestate”) in New Jersey, your assets will be divided amongst your immediate family. If you do not have children or parents, your estate will go to your spouse. If you have a spouse and children, your spouse gets the first $50,000 plus one-half of the balance of your estate. The remainder will go to your children. If you have a spouse and parents but no children, your spouse also gets the first $50,000 plus one-half of the balance of your estate.
If you do not have a spouse, your children will receive your estate. If you do not have a spouse or children, your parents will receive your estate.
Alternatives to a Will
Wills eventually become public after your death, with the details of what you owned and how much it was worth available to anyone curious enough to read the court file. As a result, many people look for more private ways to transfer their assets.
In New Jersey, alternatives to making a will include:
Life insurance policies or trusts
Gifting cash or other assets before your death
“Transfer On Death” (“TOD”) or “Payable On Death” (“POD”) bank accounts
Holding assets by joint tenancy with right of survivorship (“JTROS”), with the assets transferring automatically to the other joint tenant at the time of death
Holding assets through a tenancy in common, with each tenant having a divided interest in the property which can be independently sold
Retirement plans and Individual Retirement Accounts (“IRAs”)
“Revocable living trusts” (sometimes called “grantor trusts”), giving all your assets to a trustee for management before your death
Making a Will
In New Jersey, you can make a valid will if you are at least 18 years old and of sound mind. The will must be in writing and signed by you or by another at your direction and in your presence. Two or more competent witnesses must witness your signature.
A lawyer who does a lot of estate planning can explain the consequences of some of the most basic choices you must make, such as whether property you want to leave to your minor children should be put into a trust at your death. For that reason, it makes sense to consult with a New Jersey estate planning lawyer and have him or her draft your will, so that you don’t make costly mistakes or accidentally not accomplish what you intended.
Providing For Young Children
There are many kinds of trusts, but the most common is one you would set up for your minor children or incapacitated adult relatives for their care after you are gone and until they are old enough or well enough to take care of themselves. A parent can name a trustee to be in control of the finances and decide whether to sell or keep property, and manage assets such as real estate. The trustee, usually a family member or trusted friend, can be paid an hourly rate or a set monthly amount for their services out of the trust assets.
You will probably also want to name a guardian for your children, someone who would have physical custody of and take care of your children on a daily basis should you or your spouse be unable to do so.
“Probate” is the public process of:
Filing and validating a will in court
Paying all the debts and taxes of the deceased person
Dividing up the assets according to the will or New Jersey law
If you have no debts and no “titled property” such as real estate or vehicles to pass along to heirs, there may be no need for probate.
Probate lawyers generally charge by the hour, and they make sure everything gets processed according to the law.