New Jersey Estate Plan for the New Year
I know first-hand that one of the easiest things to do this time of year is to consider, but never execute, a list of resolutions for the New Year especially your New Jersey Estate Plan. We all procrastinate when it comes to estate planning.
However, rather than give you a list of resolutions for the New Year I will give you a list of activities regularly ignored by many, but one you should give serious consideration and thought this coming year, and that is estate planning.
But rather than being a failure of a New Year’s resolution list, I believe that the challenge in this area lies in the planning rather than the execution. Most of us do not like to think about making major life-changing decisions or dealing with the passing of a loved one. It is in this stage, the planning step, where I will ask you to concentrate your efforts. Below are four estate planning resolutions for the New Year which you should seriously consider:
Review Your New Jersey Estate Plan (Is it specific to your state?):
Nieces and Nephews pay less in inheritance tax in NY compared to NJ tax rates. So, what do in one state costs more in a different state. Talk to an attorney about your estate planning whenever you move states.
So, the first step is to ensure that your current New Jersey estate Plan is up-to-date and specific to New Jersey. Review and write down any changes which have transpired in your life since the last time you updated your Estate Plan? Did you get married, divorced, remarried, or did a loved one included in your estate plan die? Did you have an addition to your family? Or did any of your children get married or did they make you a grandmother/grandfather? Did you have additional children of your own? This is a non-exhaustive list, but it should give you an idea that if any major life event took place since the last time you reviewed your estate plan, then you should list it.
Next is what I consider the most difficult part, have difficult conversations with your loved ones:
In order for you to have a sound estate plan, you and especially your family must face the reality that EVERYONE DIES, and some may become incapacitated prior to death. You and your family need to stop avoiding emotionally-charged and personal issues. Your loved ones need to be fully aware of your wishes upon death or incapacity, if not, there is a good chance those wishes will not be honored. By engaging in an active conversation with your loved ones now, you are taking a major step towards assisting them in honoring those wishes later.
The range of issues is wide, but typically you should consider the following: who do you want to designate as your Attorney-in-Fact, typically called a Power of Attorney (PoA) to make financial and legal decisions should you become incapacitated?
Another thing to consider is who should serve as Executor of the estate, who should make medical decisions for you, what type of care do you want if you are in an end-stage medical condition, and who should receive your property when you die, when and how.
The more thought you put into the process the clearer and more accurate it will be, and the better your planning will inform the survivors of your intentions. Additionally, the more detailed you are the less tension between heirs, because your goals and objectives were thoroughly communicated and recorded in advance.
What Documents Do I need to create a complete New Jersey Estate Plan:
Power of Attorney (PoA) – allows your Attorney-in-Fact, or agent, to take control of your financial and legal matters. (If you are hit by a car and end up in a coma, your POA takes care of your bills and such while you are unable to.)
Healthcare Directive or Living Will – allows your agent to make medical decisions for you, based on your wishes, should you become unable to do so for yourself. It includes specific instructions on what kind of medical care and treatment you want, or do not want if the medical determination has been made that there is no realistic hope of your significant recovery from your end-stage condition. (Different than the POA, this person only controls your medical decisions. The POA and Living Will Agent can be the same person.)
Testament or Will – allows you, the testator, to leave instructions about what should happen to your property after you die. It also names who will manage your estate until its final distribution, or the executor(s). You can also use a will to name guardians for children and their property, instruct how debt and taxes are paid, and create provisions for your pets.
These 3 documents are just for a basic plan. If you have significant assets or are leaving bequests in your New Jersey Estate Plan to people other than your Spouse or Children the complexity of your New Jersey Estate plan will start to increase. Are you forming a Trust? Are you leaving money to a charity? Do you have a business that needs to run once you pass, or is there a buyout plan? Is there business insurance for when you pass? The more complex your life is the more complex your New Jersey Estate Plan will be.
Revisit Your Life Insurance:
Based on your current situation do you have enough insurance to cover your family’s needs when you’re gone? At the very minimum, you should consider having enough to cover healthcare and funeral costs. You should also consider a reduction if your children are now grown and have substantial funds in your retirement accounts (e.g. 401k, 403(b), IRA, etc.). Another reason to have life insurance is to provide your heirs with immediate cash proceeds to satisfy death taxes related to the distribution of your estate. Always consult your tax professional to determine if your estate will have to pay estate taxes or your heirs have to pay inheritance tax.
Taking on any of the abovementioned resolutions would be a great way to ring in the new year. If you decide to take on all four will provide great comfort to you and your family by knowing you have taken on and accomplished these difficult decisions.
Having someone who you can trust to review and counsel you with your estate plan questions is critical to securing your wishes are respected and you maximize financial benefit for your heirs while minimizing conflict between them. Please do not hesitate to contact one of our attorneys in our Estate and Trust Group. For an initial free phone consultation call Patel, Soltis & Cardenas at (844) 533-3367.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, or accounting advice. You should consult your own tax or accounting advisor before engaging in any transaction.