Estate planning is one of the most important steps individuals can take to protect their loved ones and their legacy after they are gone. Many people find the process intimidating, but speaking with an experienced lawyer makes understanding estate planning much more manageable.
With decades of experience, Weiner Law Group offers tailored guidance and draws on experience from multiple legal fields. If you need the services of a New Jersey estate planning attorney, reach out today. Below, we explore navigating the legalities of estate planning with a comprehensive guide that explores key components of estate planning in New Jersey.
Understanding Estate Planning: What Is in an Estate Plan?
When you create an estate plan, you establish legal documents that explain what wishes are related to what happens to your property and debts after you die. An estate play also typically addresses healthcare and financial management if you become incapacitated and unable to communicate what you want, whether due to age or medical events.
Estate planning often involves:
- Creating a will,
- Establishing trusts,
- Designating beneficiaries in various policies, and
- Preparing documents for incapacitation.
A comprehensive plan anticipates potential issues and resolves them in advance.
Probate vs. Non-Probate Assets
Your loved ones cannot transfer probate assets until they go through the court-supervised probate process. Probate assets may include:
- Individually held bank accounts,
- Real estate, and
- Personal property.
Non-probate assets transfer without going through the probate process. Non-probate assets include:
- Jointly owned property,
- Accounts with designated beneficiaries, and
- Assets held in trusts.
Because non-probate assets avoid the court process, your loved ones can often distribute them more quickly and with less expense.
Wills: The Cornerstone of Estate Planning
A will is the foundation of any estate plan and outlines how its creator (the “testator”) wants their loved ones to distribute their assets after death. Usually, the will designates an executor, who manages the testator’s estate, ensuring debts are paid, and property is where it needs to be. Wills can also address guardianship for minor children.
Trusts: Versatile Estate Planning Tools
When you create a trust, you select someone to serve as a trustee who manages assets to benefit designated beneficiaries. You may create a trust during your lifetime (an “inter vivos” or living trust) or after your death. Before a trust becomes active, you have to transfer assets into it—fund it—granting the trustee the right to manage the assets.
Trusts serve a variety of purposes in an estate plan, such as:
- Shielding assets from creditors and lawsuits;
- Avoiding probate and directly transfer of assets to beneficiaries;
- Minimizing estate and gift taxes, especially in larger estates;
- Providing for the needs of minor children, disabled dependents, or others who cannot manage their financial affairs;
- Enabling individuals to donate to charity while retaining some benefits from the assets placed within the trust;
- Maintaining privacy about asset distribution;
- Controlling distribution by specifying when and how beneficiaries receive assets;
- Providing for a loved one with disabilities without disqualifying them from government benefits;
- Transitioning ownership and control of a business; and
- Providing for a remarried spouse while preserving assets for children from a previous marriage.
Trusts are versatile tools, offering flexibility for individuals from many different walks of life.
Other Non-Probate Assets: Life Insurance, Retirement Accounts, and More
Although trusts are one of the most popular non-probate estate planning tools, with good reason, several other types of non-probate assets enable individuals to elevate an estate plan from ordinary to extraordinary. Many valuable non-probate assets include:
- Bank, investment, and certain other financial accounts with payable-on-death (POD) or transfer-on-death (TOD) designations;
- Jointly held property, like real estate with rights of survivorship; and
- Retirement accounts, like 401(k)s and IRAs.
Regularly updating your beneficiary designations is critical to ensure these assets remain non-probate. Failing to update the designations of certain individuals, like a former spouse or someone who has passed away, may result in the funds transferring to your estate and going through probate when you die.
Advance Directives and Powers of Attorney
Advance directives and powers of attorney allow individuals to plan for unexpected medical incapacity. Powers of attorney grant someone you select the authority to manage your medical or financial affairs if you cannot do so. Advance directives primarily include living wills, which outline your medical treatment preferences, like instructions regarding organ donation, end-of-life care, and pain management.
Navigating Estate Planning Hurdles: Avoiding Estate Planning Issues
One of the most common estate planning issues is failing to make an estate plan. When you fail to plan your estate, state law determines what happens to your assets and debts.
Navigating estate planning hurdles in incomplete or poorly executed estate plans may involve addressing a failure to:
- Update documents after life changes such as marriage, divorce, the birth of children, or asset changes;
- Coordinate between documents like wills, trust, and beneficiary designations;
- Account for taxes;
- Account for digital assets like online accounts and cryptocurrencies;
- Use clear language to explain how the plan should work;
- Communicate your plan to loved ones, especially if you have selected them as executor or power of attorney;
- Transfer property ownership to the trust;
- Carefully select an executor or trustee who is up to the task;
- Address business succession;
- Plan for incapacity during life;
- Plan for long-term care coverage, such as nursing home or assisted living care;
- Properly plan for debts or creditors.
Proper estate planning requires careful consideration, expert advice, and regular updates to ensure the plan aligns with the individual’s current wishes, financial situation, and family dynamics. When key elements are overlooked or mismanaged, it can lead to unnecessary complications for both the estate and its beneficiaries.
How Much Does an Executor Get Paid in NJ?
An executor in New Jersey is entitled to a 6% commission on all income received by the estate (N.J.S.A. 3B:18-13). For instance, if the estate earns $50,000 from stocks and bonds, the executor would receive $3,000.
Partnering with Weiner Law Group
Navigating the complexities of estate planning in New Jersey requires guidance from a trusted, knowledgeable advisor. From crafting wills and trusts to optimizing the use of non-probate assets and preparing advance directives, Weiner Law Group provides comprehensive support to our clients.
With over three decades of experience, our multidisciplinary approach can help you address related legal issues, offering peace of mind from thorough and effective planning. Contact us today to schedule a consultation.