Setting up wills should be at the top of New Year resolution lists
It is that time of year again. January is typically when New Jersey residents turn their backs on the past year and focus on goals for the next. While some New Year resolutions may seem trivial, estate planning goals are not. If you do not have a will – or have not recently reviewed your estate planning documents – resolve to get a plan in place before spring arrives.
Top reasons to have a will
Many people believe that only wealthy families require wills, trusts or other estate planning documents. However, there are many reasons you should have a will, no matter the size of your estate. Some important reasons include the following:
- Minor children: If you have minor children, you will want to designate a guardian for them rather than leaving that decision to a court. Your appointed guardian can also make financial decisions on behalf of your children until they reach the age of majority.
- Trusts for minors: If your children are minors at the time of your death, New Jersey law prohibits the distribution of assets directly to them. If you die without a will, their inheritance will be under court supervision until each child reaches age 18. If you have a will, a bequest to a child can be held in trust until whatever age you determine. You also designate the trustee and the terms of the trust.
- Tax planning: While recent tax law changes protect most U.S. residents from federal estate tax liability, New Jersey has a state estate tax that taxes much smaller estates. Additionally, a sudden influx of income or an inheritance can push you over the federal threshold, exposing your family to an unexpected federal tax burden.
- Probate: A will can greatly reduce the amount of time and money it takes to probate your estate. A shortened probate process leaves more of your assets to your family.
- Executor: In your will, you choose your executor — the person who will carry out your wishes expressed in your estate plan. Without a will, the administrator may be chosen by the court and may not be a person you like or trust.
- Gifts and donations: A will can allow you to give donations to your favorite charities and may also let you account for lifetime gifts given to specific family members. For example, if you provided substantial financial assistance to one of your children during your lifetime, you may choose to leave less to that child after your death in order to provide equally for all of your children.
- Avoid family disagreements: Many family disputes and lawsuits would be averted if more people had wills. While surviving family members are mourning the loss of a loved one, tempers can flare as questions about money, family heirlooms and valuable assets arise.
While certain issues and items must be handled outside of your will — such as funeral arrangements, jointly held real estate, life insurance proceeds or retirement benefit payments — a will allows you to distribute the balance of your assets as you determine.
If you do not have a will or have not recently reviewed your will with an estate planning lawyer, consult a New Jersey attorney. An attorney knowledgeable about wills, trusts and the probate process can help.