J. Jeffrey Press, P.A.
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New Jersey Estate Planning and Probate Law Blog

Digital assets and estate planning

Almost every New Jersey resident has some sort of digital asset. It's almost impossible to avoid having a social media account, online bank account, music library or other online accounts. There was a recent New Jersey law regarding digital assets that went into effect.

This past September, Governor Chris Christie signed into the law the Uniform Fiduciary Access to Digital Assets Act. This act allows New Jersey residents to manage their digital assets much as they do their financial assets. A digital asset is defined as an account, document, information or record that is accessed by an electronic device. These can include email accounts, social media accounts, video sharing accounts, online purchasing accounts, gambling accounts and digital media.

Estate planning mistakes to avoid

Many New Jersey residents recognize the value of creating an estate plan. An estate plan is a way to preserve a family's assets for future generations and create and maintain a family's legacy. But, when completing an estate plan, there are certain mistakes a person should keep in mind to avoid.

An estate plan should be revisited

Many families in Parsippany have taken the time to create an estate plan. This is the best way to make sure a family's assets are passed to the next generation and that their legacy continues.

Once an estate plan is created, it is not a fixed document. Those that have an estate plan may think that once it's created they are done with that task. But, an estate plan should actually be updated every 2 to 3 years. There are many life events that can affect a person's estate plan. These may include marriages, the birth of a child, divorce, death, bankruptcies, and many other events. If the estate plan is not updated, the estate owner's wishes may not be carried out when they pass away. A power of attorney may need to be updated and beneficiaries can change.

Are gift taxes something you should look into?

For many New Jersey residents, gift taxes are something that is of interest as a tool in their estate planning wardrobe. Gifts to a loved one can be a good way to transfer some assets while a person is alive and reduce the total amount of the estate.

One of the most important things to know about giving a gift to a loved one is the annual exclusion of $14,000 per person. Therefore, a person can make a gift of up to $14,000 to a beneficiary without having to pay taxes. These gifts do count towards the lifetime amount a person can give away, which is currently at $5.45 million. Giving money away while you're still alive has many benefits including reducing the total amount of an estate and gives the donor good feelings about their generosity. You can make this gift every year up to the exclusion amount without having to worry about taxes. The gift can be in the form of money, property, or other assets.

The importance of estate planning conversations

Awkward conversations are hard for almost anyone in New Jersey. People usually don't go out seeking to have a difficult conversation with another person. But, many times these conversations are important and the estate planning conversation is no exception.

Estate planning conversations between parents and their adult children can be uncomfortable. But, without this dialogue, it can lead to both parties having hurt feelings and assumptions that are not true. The benefits of having an estate planning conversation include the ability to pass along the family's values, creating a sense of empowerment among family members and helping everyone in the family come to a common understanding that can be passed down to future generations. Besides the wholistic benefits of estate planning, there are practical ones as well. These include helping a family prepare for the event that someone becomes incapacitated, the ability to develop a plan for other members of the family and create a plan that takes advantage of tax strategies.

Components of a good estate plan

Estate planning is probably one of the last things on the mind of Northern New Jersey residents. But, having an estate plan in place is important for almost anyone, regardless of income or life circumstances.

A will is one component of an estate plan. This is where a person can list who will receive what assets and they can also name guardians for their minor children. A trust is used to hold assets on behalf of a beneficiary and can also help the estate avoid probate. A power of attorney can be drafted, which appoints a person who is designated to manage finances if the estate planner becomes incapacitated. Important healthcare documents, including a healthcare proxy and living will, are also important parts of an estate plan. A healthcare proxy is a person designated to make healthcare decisions if the estate planner becomes incapacitated and unable to communicate. A living will gives healthcare instructions regarding medical decisions that may need to be made if a person becomes incapacitated. Finally, beneficiary designations on retirement accounts, life insurance and bank accounts, should be reviewed frequently.

Why you should have a living will

I am sure you have heard the saying, "out of sight, out of mind." It is a common phrase referring to things that we do not think about until we have a need to. We typically do not think about our hot water heater unless it breaks. We do not think about the tires on our cars until one goes flat. Estate planning is often like that. Many Americans, including those of us from North New Jersey, do not typically think about our long-term future. Death is inevitable, yet for most of us, it is not often on our minds.

It is important, however to be mindful that our days here are limited, and we never know when a sudden accident or illness could drastically and immediately change our lives. With this in mind, it is important to consider a living will. A living will is not actually a will, rather it is a document that includes your health directives in the event that you are incapacitated and unable to express your wishes to anyone.

Trusts 101: Understanding the basics of trusts

Trusts can form the backbone of a well-rounded estate plan for many people in New Jersey. Not only can they serve as a vehicle for handing your assets down to your loved ones after you die, but conditions can also be placed on trusts. Therefore, it is a good idea to have a basic understanding of trusts.

In general, trusts fall under one of two types. Testamentary trusts are made a part of a person's will, and only go into effect once the person passes away. Living trusts, on the other hand, are set up while a person is still alive.

Even millennials should have an estate plan in place

Despite what one's opinion of the millennial generation is, young adults need an estate plan just as much as older adults. After all, no one can predict when they will pass away and no one is guaranteed a long life. It is best to be prepared.

Many millennials work with a budget, especially if they are paying back student loans. Because of this, some may wait until they are older before buying a starter home, and some may also wait to marry or become parents. However, even if a person has a large debt load, does not have children and feels like they do not have much in the way of assets, it is still important to create an estate plan. Unfortunately, according to one survey, nearly 80 percent of individuals in the United States under the age of 36 have not executed key estate planning documents, such as wills or trusts.

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J. Jeffrey Press, P.A.
8 Wood Hollow Road
Plaza Level - Suite 2A
Parsippany, NJ 07054

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