Wills, Trusts, and Estates
Prudent and careful estate planning can help you enjoy your wealth and pass it onto your heirs with ease, eliminating unnecessary expenses and delays. Coming up with an estate plan that draws up a roadmap on how your assets will be transferred can eliminate any headaches and controversies that might be left behind for your family.
A lawyer with experience working in this practice area can help you prepare wills and trusts of all types. A lawyer can advise you on the advantages of different options to minimize taxes while achieving your personal goals. A lawyer can also customize a plan that will suit your needs.
What is an Estate?
While many associate an estate with a lavish mansion on acres of land with ornate gardens, an estate in terms of probate law pertains to the assets an individual owns. It does not have to be extensive.
An estate plan is a way to ensure that your assets are distributed according to your wishes. This is achieved through a variety of legal documents. The documents protect the assets. There are several legal documents that are a part of an estate plan, including:
- Last will and testament: This is a legal document that formally lays out the deceased person’s wishes. It will specify who or what will take possession of the assets. The document can also specify who will take custody of any children who are left behind.
- Living trust: This is a legal document that contains all of a person’s assets, including their investments, bank accounts, real estate, vehicles, and valuable personal property. It places them in a trust to be distributed to a beneficiary during the person’s lifetime. It then specifies what is to become of those assets upon the person’s death.
- Irrevocable life insurance trust (ILIT): This document is created to own and control a portion of permanent life insurance while the insured person is still alive. The document lays out how to manage and distribute the assets upon the policyholder’s death.
- Charitable remainder trust: This trust is set up to reduce taxable income by initially dispersing income to the beneficiaries of the trust for a certain period before donating the balance to a designated charity.
- Charitable private foundation: This is an organization that is traditionally established by a person, family, or a company to support local charities. A board of trustees or directors run the foundation and manages its donations and contributions.
- Qualified personal residence trust: This is a trust that allows the creator to remove their primary residence from the estate to reduce the gift tax that can incur due to the transfer of assets to a beneficiary.
- Family limited partnership (FLP): In this arrangement, a group of family members pool their money to run a business project. Each member purchases a share and earns profits based on their percentage of ownership.
- Limited liability company: This is a business structure that individuals create that protects them from personal liability when it comes to the company’s debts or liabilities.
- Power of attorney: This gives a specific person the authority to make the financial decisions if an individual is unable to make them. The appointed person also has the authority to pay bills, manage investments, and make legal or business decisions.
- Living will: This lays out a person’s end-of-life preferences.
There are many advantages to having a comprehensive estate plan in addition to a will. Avoiding probate, minimizing taxation, and placing conditions on bequests are key features. The right combination of legal instruments can provide safeguards for a person’s health and welfare while they are alive and ease the transfer to their beneficiaries when they pass.
What is the Probate Process?
The probate process is a legal procedure that takes place upon a person’s death that provides the means to execute a person’s final wishes if they have a will or determines the best way to distribute their assets if there is no will. When there is a will, the person named executor of the will files paperwork with the surrogate court in the county in which the deceased person lived informing them of the person’s death and listing their assets along with any debts or taxes owed. They must also supply a list of the beneficiaries named in the will.
The entire probate process usually takes several months to one year, and in that time, the executor will find, secure, and manage the assets. The executor has primary discretion in this process and may choose to sell the assets or investments to pay off the debts that have been left behind.
In New Jersey, there are certain circumstances that will allow for the process to go through state’s simplified probate procedures. The streamlined probate, which is quicker and less expensive than regular probate, is available in the following circumstances:
- The value of all the assets left by the deceased person does not exceed $20,000, and the surviving spouse or domestic partner is entitled to all of it without probate.
- There is no surviving spouse or domestic partner, and the value of all the assets does not exceed $20,000. One heir, with the written consent of the others, can file an affidavit with the court and receive all the assets.
If the executor lives outside of New Jersey, they may have to post a bond to continue to serve as executor unless it is waived in the will. The bond is included as a protection for the estate. If there are not problems with the will, the court will issue a letter of testamentary, which authorizes the executor to do the following:
- Collect and inventory the deceased person’s assets and keep them safe.
- Have the assets professionally appraised if necessary.
- Pay valid debts and taxes.
- Distribute the remaining property as the will directs.
Within 60 days after a will is admitted to probate, the executor or administrator must mail notice of the proceeding to all heirs and beneficiaries named in the will.
Why Do I Need an Estate Plan?
The benefits of creating an estate plan are to make it easier for your beneficiaries to determine how to distribute your assets with little controversy. The death of a family member can be emotional, and many do not wish to drag out the matter of dispersing the assets. There are five main benefits of an estate plan:
- Avoid Probate: Probate can be a long and tedious process, and it can be easily avoided or minimized through a comprehensive estate plan.
- Reduce estate taxes: There are a significant amount of taxes associated with your estate, and you likely want your beneficiaries to avoid having to pay them. There are multiple techniques you can use that will help eliminate these taxes.
- Avoid issues: When there is no plan in place, it can become complicated for the people left behind to determine how best to distribute your assets. An estate plan will lay all out all of the important details.
- Protect beneficiaries: A minor beneficiary can have a guardian named on their behalf that will protect their inheritance, and the estate plan can also put provisions in to protect an adult beneficiary who may not be great at handling money.
- Protect assets: You can protect your assets for your beneficiaries from others who may attempt to take the assets through a lawsuit or other legal means.
It is never too early to start working on your estate plan. Looking toward the future and putting a plan in place will be beneficial to you and your family.
New Jersey Wills Trusts and Estates Lawyers at Herold Law Can Help You Develop an Estate Plan
If you are looking to secure you and your family’s future, our New Jersey wills trusts and estates lawyers at Herold Law, P.A. can help. We will advise on executors, trustees, and beneficiaries regarding your estate. Call us at 908-647-1022 or contact us online today to schedule your initial appointment. Located in Warren, New Jersey, we serve clients throughout the state.