In New Jersey, if you die without creating a will, the probate court will appoint an administrator to manage your estate according to New Jersey law. In order for this to be accomplished, an application must be made to the Surrogate’s Court and a bond must be posted. The assets of the estate will pass to the next-of-kin based upon the laws of intestacy, with priority given to certain relatives, such as a spouse and children.
Although it is possible to draft a will without the expertise and assistance of a lawyer, many personally drafted wills may be incomplete and, therefore, invalid under New Jersey state law. Additionally, individuals who draft a will who are not experienced with this type of law, often inadvertently create issues that are in conflict with their intentions. A will is an important document with so much at stake, it is better not to take the chance in drafting it incorrectly. An attorney familiar with New Jersey state law can draft a will that is valid, enforceable under the law, and assist you to achieve your goals.
Your gross taxable estate consists of the assets which you have an interest in at death, even if the assets do not pass by virtue of your last will. Your gross taxable estate may also include certain property which you transferred during your life in which you retained an interest. For example, if you transferred property to your children but retained a life estate, that property would still be part of your gross taxable estate. Or, if you have property or financial interests that would become payable upon your death, such as life insurance or retirement accounts, that will also be included in your gross estate. The property that constitutes a person’s gross taxable estate may also include ownership interests in trusts, partnerships, and jointly owned property.
Your probate estate refers to assets which pass to your beneficiaries through a will. This includes assets that were in your sole name at the time of your death or made payable to your estate. The probate estate does not include assets owned jointly with rights of survivorship, payable-on-death accounts, or other assets with named beneficiaries. Assets held in a revocable or irrevocable trust do not typically pass through the probate estate.
Probate is also the name of the Surrogate’s Court process by which the will is determined to be a final statement of how your assets are to be distributed at death and confirms the appointment of an executor chosen by you. The term “probate” also refers to the process of administering the estate. The probate process involves asset gathering, paying the debts, taxes and expenses of administration and distributing the assets to the beneficiaries named in the will. Assets held in a trust, jointly held or with a named beneficiary will not be subject to the probate process and will generally pass immediately to your named beneficiaries.
If you have an existing will that no longer reflects your wishes or does not provide for your current life circumstances, it is important to have an estate planning attorney update your will. An amendment to the current will can be drafted or you may create an entirely new will.
It is important to review wills, trusts, advance healthcare directives, powers of attorney and other estate planning documents regularly to ensure that they still reflect your wishes. There is no specific rule for how often you should review your estate plan, but a brief review each year and a more thorough review every five years is a good guideline to follow. Your financial and personal situations can change so in order to confirm that your will still achieves what you want it to accomplish, your estate plan should be revisited, reviewed, and updated as needed during your lifetime.
Changes to a will might be advisable in case of marriage, birth or death of a beneficiary, divorce, remarriage, purchase or sale of a business. Changes to your will must be made if you want to add or remove a beneficiary and if you wish to change the people you appoint as the executor, trustee, or guardian.
Well-designed trusts can produce many advantages, not only for your beneficiaries but also for you during your lifetime. Trusts can help to minimize taxes, court costs, and unnecessary legal fees. Additionally, trusts can provide asset protection and allow you to maintain control over your assets upon your death (or upon a transfer during life). You should discuss your goals and the specifics of your situation with an experienced estate planning attorney to learn whether a trust might be an effective part of your estate plan.
An executor is basically a liquidator whose role is to wind down the business that you conducted during your life. An executor must submit your last will to probate before the surrogate of the county in which you resided when you died. The executor must gather up your assets, which is frequently called “marshalling” your assets and may deposit those assets into an estate account or multiple estate accounts. An executor must pay all of the bona fide debts that you incurred and the debts of your estate, which includes any death taxes that may be owed upon death. An executor must account to the beneficiaries of the estate and must distribute the assets of the estate to the beneficiaries after the beneficiaries have approved his accounting. An executor is a fiduciary, meaning that he or she has the highest duty of care in administering the estate for the benefit of the beneficiaries of the estate. A typical estate may take anywhere from nine months to two years to fully administer.
A trustee is also a fiduciary, meaning that a trustee has the highest duty of care to administer the assets of the trust for the benefit of the trust’s beneficiaries. A trustee is responsible for investing and administering the assets of the trust and can be held liable to the beneficiaries of the trust if he or she invests the assets of the trust in an imprudent manner. A trustee must also distribute the assets of the trust to the beneficiaries of the trust according to the terms of the trust. For example, the trust may say that the trustee can distribute the assets of the trust to a beneficiary for his or her education and only his or her education and the trustee would be bound by those terms. The role of trustee may last for several months or several decades, therefore, unlike an executor, a trustee may be serving in his or her role for a very long time.
A power of attorney is a written authorization whereby a person grants an individual (an agent) to represent or act on his or her behalf in private affairs, business, or some other legal matter. A power of attorney may be general or limited. A general power of attorney is one that allows the agent to make all personal and business decisions. A limited power of attorney is one that is limited to a specified act. A power of attorney may also be durable or springing. A durable power of attorney takes effect immediately and continues until the principal’s death. A springing power of attorney is one that takes effect only after the incapacity of the principal or some other definite future act or circumstance.
An advance health care directive is a legal document in which a person specifies what actions should be taken for their health if they are no longer able to make decisions for themselves because of illness and incapacity. A living will is one form of advance directive in which an individual would provide instructions for his or her treatment. Another form of advance directive is a specific type of power of attorney or health care proxy, in which the person authorizes someone (an agent) to make decisions on their behalf when they are incapacitated. It is important to complete both documents to provide comprehensive guidance regarding medical care.