Is your “Simple” Will too Simple?
Most people want to have a “Simple” Will. They do not want to burden their family with unnecessary legal complexities and costs. Unfortunately, important issues are often ignored in the Wills that I am asked to review. With some attention to detail, your Simple Will can be enhanced and supplemented to provide a comprehensive plan of action. Following are some examples of issues you may wish to consider:
Planning can often be done to minimize the two death taxes that most commonly apply to New Jersey residents: the New Jersey Estate Tax and New Jersey Inheritance Tax. An effective Last Will and Testament will be designed to deal comprehensively with both of these death taxes, and will be tailored to your specific circumstances and needs.
Assets that Pass “Outside” of the Will
Not all of your assets pass according to the dictates of your Last Will and Testament. For example, a joint bank account will pass “outside of the Will” to the other joint owner, not to the beneficiaries you have named in your Will. Often clients will name one child as a joint owner on a checking account “for convenience” without realizing that this may ultimately result in an unequal distribution of assets between their children. This problem would be greatly exacerbated if more substantial assets, such as large annuities, insurance policies and the like are involved. There are a wide variety of such “non-probate” assets, and it is important that all such assets be carefully reviewed to be sure that each works in harmony with your Last Will and Testament.
“Probate” is the process of “proving” a Will at the Surrogate’s Office and administering a decedent’s Estate. Probate in New Jersey is relatively easy. However, there are occasions when avoiding the probate process can be beneficial. Some reasons to consider probate avoidance include: preventing private information from becoming public record and preventing the State of New Jersey from “freezing” 50% of your in-State bank accounts or establishing liens against certain assets. Probate avoidance may be especially prudent for anyone with real estate in other jurisdictions such as Florida in order to avoid difficult, expensive and time consuming “ancillary probate” requirements.
Long-Term Care Planning
Many clients tell me that their primary goal in estate planning is to leave something to their children. They want to preserve their assets for the next generation. In New Jersey, nursing home costs can exceed $10,000.00 per month. If you haven’t planned to accommodate the possibility of long-term care, the assets you have worked hard for a lifetime to attain could be lost if long-term care becomes unavoidable. A long-term care plan must be crafted in the context of constantly changing laws and regulations. Even those who choose not to plan for long term care should learn the basic Medicaid rules. Simple gifts, such as payment of college costs for grandchildren, could have unfortunate and unanticipated consequences.
Business Succession Planning
A small business is a valuable and cherished asset. Unfortunately, without a well conceived succession plan, it can turn into a considerable liability and become the cause for family dissention. Conversely, utilization of Buy Sell Agreements, cross purchase insurance, and other business succession planning tools can ensure a business’s continued viability and provide financial security to your family.
Children with Special Needs
If you leave anything to a child with special needs, he may lose access to vital disability benefits. With proper planning, however, you can provide for the “special” or “supplemental” needs of a loved one who is dependent upon such assistance without any fear that he will be disqualified. You can also leave a “Caregiver’s Memo” so that those who will eventually care for your disabled loved one will have all of the information needed to give him full and loving support when you are no longer able to do so.
Trust for Pets
A growing number of people see their pets as being true members of the family. Planning for a pet’s care and support can be included in your Will, and money can be put aside to ensure that your pet continues to be given loving care.
Asset Protection for Children and Loved Ones
For a growing number of clients, leaving an unprotected legacy to children and other loved ones is simply not enough. Concerns include the uncertainty of the economy, IRS issues, creditors’ claims, potential spousal disputes, poor spending habits, the need to maintain eligibility for government benefits, gambling and addictive behaviors. With careful planning, you can rest assured that the legacy you leave will confer a lasting benefit for those you love despite these and other challenges.