Ideally, New Jersey residents should have estate plans in place to ensure that their final wishes will be carried out. A basic plan may include a will, a living trust and powers of attorney. However, it is important that an estate plan is constructed properly to avoid a myriad of issues that could make it harder to comply with its terms.
First, a will should be read carefully to ensure that it says what an individual wants it to. It should also be examined to make sure that all intended beneficiaries are included and that what they are to receive is clearly indicated. How beneficiaries are chosen and what they inherit may be impacted by estate tax issues. While only 0.2 percent of Americans will pay federal estate tax, it is important to consider inheritance taxes.
These taxes are paid at the state level by the person who inherits property unless it’s a spouse. According to the Tax Foundation, there were six states that levied such a tax in 2016. To transfer investment accounts held outside of a retirement account, it may be worthwhile to add a transfer-upon-death designation. This allows the beneficiary to collect the asset without having to worry about probate proceedings.
Wills or trusts are effective estate planning tools. However, they may not be enough to ensure that a person’s last wishes are carried out in a timely manner. An individual may wish to speak with an attorney about why transfer-on-death designations or changing the title on a piece of real estate may be smart moves. In many cases, taking these steps may prevent certain assets from having to go through probate, which allows them to be transferred quickly after an individual passes away.