Failing to create an estate plan can lead to significant financial losses for families in New Jersey. Without a plan, the state determines the distribution of assets, which may not align with the wishes of the deceased.
This process, known as intestate succession, can result in unnecessary taxes, legal fees and prolonged delays in asset distribution.
How intestate succession works
Intestate succession is an aspect of the inheritance process that applies when the deceased did not write a will. New Jersey’s intestate succession laws call for the distribution of assets according to a strict hierarchy. This also means that when a married person dies without a will, their spouse may not automatically inherit everything. The spouse typically receives the first $50,000 of the estate, plus half of the remaining balance. The other half goes to the deceased’s children.
Financial loss for non-traditional relationships
Intestate succession does not consider non-traditional relationships. Unmarried partners, stepchildren or close friends will not receive any assets under New Jersey law unless they are explicitly named in a will. This situation can leave loved ones without financial support and create tension among surviving family members.
Lack of tax preparation
New Jersey imposes an inheritance tax on certain beneficiaries. Without proper planning, the tax burden can be significant. By carefully structuring an estate plan, individuals can take advantage of tax exemptions and strategies that minimize the amount owed. Without these measures, heirs may face large tax bills, which could force them to sell valuable assets at a loss to pay the taxes.
Significant probate costs
The probate process, where the court supervises the distribution of assets, is another source of potential financial loss. Without an estate plan, probate can be lengthy and costly. The court will extract probate fees, such as court costs and executor fees, from the estate’s assets, reducing the amount that heirs receive.
An estate plan accomplishes much more than simply designating the allocation of one’s assets. It can also be a tool for managing wealth in such a way that preserves it effectively for future generations.
