Estate planning is an important matter for all adults in New Jersey. While most people associate the need for an estate plan with being older, a recent survey by Wells Fargo shows that around 40 percent of Americans who are 60 or older haven't taken the time to create an estate plan. This is troubling because not having an estate plan leaves loved ones unprepared for when the person passes away.
There are many different types of trusts New Jersey residents can use to protect their financial legacy and limit how much their estate may be taxed. However, it is important that in addition to choosing the right type of trust, they also designate the right person to administer the trusts.
People in New Jersey should create an estate planning checklist to ensure that they have everything they need in their estate plan. While estate planning provides individuals the opportunity to get ready for the unavoidable, it also allows them to dictate what should happen to their financial assets after they die. If their estate plan is not structured as it should be, surviving loved ones may encounter difficulties with the estate.
When people in New Jersey are creating an estate plan, they may want to use a living trust. A living trust allows a person to keep control of assets after placing them in the trust. Married people may place assets in a trust and name one another as co-trustees. With a trust, assets do not go through the public process of probate and can be distributed to beneficiaries without delay.
One of the estate planning mistakes that many New Jersey residents make is not using a trust to hold assets for their adult children. Trusts can be particularly helpful if an adult child has unhealthy spending habits.
Some New Jersey residents who are creating an estate plan might wonder if they should take steps to avoid probate. There are advantages and disadvantages to the probate process, and a person should consider them carefully before deciding how to set up the estate plan.
New Jersey residents and others who are thinking about their legacy may want to start creating an estate plan today. At a minimum, an estate plan will contain a will or a trust in addition to a health care and financial power of attorney. The will or trust will give a person greater control over how assets are handled. In the absence of a will, assets may go to surviving family members such as parents or children.
People in New Jersey who have created an estate plan may want to review that plan. In December, Congress passed a law that changed the amount of the estate plan exemption from $11 million for couples to $22 million. This means that people who have created trusts and used other tools to avoid estate tax may want to review their plans and see if those tools are still necessary. However, there are reasons that everyone should review an estate plan regularly even if the estate is a much smaller one.
New Jersey residents can't predict when they may find themselves incapacitated. If they do, how their affairs are carried out depends on how their estate plan was created. If the plan has a power of attorney, whoever was granted that power has the authority to manage the principal's affairs. It is important to point out that it must be signed by the principal while he or she is of sound mind.
A common misconception people have is that estate planning is for wealthy individuals with many assets. Some people in New Jersey also believe that estate planning is meant to be done later in life. While it's true that a tax filing isn't required unless assets and previous taxable gifts exceed $5.6 million, there are many potential benefits associated with being proactive about estate planning at any age.