Every adult should have a basic estate plan. Some believe that estate planning is just for the very wealthy, but the elements of a basic estate plan apply to decisions affecting health and property that we all face.
The documents that make up a basic estate plan are:
1. Last Will and Testament
2. Advanced Directive for Health Care
3. Durable Power of Attorney
For even a basic estate plan, the best course of action is to consult an attorney or financial adviser.
However, for those wishing to create their own documents, forms are available online. Make certain that you use forms specific to the state of New Jersey.
Last Will and Testament
A Will conveys your assets to your beneficiaries upon your death. Without a Will, your assets go to your next of kin, but the law may produce results you would not have intended. You have the ability in your Will to name an Executor who can carry out the distribution of your estate. Absent a Will, the Surrogate must appoint an Administrator, usually a spouse or other family member, but sometimes costly court battles occur to settle these questions. Parents also have the ability to name a guardian and trustee, in the event they die while their children are still young. These Will provisions also head off costly court actions. A Will waives the requirement that an Executor post a surety bond. This is a savings to your estate.
I have outlined here just a few of the benefits of having a properly drafted and executed last Will and Testament. In future columns I will discuss the Advanced Directive and the Power of Attorney.
To close, I want to identify two important things you should bear in mind when formulating any estate plan. Number one, you need to take into consideration the difference between “probate” and “non-probate” assets. For example, your marital home, if titled as husband and wife, will pass to your spouse by right of survivorship and not through the Will. Likewise, jointly held bank accounts or “POD” accounts pass according to bank rules and not by Will. Life Insurance or investment accounts will go to a named beneficiary under contract law, not Will (unless the named beneficiary predeceased the insured).
As you can see from these few examples, when you begin thinking about your basic estate plan, it would be wise to assemble any insurance policies, pension documents, investment and bank accounts, deeds, vehicle titles etc., to determine which assets will actually be passing through the Will and which will pass to named beneficiaries by operation of law.
Finally, the most important idea to keep in mind when making an estate plan is the importance of selecting a good personal representative to speak for you when you cannot speak for yourself. The Executor of the Will, the Attorney in Fact, the Designated Healthcare Representative, fiduciaries such as a Trustee or Guardian, must be individuals you absolutely trust and who will be faithful to your plan.
Understandably, It is difficult to think about concepts of illness and death, but best to do so while we are healthy and able because a well thought out estate plan is a gift we give our families.
Meanwhile, love each other and live every day to the fullest!
For more information call the Surrogate’s Office at (609) 645-5800.
James Curcio
Surrogate
Atlantic County