By David T. Norrie, Attorney at Law, New Jersey
Summary: You need a Will to make sure that your estate is left to whom you wish and to control who will administer your estate. Your Will can also appoint a guardian for your minor children and control the manner in which your children inherit your estate. Your Will can further be used to minimize federal estate taxes when your individual assets exceed $650,000. In addition to your Will, you should also have a Power of Attorney and a Living Will.
Who Inherits Your Estate: If you die without a Will, New Jersey’s statutes determine who receives your estate. These statutes could result in your estate being divided up differently than you want. For example, if you are survived by your spouse, and you have children, your estate will be split between your spouse and your children. If you do not have children, but your parents are alive, your estate will be split between your spouse and your parents. In both of these situations, most people would prefer to have their entire estate go to their spouse if their spouse survives them. If you want to control who receives your estate, you need to have a Will.
Who Administers Your Estate: If you die without a Will, someone will need to go to the County Surrogate and obtain letters of administration of your estate. This may or may not be the person whom you would wish to administer your estate. In addition, this person may be required to post a bond which may be paid for out of your estate. You can designate in your Will an executor to administer your estate and can waive the requirement for a bond.
Inheritance By Minor Children: If you do not have a Will, and you have minor children, the person who is appointed administrator of your estate will need to designate a person to manage your children’s inheritance until they reach age of 18. This may or may not be the person you would choose to manage that money. You also may not wish your children to receive all of this money directly at age 18. You might, for example, prefer that they not receive the money until they are done with college or until they reach the age of 25 or even 30. If you have a Will, you can specify the person who will manage this money for your children, and the manner in which the money is to be spent, and the age at which your children will receive the money directly.
Guardian For Minor Children: If you do not have a Will, someone will need to file a court proceeding for guardianship of your minor children. This person may or may not be the person you would choose to be guardian and this person may be required to post a bond. The costs of this proceeding and the cost of the bond may be paid out of your estate. If you have a Will, you can specify the person who is to be guardian of your minor children and you can waive the requirement of a bond. The appointed guardian will not have to file a court proceeding, but will merely need to go to the County Surrogate and sign some papers to confirm the guardianship.
Federal Estate Tax: The federal government may presently tax your estate up to fifty-five percent. That portion of your estate which goes to your spouse is exempted from this tax. You also have an exemption equivalent in 1999 for up to $650,000 of your estate. If you leave your entire estate to your spouse, there is no federal estate tax upon your death because of the spousal exemption, but your spouse cannot use your exemption equivalent, so your spouse’s estate will be taxed up to fifty-five percent of the amount it exceeds $650,000. However, with appropriate tax planning trusts, you can each make use of your exemption equivalents and have no federal estate taxes on up to $1,300,000.
Power of Attorney: A Power of Attorney is used to designate someone to take control of your finances in the event you become disabled. Without a power of attorney, someone would need to go to court in order to obtain control over you finances.
Living Will: A Living Will (also called an Advanced Directive for Healthcare) is used to designate someone to decide matters about your medical treatment and termination of treatment in the event you are unable to do so. Without an advanced directive, no one may know what your wishes are with respect to your medical treatment, and if even if they do know, they may need to go to court in order to carry out your wishes.
© 1998-99 by David T. Norrie, Esq.
Mr. Norrie has a law office in Mount Olive, New Jersey, that is separate and independent from Mr. Webb’s law practice. More information about Mr. Norrie’s law practice can be found at his Internet Web site: www.NorrieLaw.com