One of the most frequent questions we hear in the area of estate planning is whether you should have a Last Will and Testament prepared in order to exercise some degree of control over how not only your assets are managed after death, but also how your family is taken care of in your absence. It is unfortunately all too common to hear that a family is torn apart by the bickering of the surviving family members over seemingly trivial details of the division and distribution of wealth and personal assets of a decedent only days after his or her passing.
For those individuals fortunate enough to have accumulated assets valuing more than approximately $500,000, it is highly recommended that they not only have a will, but also explore estate planning options to effectively minimize federal and state tax liability. These options include various types of trusts, and the utilization of life insurance, one’s residence, and gifting as a means of distributing assets to intended beneficiaries in a calculated and purposeful way. These estate planning vehicles permit individuals to effectively reduce the amount paid in estate, income, inheritance, gift, and transfer taxes to state and federal governments and instead seamlessly transferring more of those assets to loved ones.
You may be surprised to learn that if you should die without a Will, the State of New Jersey has an automatic distribution formula in place that represents the manner in which most people would like their affairs to be handled and their assets to be distributed. For individuals and families who would like to deviate from New Jersey’s formula, a Will is absolutely recommended. For example, individuals who have young children, who are divorced, who have adopted children, who have blended families, who have family members who are disabled, who have estranged family members, or who have certain personal property that is intended for a specific person, all should have a Will prepared outlining their wishes. For any individuals with any of these family situations, New Jersey’s distribution may not align with their own sense of how their assets should be distributed.
Even in the simplest families with several surviving generations, a Will is recommended because of distribution by representation. For example, suppose Jane Doe, a widow, had two children, Jay and Joe, who both died before her leaving children of their own. Jay had one child, C. Joe had 3 children, X, Y, and Z. If Jane left $120,000 to her grandchildren, how should that amount be split among C, X, Y, and Z? Many people in Jane’s position would choose not to give $30,000 to each of these grandchildren and instead give $60,000 to C and $20,000 each to X, Y, and Z. In New Jersey, they would need a Will in order to implement that wish.
One benefit of having a Will that is attractive to many individuals is the ability to exercise some control over how assets are given to beneficiaries. This is especially true when the intended beneficiaries are young children, teenagers, or even young adults. Many individuals worry, and rightfully so, about the possibility that in the unfortunate event that they should die leaving surviving children, that those children would be left with a substantial inheritance and without the requisite financial and investment expertise to manage it. And in the event those children are very young, then there is often a dispute as to how the inheritance should be managed until the child reached 18 years old. If you think that even 18 years old is too young to have the responsibility of managing a large sum of money, then you are not alone. This is one reason why many individuals choose to have a Will prepared and utilizing trusts to responsibly transfer their assets to their intended beneficiaries in the precise manner in which they direct.
The above is for information purposes only and does not constitute legal advice. For more information or to consult with our attorneys, please feel free to contact The Choi Law Group, LLC.