Why You Need an Estate Planning Checkup

Good for you, you have a will! How long has it been since you looked at it? Do you even remember where you’ve stored it?

Dig it up now. Take a look at when it was signed. Was it two years ago, five years ago, ten years ago, even more?

Now read it. Was the will signed in a different state? You need to consult with an estate planning lawyer to determine whether your existing will complies with New Jersey law. If it does not, it is not valid.

Is this still the way you want your estate distributed? If you have acquired a larger estate since when you signed your will (yes, even with the latest financial crisis), your estate may be large enough so that your estate might be subject to New Jersey estate taxes. Since the threshold is $675,000, a lot of people who thought they were not subject to any estate taxes should talk to their estate planning lawyer.

If you have minor children, did you name a guardian? Do you still want that person to act as guardian? Is the guardian still willing to take on this responsibility?

Have you become married, divorced, or widowed since you signed your will? If you are married, your spouse is entitled by law to a percentage of your estate, even if the spouse isn’t mentioned. But, do you want your spouse to inherit everything? Then you need to revise your will. If you have become divorced, did you change your will to ensure that your ex-spouse gets only the amount you wish to give him – or do you want to cut him out completely?

Is your power of attorney more than five years old? Although a durable power of attorney does not have an expiration date, as a practical matter, banks and other financial institutions have a reluctance to rely on an old document. This means your agent (the attorney-in-fact) may have difficulty using the powers that you gave her. You might want to re-execute a new durable power-of-attorney and think about whether you want to appoint the same agent.

Likewise, is your health care proxy more than five years old? Does it give your health care agent permission to review your medical records? Do you still want to name the same agent? Do you give your agent instructions in a living will as to your wishes for medical treatment if you are terminal or in a coma? These are all very good reasons to call your estate planning lawyer to re-do your health care proxy and living will.

Your estate plan changes as your life changes. Revisions in the tax laws are also a reason for a change in your estate plan. Don’t think that because you had your estate plan created once that you are done forever. You should have an estate plan check-up every 2-3 years.

Lessons from Michael Jackson’s Death – the Guardian Issue

Michael Jackson died a week ago and provided the world with a great lesson in estate planning. There was a lot of speculation from “experts” and anyone with an opinion on who should be the guardian of Michael Jackson’s three children. The opinions ran one way before Michael Jackson’s will was filed for probate and ran slightly differently afterwards. But there was a certain amount of agreement which should make every parent who has children think or re-think who they have appointed as a guardian for their children if they die young.

Michael Jackson had a very unusual situation with his children. He was divorced, his second ex-wife, who may or may not be the biological mother of his two eldest children (but is legally their mother because she gave birth to those children) possibly gave up her custody rights when she divorced Jackson, and there is a third child, whose mother is unknown. If Jackson didn’t have a will, it was predicted that there would be a huge fight for custody of the three children among the biological mother of the two eldest children, Michael Jackson’s mother, and the nanny who spent many years with the children. The three children could conceivably have been sent to live with different guardians. Because Jackson had a will, naming his mother as the guardian of all three children, the discussion has shifted.

Now, the speculation is whether the mother of the two eldest children will ask the court to be appointed as the guardian of her two children, even if she signed away her rights as a parent. Custody of the third child does not seem to be up for grabs. Michael Jackson’s mother, who was named as the guardian of all three children in the will, will remain as guardian of that child. So, if Michael Jackson named his mother as guardian of all three children, why is there any question as to whether she will remain as guardian of all three?

The answer is that the courts grant custody to the natural parent of a child unless the parent does not want custody or the court finds that the parent is unfit to be a parent. The standard is normally “the best interests of the child” but the natural parent still gets the benefit of the doubt.

What is the lesson for all parents? It is better to name a guardian in your will than to die without a will naming a guardian. Although Michael Jackson’s situation is very unusual, it is common for guardian issues to arise in blended families. Your children with your former spouse will live with him even if your current husband is very willing to raise those children. This is true, even if your ex-husband has barely been involved in his children’s lives. But, if your ex-spouse does not wish to assert his parental rights, the person you name as your children’s guardian will get appointed by the court and will raise your children, as you had wished.

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Why You Need Estate Planning if You Belong to One of These Groups

Many of us think that estate planning is for very wealthy people only. You hear about the federal estate tax exemption of $3.5 million per person and think I don’t have that kind of money, why should I bother spending the money on estate planning?

No matter how much or how little money you have, you need a durable power of attorney, to have someone manage your bill-paying and banking affairs, and an advanced health care directive, which appoints someone to make medical decisions for you when you cannot make them for yourself. You also need to think about how you will be taken care of when you can’t take care of yourself. Is there a spouse who will have the strength and energy to take care of you when you are both old? Do you have children who can take care of you? Do they live on the other side of the country and have a job to help support their families? Do you have enough money to pay for assisted living or a nursing home? These are all questions that an estate planning lawyer can help you decide and plan for.

No matter how much or how little money you have, you need a will if you have minor-aged children. You need to appoint a guardian for your children and it must be in writing. Otherwise, you can have all of your relatives fighting over your children to be their guardian and a judge deciding which one of them will make the best substitute parent. Or you can have no one fighting over your children, and they have to go to foster care. Isn’t that a nightmare in either case?

If you have a blended family, you need a will to protect your assets from going to your spouse’s family and not to your children. Many couples struggle with the issues raised by having separate families. If you leave things to luck, you are almost guaranteed that chaos will follow after you die. It is smart to work through these issues now and get all your legal affairs in order.

Is one of your children a spendthrift? He spends more than he earns and has enormous credit card debt? Do you worry that any money that he inherits from you will just go to his creditors and he will not be able to keep any of it? An estate planning lawyer will talk to you about different trusts that can be set up so that your child will never lose the money he inherits from you to a spouse who is divorcing him, to a judgment creditor who sued him for an accident that he was in, or to pay his debts (especially when you know in your heart that the minute he clears his current debts with your money, he will just run up new debts again).

Even if you don’t have “wealth”, you could use the advice of an estate planning lawyer. It will be money well spent.

What Happens When You Die Without a Will

The majority of people in the United States do not have a will. In most cases, this leaves a mess for the family to deal with after a loved one dies. Here’s what the scenario may look like.

If you die without a will (called “intestacy”), New Jersey law decides how your estate will be divided. The law may mirror your wishes but many times it will not. For example, if you die with a spouse and one or both parents still living but you have no children, your spouse will have to divide your estate with your living parents. If you die with a spouse and children (but some of your children are from a prior marriage), your spouse will get the first 25% of your assets (but not less than $50,000 nor more than $200,000) plus ½ of the balance and your children divide the remaining assets.

When you die with a will, you decide who will act as the executor (the person who carries out your wishes as expressed in your will). If you have no will, any relative can be appointed as the executor. And the court will require that person to pay a premium for a surety bond to ensure his honest performance. Your will can require that no surety bond is required.

If you die without a will and your children are minors, the court will appoint a guardian for your children and their assets. This may not be the person that you would want to raise your children and it might not be the person you would want to handle their money. The guardian appointed by the court needs the court’s permission to take certain actions, so he will be paying lawyers’ fees and court costs every time he needs to go into court. This can be time-consuming and expensive. This is true even if your spouse if the guardian of your children’s inheritance.

If you die without a will, your children will inherit their money when they turn
18. A will would allow you to postpone them getting their inheritance until they are older and more responsible about money.

When you do not consult an estate planning lawyer, you generally do not learn about different estate tax avoidance methods. Did you know that New Jersey law does provide for a state estate tax? The asset level for owing New Jersey estate taxes is $675,000 and up.

No one seems to like thinking about his/her death or spending the money on consulting a lawyer. But, in the end, not consulting a lawyer to write the will that you want and making sure it’s written in accordance with New Jersey requirements will cost your family thousands of dollars more than doing it the right way now.

Estate Planning If You Are Not Wealthy

You may not think you need to have a will. After all, you don’t think of yourself as wealthy. And you think you won’t need to pay any estate or death taxes (those are only for the rich, right?). And you’re fairly young and in good health, so you aren’t dying anytime soon. But you could be wrong – about all of your assumptions.

There are many reasons that people own their property in joint ownership. One of those reasons is so that the other owner automatically inherits upon your death - without needing a will. But, there are also reasons why that could be a bad idea. You may have accounts that can be “payable on death.” And for those accounts, you would not need a will. But, it is unlikely that everything you own is in joint ownership or a “payable on death” account. So, you need a will.

You probably have heard that you don’t pay “death taxes” or "estate taxes" unless you have an estate of more than $3.5 million. That $3.5 million is the federal estate tax exemption. So if you die and your estate is less than $3.5 million, then your family does not pay federal estate tax. But if your estate is more than $675,000, you will pay a death tax to New Jersey. And if you start counting the equity in your house, the balance in your retirement account, a life insurance policy that is not in a life insurance trust, and your stocks (even with the hit it took in the stock market these past few months), you might easily be past the $675,000 number. Do you want to pay estate taxes to New Jersey? So, you need a will.

Do you have minor-aged children? Do you want your relatives arguing over who should be the guardians of your children? Do you think that one of your relatives shouldn’t even be the guardian of your pets, much less your children? Do you know for sure that you will not die until the youngest child is over 18? So, you need a will.

Do you want your family hard-earned assets to be destroyed by your creditors, by an ex-spouse, by the stupid decisions of your college-aged kids, by your spouse re-marrying and giving your money and things to the new spouse? So, you need a will.

Of course the wealthy know that they need estate planning. And the majority of them spend the time and money to come up with a plan that leaves them with the peace of mind that comes from being in control as much as possible. They don’t leave things to chance. You may think you don’t need to act like them because you don’t have the same amount of money. But don’t you like the idea that you can leave things the way you want them, not to chance? Don’t you like the idea that your loved ones will be protected from bad luck and bad decisions? So, you need a will. Go call an estate lawyer. You’ll be glad you got a will.