New Jersey residents who are married may wonder about the process of setting up an estate plan for a spouse. Some spouses simply hold assets jointly, titled so that a spouse automatically inherits them at the time of death, or they have a basic will that leaves everything to a spouse. However, a simple estate plan can ensure that all assets are accounted for and transferred according to the testator's wishes.
How to fund an estate plan
Why everyone needs estate planning, not just the rich
Many people may believe that estate planning only benefits the elderly or the very wealthy; however, estate planning is important for everyone, even those with limited assets. Estate planning includes wills, but it also includes living trusts.
Estate planning for the not-as-wealthy
When planning an estate, most people automatically think of the very rich since the exemption for an estate tax is more than $5 million. However, an estate tax is not the only issue involved in estate planning. Most people, no matter their social status, need to make up a will through the use of either a lawyer or a financial adviser. However, the middle-class individual could also benefit from other areas of estate planning.
Estate planning in the electronic age
Over the years, the American people have moved huge portions of their lives to the Internet. From socializing with friends and business associates to shopping and banking, people spend a great deal of time on the Internet. As part of this shift, "digital assets" have emerged. Some New Jersey residents may wonder how to address these assets as part of estate planning.
Estate planning for the future
Since 2001, there have been many changes to federal tax laws regarding estates. In the complicated world of estate planning, the focus has been on exemption amounts and the tax rate above it, even in New Jersey. From 2001 to 2010, the exemption rate continually rose while the tax rate declined until disappearing completely during most of 2010. The tax returned in 2011 and the exemption was set at $5 million with a 35 percent rate above that, and the American Taxpayer Relief Act made those 2011 changes to the exemption rate permanent.
Man dies with large estate and no heirs
New Jersey residents may be interested in to hear that in 2012, a 97-year-old Holocaust survivor and real estate developer passed away, leaving no relatives and no heirs. He also apparently did no estate planning - and left an estate worth nearly $40 million. A representative for the state comptroller's office said that this is the largest unclaimed estate that the state has ever seen.
Estate planning is important in financial planning
Some people think that only "old" people die, or that estate planning is unnecessary for the young. On the contrary, estate planning is essential for people of all ages. An estate plan will help ensure that a person's wishes are respected should the person pass away unexpectedly.
The importance of estate planning in New Jersey
It's important for New Jersey residents to plan how their estates will be distributed when the time comes, but many of them may not know the importance of the estate planning process. Without a solid estate plan, their children don't always know what assets they own, and these assets are often scattered in different places. Even after the assets are assembled and the family can start dividing them, there are often issues with various ownership structures, account titles and beneficiary information. Dated estate planning may not keep up with the changing laws, and it may not reflect a person's current financial position. As a result, surviving family members may face a mess of paperwork that is difficult to understand and time-consuming to sort through. The more convoluted the estate is with accounts in various joint names and housed at different banks, the more tedious it will be to finalize and divide.
Baby Boomers plan for Medicaid
A unique trend is emerging among Baby Boomers as they plan for retirement. Many are now attempting to position themselves through a process known as Medicaid planning to be more likely to qualify to receive Medicaid while still preserving their assets.
Medicaid planning can protect assets and access to care
Medical care is expensive, and this gets even truer as people get older, especially if they develop a serious illness or have to move into a nursing home. In these situations, even people who have set aside a significant amount of assets for retirement may have a hard time paying for their medical care.
