Virtually all New Jersey residents are aware that building an estate plan around trusts instead of simply drafting a will can keep an estate out of probate. The probate process is time-consuming, expensive and fraught with potential tension and stress, and avoiding those negative aspects is a worthy goal. However, there are a number of other reasons to choose trusts over a will.
For many in New Jersey, the act of creating a comprehensive estate plan brings about a sense of relief in knowing that these matters have been addressed. With the right degree of effort, estate planning strategies can work wonders in ensuring that one's wishes are followed when the time comes. It is important for individuals to understand, however, that simply creating a will is not a catch-all solution. Many assets can still pass to others upon one's death if the proper precautions are not taken.
Most tasks that people find onerous can be made easier by taking a step-by-step approach. This is true for purchasing a house, adding to one's family or planning a vacation. It is also true for estate planning, and many in New Jersey find it helpful to break down the process into simple steps. The following outline offers guidance on the matter, but it is important to note that each individual or family will have a unique set of needs, and the basic steps chosen should reflect those goals.
For many in New Jersey, the main focus of planning one's estate is to ensure that loved ones receive the inheritance that is planned for them, without incurring heavy taxation and outside of the probate process. For those residents who are unmarried and do not have children, estate planning may be structured around a different focus. Many forget that an important function of estate planning can have an impact while an individual is still alive.
A great deal of focus within estate planning is centered on the best way to transfer assets to children and grandchildren after the death of a loved one. For couples in New Jersey without children, a different estate planning approach is often taken, and the focus becomes how to best ensure that one's own needs are taken care of in the event of an incapacitating illness or injury. It is one thing to consider how one would like to be cared for in such circumstances, but another to actually structure a plan to make sure that one's wishes are followed in this most important regard. This aspect of estate planning is often overshadowed by a focus on passing on assets and avoiding probate.
Many New Jersey residents have seen media coverage of the generous gift that former basketball coach Dean Smith left for the players he worked with over the years. Smith, who is widely considered one of college basketball's most beloved coaches, used a revocable trust within his estate planning strategy to gift $200 to 180 of the young men who passed through his program. Not only is his generosity to be applauded, but the method through which he structured his estate also deserves admiration.
Organization and periodic review are two topics that should always be associated with the creation and maintenance of a proper estate plan. Without these two practices, it is all too easy for the wishes of a New Jersey resident to fall by the wayside. Over the course of a lifetime, many individuals will obtain a wide variety of assets, including various insurance policies. Ensuring that the beneficiaries for those assets are up-to-date is an essential aspect of good estate planning. Absent such measures, the division of one's estate can be left in the hands of a probate court.
When planning for the distribution of one's assets upon death, many New Jersey residents make the mistake of taking a piecemeal approach to the matter. They may draft a will in which they outline how they would like their assets to pass to the designated heirs, which is an important step within estate planning. However, there may be a range of assets that have named beneficiaries, such as bank accounts, investment accounts, life insurance and more. In addition, many individuals name their children or others as joint owners on certain assets, such as their home. This approach can lead to a wide range of problems.
The number of Americans who purchase and own firearms has been on the rise in recent years. Statistics compiled by the National Instant Criminal Background Check System, which is run by the FBI, indicate that the number of firearm purchases has risen since 2012, and that last December's numbers were also higher than the year prior. This means that more and more households contain guns, many of which are highly valuable. For those in New Jersey who have a valuable firearm collection, the topic of gun trusts within estate planning may be of interest.
Some level of sibling rivalry exists in most families. New Jersey readers may identify with one sibling believing that the brother or sister always received more attention, more money and nicer clothes. Such feelings can resurface upon a parent's death, and it is not uncommon for one sibling to contest a will that leaves more to the other sibling. In many cases, the "favored" child is appointed as the administrator or executor of the estate. Sometimes, parents fail to keep sibling rivalry in mind during their estate planning.