It’s not something people like to think about. But insuring that your will is properly updated can save your family a good deal of heartache.
Now, honestly, not everyone needs a will, and there is a huge misconception that without a will, the government will take your assets. In fact, the State of New Jersey has what is called an Intestacy Statute, clearly delineating who is entitled to your assets in the event that you die without a will. You may not like, however, how the law requires your assets to be distributed.
For example, here are some possibilities:
If you are single, without children, your parents take your estate. If your parents have already passed on, your brothers and sisters share your estate. If you have no brothers or sisters, nieces and nephews come next, and so on.
If you are married and die with children only of the marriage, your spouse receives the first $50,000.00 plus half the balance, and your children get what’s left.
If you are married and die with children not of your current marriage, your spouse gets strictly half and your children share the other half.
If you are married and die without children, but your parents are still alive, your spouse receives the first $50,000.00 plus half the balance, and your parents get what’s left.
Clearly, the government is not coming to take your money, and there is a plan in place in case you don’t have a will when you die.
But maybe you don’t like how this will work out. Maybe you want to disinherit one or more of your heirs, or you want to make disproportionate gifts. Or perhaps you want to specify who should receive particular assets. Without a will, the Court will appoint someone to distribute your assets- wouldn’t you rather choose the person who will take on this task? These are all good reasons to have a will prepared.
Having young children presents its own challenges in this arena. Young children who inherit under the Intestacy Statute are simply entitled to your money. There is no mechanism for control- no means to insure that the money they inherit will be available to support them as they go through college and early adulthood. Similarly, without a will, the Court will appoint a person to care for your children after you are gone. Most people I know would rather select the guardian who will care for their children.
So, notwithstanding the Intestacy Statute, there are plenty of good reasons to have a will. But it’s equally important to update your will as your life circumstances change. The people you have chosen to act on your behalf after you die may have become disabled or died themselves. Your children may have grown to an age where trusts are no longer applicable. Or you may have amassed significant assets that create the need for tax planning.
What kind of tax planning? New Jersey residents are subject to three levels of tax upon death- New Jersey Inheritance Tax, New Jersey Estate Tax and Federal Estate Tax. While these taxes kick in at different thresholds, and not everyone is required to pay, the cost can be significant- and sometimes, there are ways to avoid these payments.
At Pickus & Landsberg, we are happy to meet with you, review any will you might have, and discuss your circumstances to determine any changes that need to be made. Please call or email for a free consultation.