Estate Planning: More Than A Will
By Parag P. Patel, Esq.
During our lifetime, most of us strive to create and build
upon our net worth. We generate savings, purchase a home, and eventually invest
in stocks, bonds, mutual funds, IRAs and retirement plans. Unfortunately, most
of us risk losing an unnecessarily large amount of these assets by failing to
plan to protect them.
Recent surveys have revealed that over 40% of our
population does not have a will. For those individuals, their death often
creates a scenario whereby their family must needlessly waste money to petition
the court for an individual to administer the estate. In many instances, this
insult is compounded by the assets being subject to taxes, which could easily
have been avoided. Thus, an integral part of anyone's financial planning must be
an estate plan.
Traditionally, an estate plan was simply a will. However,
with the growing medical needs of an aging population, as well as the
ever-present threat of the Internal Revenue Service, prudent estate planning
requires additional protections for all of us. Even the best written will has
little value if one's assets are depleted in later years by health care costs
which can be mitigated or borne by someone else.
Any prudent estate plan should address four questions:
(1) Where do I want my money to go after I am dead?
(2) How can I minimize any taxes as a result of my death?
(3) How can I protect my estate and myself if I become
disabled?
(4) Do I want my life to be extended by life support even
though a medical event has left me in critical condition without any hope of
recovery?
The basic documents, which are necessary to answer these
questions, are a will, living will and power of attorney. A will declares who
shall inherit an individual's assets (the beneficiaries) and who shall be
responsible for distributing them to such beneficiaries (the executor). For
young parents, a will can also be used to appoint a guardian for their children
and a trustee to manage a child's money until they are old enough to handle it
themselves.
Often, individuals wish to care for their spouse first,
then their children. Often, this intention is reflected in a will. If you die
without a will, though, your spouse is only entitled to the first $50,000.00
outright. In New Jersey, he or she must split the rest of your assets with your
children, no matter how young or old they are. If you have no children, your
parents step into their place.
Even if you have a will, your assets are not completely
protected. It is necessary to execute a Power of Attorney to provide to appoint
someone to care for you and your assets if you are disabled. Individuals, who
become disabled mentally and do not have a power of attorney, can only be
protected by an expensive and humiliating procedure known as a guardianship,
whereby they are judged to be "incompetent" in the public forum of a
court.
Finally, a living will should be executed to announce your intentions in the event an accident, stroke or other serious medical event leaves you brain dead or physically depleted of any possible quality of life. A living will protects your assets from being used for unnecessary and costly life support. Without a living will, there is no authority, outside of a court proceeding, to allow a doctor to discontinue this treatment.
Patel Law Office
33 Wood Avenue South, Suite 600
Iselin, New Jersey 08830
1.800.857.0546
patellaw@mail.com
Parag P. Patel, Esq. is a business and tax attorney and may be reached for a free consultation at (800) 857-0546 or patellaw@mail.com. Opinions expressed in this article are not intended to be a substitute for specific individual tax or legal advice.
New Jersey Lawsite Home | Lawyer Search | County Directory | Practice Area Directory | Articles | Contact