Legal Documents for All Ages 18 – 118 Part 3 of 3
Nancy M. Rice, Esquire, CELA
1236 Brace Road, Suite F, Cherry Hill, NJ 08033
Q: What are the “top 3” legal documents everyone should have?
A: 1. Advance Medical Directive/Living Will
2. Durable General Power of Attorney
3. Last Will and Testament
Q: TRICK QUESTION: What happens to your assets if you die without a Will?
A: Most people believe that their assets will pass to the State of New Jersey if they die without a Will; but think about it . . .if this really happens, we wouldn’t have to tax toilet paper or sell highways in order to balance the State budget, would we?
Q: OK, what REALLY happens if I die without a Will?
A: First, look to see how assets are TITLED (for example, if a house is owned by a husband and wife, jointly, it will pass to the survivor automatically) and whether an asset has a beneficiary named (for example, all IRA’s and life insurance policies and annuities name beneficiaries, and these beneficiary forms dictate where assets pass upon death, regardless whether a Will says otherwise. Assets which are not titled jointly and which do not designate a beneficiary will pass, in absence of a Will, to your “heirs” as defined by the State Intestacy Laws.
Q: Who are my “heirs” under the NJ Intestacy Laws?
A: The New Jersey intestacy law changed a few years ago. Generally, the surviving spouse or domestic partner is first in line to receive assets from the intestate estate. However, the amount a surviving spouse or domestic partner is entitled to varies as follows:
If the decedent has no children or grandchildren or parents surviving, or if all of the children are of this marriage, the surviving spouse or domestic partner is entitled to the entire intestate estate.
If the decedent has no children or grandchildren surviving, but is survived by one or both parents, the surviving spouse or domestic partner is entitled to the first 25% of the estate (but not less than $50,000 nor more than $200,000), plus three-fourths of the remaining balance of the intestate estate.
If all of the decedent’s surviving children are of the current marriage or domestic partnership and the surviving spouse or domestic partner has one or more surviving children who are not descendants of the decedent; or if one or more of the decedent’s surviving children is not a descendant of the surviving spouse or domestic partner, the surviving spouse or domestic partner is entitled to the first 25% of the intestate estate (but not less than $50,000.00 nor more than $200,000.00), plus one-half of the balance of the intestate estate.
Any part of the intestate estate not passing to the surviving spouse or domestic partner as indicated above, or the entire intestate estate if there is no surviving spouse or domestic partner, passes as follows to decedent’s:
-Descendants; and if none, to:
-Parent or parents equally; and if none, to:
-Parents’ descendants; and if none, to:
-One or more surviving grandparents; and if none, to:
-The descendants of grandparents (e.g., aunts and uncles, nieces and nephews); and if none, to:
-Step-children or their descendants.
If there are no relatives surviving, the intestate estate passes (escheats) by default to the state of New Jersey.
Thus, if you want to make a bequest to people or organizations other than those listed above, or if you want to exclude certain people, you must make a Will and take care to review all of your beneficiary designations on life insurance, retirement plans, and annuities.
Q: Other than stating who gets my property following my death, why else do I need a Will?
A: You want to decide who will act as your Executor, Trustee, and Guardian for minor or disabled children. You want to put provisions in your Will to reduce or eliminate death taxes such as New Jersey Inheritance Tax, New Jersey Estate Tax, and Federal Estate Taxes. Your attorney can also advise you how to best minimize or eliminate income taxes on assets such as IRA’s and 401(k)’s.
Q: If I already have a Will, how often should I consider changing it?
A: Whenever family circumstances change (birth, death or disability of a family member), your assets increase or decrease or change substantially, or you add or lose life insurance coverage; whenever you decide you want to change who you named as Executor, Trustee, or Guardian; if you want to consider creating a trust for you children because of marital issues; or if your state of residence changes, you should consider a review of your estate planning.