Why You Still Need A Will
Why Estate Planning Is Still Important after Tax Reform
Under the changes made in the federal tax laws last year, individuals may now pass up to $10 million (just over $11 million when indexed for inflation) to heirs without incurring any estate tax – that’s about $22 million for married couples. In addition, the state of New Jersey has repealed the state estate tax, with the law going off the books as of January 1, 2018.
Considering those two significant changes in the way New Jersey estates are taxed, an obvious question might arise – do I still need a will? Yes, you do!! There are still many compelling reasons to prepare and execute a valid will.
A Will Allows You to Determine How Your Estate Will Be Divided
With a will, you can identify specific gifts and can ensure that your property will be distributed in accordance to your wishes. You can also specify who will oversee the administration of your estate – notifying heirs, paying debts and distributing assets.You can also choose to specifically prevent certain heirs from receiving assets from your estate.
Without a will, you must depend on either the good faith of your heirs or the laws of intestacy. The good will of your heirs can surprisingly change where significant assets are at stake. The laws of intestacy provide a concrete framework for the distribution of your property if you die without a will, but that distribution may not be consistent with your wishes. A will can be the best gift you leave your heirs, as it can eliminate most disputes about property.
Whether you have a will or not, your estate may need to go through the probate process. With a valid will, the process is typically less complicated, and takes less time.
A Will Lets You Choose Guardians for Any Minor Children
If you die leaving minor children, but have no legal spouse to take care of them, a will can allow you to name a specific person to act as guardian. Without a will, your children’s fate will be up to the courts – they may grant custody to family members, but may also opt for a state-appointed guardian.
A Will Can Minimize the Tax Consequences on Your Estate
Even though New Jersey has repealed the estate tax and the federal exemption has increased substantially, there are still potential tax implications for your estate. New Jersey did not repeal the state inheritance tax – that’s the tax that’s levied on heirs other than spouses or children. The exemption under the inheritance tax law is negligible – just $500 – and, historically, there have been more annual inheritance tax filings than estate tax filings in New Jersey.
A Will Is Highly Effective Way to Engage in Trust Planning
As last will and testament allows you to create testamentary trusts to address any number of situations. You can establish a trust for the benefit of minor children who are not yet able to handle an inheritance. You can create a special needs trust (SNT) to provide for a family member while protecting their access to government programs. You can create a trust to pay for your children’s education. You can establish a charitable trust to benefit your favorite charities while at the same time benefiting from various tax breaks. And most importantly you can establish a trust that will ensure that your estate is invested and distributedin the time and manner that you want.
Contact the Experienced Estate Planning Attorneys at the Knee Law Firm
At The Knee Law Firm, LLC we have the experience, knowledge and skill to help you create and implement an effective estate plan. Contact us online or call our office at 201-996-1200 to learn more about how we can help you plan your estate.