Checklist for Estate Planning
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Estate Planning Attorney
Your estate plan is an investment in you and your family’s future. As years pass, you and your family will age and may grow, your assets will change, and new laws will be passed. We recommend all of our clients review their estate planning documents once every five (5) years or after a major personal or financial change.
This checklist focuses on the foundation of your estate plan, including documents such as a Last Will and Testament, Revocable Trust, General Durable Power of Attorney and Living Will. (Note that references to a “Will” in this checklist is generally interchangeable with the term “Revocable Trust”, which can also be used as the centerpiece of an estate plan.) However, irrevocable trusts – such as a Life Insurance Trust – and other estate planning vehicles should also be reviewed periodically to see if they are performing as expected.
Estate Planning Checklist
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Below are some questions YOU should ask yourself when reviewing your existing estate plan documents. The entire article can be found on our website, www.njelderlawcenter.com under “Free Stuff”.
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- Do you have a (i) Last Will and Testament, (ii) Revocable Trust, (iii) General Durable Power of Attorney, and (iv) Health Care Power of Attorney/Health Care Proxy/Living Will? Every complete estate plan must contain at least three of these documents.
- Have you moved since you last updated your estate planning documents? If you have moved from one state to another, especially into New Jersey, there may be questions of the interpretation or validity of your existing estate planning documents in your new state of residence, and significant estate tax issues.
Generally, estate planning documents executed in one state will be valid in another state, but your new state of residence may have specific statutes or tax laws that are not addressed in your existing estate planning documents. You may want to contact an attorney in your new state or residence to advise you as to what might need to be updated.
- Do you have a personal property designation? This is a separate writing where you indicate who should receive specific items of your personal property such as photographs, jewelry, art work, etc. If you have one, you should review it and make sure that it is still an expression of your wishes. If you don’t have a personal property designation, you may want to consider creating one so that specific items will go to specific people.
- Is any person receiving your estate a minor (under 18)? If so, your estate plan should make provisions for that property to be held by the minor’s Guardian or Trustee until he or she attains an appropriate age.
- Do you have any specific gifts or bequests you want to make? Any gift of a cash amount or of an asset other than personal property should be stated in your Will or Trust. If you plan to give away a specific asset to a person in your Will (i.e. your shore house), be sure that the asset still exists. Also, your Will should provide for what happens if the specific asset is sold during your lifetime.
- Are your total combined assets, including life insurance death benefits, greater than $2,000,000? If so, there may be a New Jersey Estate Tax imposed at your death in the future. Both Federal and New Jersey Estate Taxes can be reduced or even eliminated with appropriate estate tax planning. If you are married, both spouses’ assets should be totaled together to see if they exceed $2,000,000. If you have a taxable estate your estate plan should contain trusts or other provisions to reduce taxes.
Choosing a Fiduciary: It’s a Job, Not a Reward
We spend about 45 years of our lives slaving to provide for our retirement and to leave a legacy for our family. By some standards, that’s approximately 85,000 hours at work, probably more. So tell me, why so many of us spend so little time deciding who will protect our life’s savings if we become incapacitated before our death and then after we die?
The decision of who will serve as the personal representative of your estate or the trustee of your trust (collectively, your “fiduciaries”) should be one of the most important decisions you make during the estate planning process, yet this decision is often made thoughtlessly or in haste. There are many options available to you when selecting your fiduciaries. You may decide to name a single family member, trusted advisor, bank or trust company, or you may decide to name multiple fiduciaries to manage your estate and/or trust.
It is very common for an individual to name a surviving spouse, child or other family member to serve as the fiduciary. There are plenty of advantages to naming a family member, including the fact that they often will serve without charging a fee. Because they have a personal stake in the estate or trust and probably are familiar with you and our values, they may know some of the more intimate details associated with your family and assets. As such, a family member may have a greater understanding of your estate planning goals and objectives.
Naming a family member as your sole fiduciary may also have some significant disadvantages. For example, the person named may be overcome with grief, become ill or become disabled and be unable to act in the future, particularly if he or she is an aging spouse. The family member serving as the fiduciary may encounter conflicts among siblings, more distant or estranged beneficiaries or lack of skills to distribute and divide the assets. In the case of a second marriage, conflicts often develop between the new spouse and the children of the deceased parent. Finally, the individual may lack the time, organization skills or intellectual ability to serve as the fiduciary. An alternative to naming a family member is to name a bank or trust company to serve alone or as co-fiduciary with a family member. Naming a professional or corporate fiduciary has many benefits, especially when it comes to actually administering the estate or trust. Because of the considerable experience these fiduciaries have with estates and trusts they understand the accounting, tax and compliance issues associated with estate administration and therefore will often be more efficient. Further, because they don’t have a stake or personal interest in the administration, a bank can be more objective and impartial when making decisions regarding distributions to beneficiaries. Finally, a corporate trustee will provide experienced and professional investment advice.
Naming a professional or corporate trustee also has some disadvantages, including the fees for their services and their investment decisions may be more conservative than the beneficiaries’ desire. However, fees charged by a corporate fiduciary may be no more than an individual trustee pays to delegate the investment decisions to a professional advisor or a paid CPA or attorney to assist with the income tax issues, and conservative investments may not be bad.
In making decisions regarding fiduciaries, it is important to select someone who is financially responsible, stable, trustworthy and organized and has enough time to handle all of their responsibilities. All too often, this decision is based solely upon the desire to avoid fees charged by professionals, banks or trust companies. However, when selecting a fiduciary it is important to think of the appointment as a job, not a way to reward (or punish) that chosen person. The question to ask is, would you hire that person to run your business or your household while you’re alive? If not, why put them in charge after you’re gone?
We can help you in all aspects of estate planning in NJ including elder care, asset protection and tax reduction law. Don’t wait until it’s too late to plan for the future. Call Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or e-mail him at firstname.lastname@example.org today and speak to him personally. He welcomes your call.
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