Creating an estate plan requires the use of certain documents. When you begin estate planning, you are faced with matters of considerations such as disability planning, guardianship planning, probate, distribution of assets at your death, etc. All these issues are covered by wills and trusts, but some situations necessitate the use of either. Sometimes you can even find yourself at a loss what to do, because you do not know what asset to put in a trust, or what assets to distribute by a will. Some people even avoid estate planning because of the difficulties it presents. But the truth is you do not have to go at it alone. When you hire an estate planning attorney, you can rest assured that your estate plan will address all that pertains to your estate and well-being.
Our estate planning attorneys at our estate planning law firm 07652 are highly competent and knowledgeable, and know just the right documents to use in your estate plan.
Here are things to consider in using wills and trusts in Paramus
Asset distribution
A fundamental aspect of estate planning is specifying how you want your possessions distributed at your death. So the question is, “should I use a will or trust to distribute my assets?”
Using a will
Drafting a will is quite simple. Note that you can only use a will to distribute assets which are held in your name only. Assets including retirement accounts, 401(k)s, insurance policies, bank accounts payable on death, will all be passed to the designated beneficiaries without having to include them in your will. Also, assets held in joint tenancy with your spouse or other partner will not be distributed by a will. They pass directly to the joint partner. So even though you include such assets in your will, the deed agreement will take precedence over your will.
You can use a will to name a Guardian who will look after the assets you leave for your minors.
Using a trust
Trusts are more expensive and difficult to create. When you hold assets in a trust, those assets will go directly to your beneficiary immediately you die, without going through probate. You cannot hold insurance proceeds and retirement accounts in a trust but you can make the trust their beneficiary. If you wish for your loved ones to receive your property immediately after you die without any court proceedings, then use a trust instead of a will because wills take time to probate before assets can go to your beneficiaries.
Taxes
By New Jersey law, no estate tax will be paid to the state after you die. However, federal estate tax will be paid if your estate exceeds $11.58 million. If your estate exceeds this value and you want to avoid the huge taxes (because you want the whole value to go to your loved ones), then consider holding some valuable assets in an irrevocable trust. An irrevocable trust takes full ownership rights of the assets funded in it, and so those assets will not be counted as part of your estate. Fund the trust until the value of your estate falls below $11.58 million, and then your estate would be tax-exempted. The assets held in the irrevocable trust will immediately pass on to your beneficiaries at your death. Also, inheritance tax will not be paid.
But if you are using a will, your estate will be subject to federal estate tax and inheritance tax. All these must be paid by your beneficiaries before they can inherit your property. Contact our estate planning law firm 07652 for assistance with tax planning using trusts.
Disability and end-of-life
Last wills only go into effect after you die so if you wish to plan for incapacity and end-of-life situations, consider creating a living trust or a living will. A living will, as opposed to a last will, allows you to lay down instructions on the kind of medical treatment you want when you fall into a terminal condition; would you like to be put on life support or not? Assets are not transferred with a living will.
On the other hand, a living trust allows you to name a trustee who will stand in your stead to make financial and medical decisions on your behalf when you become disabled or incapacitated. With a trust, you need not create durable powers of attorney which can be used alongside a will.
Using wills and trusts in Paramus depend on your situation and needs, and estate planning is not a one-size-fits-all affair. Our estate planning law firm 07562 (New Jersey) will help in customizing your estate plan to suit your particular situation. Give us a call today.