When people in New Jersey and elsewhere finally begin the process of planning out their estate, it can be overwhelming to decide on what is most important. Often, we focus only on the financial aspects and how to distribute accumulated wealth to loved ones. But there is more to estate planning than this.
Without a doubt, most of us realize that drawing up a will is a priority. A recent survey has highlighted the upward trend among adults aged 18-34 who are now more likely to have at least a will in place than even middle-aged adults. Even though fewer than half of all adults in the United States has a will, many younger people are increasingly motivated to plan for the future after events that have occurred in recent years.
What a will does
A will is a legal document that formalizes the intentions of its maker regarding not only the distribution of assets, but also resolving debt, paying taxes on the estate and planning for the care of minor children. In addition, a will allows the maker to name a personal representative (PR), often a trusted friend, close relative, or professional financial or legal advisor whose responsibilities entail the handling of all aspects of probate.
For a will to be valid in New Jersey, it must satisfy specific requirements:
- The testator must be at least 18 years of age.
- The testator must be of sound mind.
- The will must be signed in the presence of at least two witnesses.
- Oral wills are not valid, but holographic or handwritten wills are, with or without witnesses.
A will can also direct or allocate assets to be transferred to a trust on behalf of minor children or other loved ones after death. This estate-planning mechanism will also reduce the tax burden.
Other essential documents
In addition to a will, it is wise to also have two other important documents. Healthcare directives, often called living wills, secure the individuals preferences regarding end-of-life care and medical treatments. As people age, they sometimes do not take into account how health conditions and mental deterioration may affect their ability to function or even express their wishes. A living will formalizes these preferences at the time that the maker is able to communicate them lucidly.
Finally, a durable power of attorney is a document that delegates legal authority to another person to make decisions on behalf of the principal in financial or health care concerns that may arise. Also called the attorney-in-fact, this representative will step in if the principal becomes incapacitated.