Lawyers in New Jersey & Pennsylvania
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Frequently Asked Questions About Estate Planning>
- Do I really need a Will?
- What happens to my property if I die without a Will?
- If I am married, why can't I leave all of my property to my spouse?
- Can I make special provisions for my spouse without a Will?
- What are the roles and responsibilities of the individuals who will administer my estate?
- What is the federal estate tax?
- 10 Things Estate Planning With Maselli Warren, P.C. Can Do For You
Do I really need a Will?
Answer: A Last Will and Testament serves a variety of purposes, among them, the disposition of your property and the ability to name guardians for minor children. Without a Will, state law dictates the resolution of several matters concerning your estate. These state sanctioned decisions may differ from your personal preferences. Because these issues deal directly with your property, you should be the one to determine who will enjoy it and how it will be enjoyed upon your death. To do this, you must have a Will.
What happens to my property if I die without a Will?
Answer: If you opt to forgo a Will, upon your death there will be two areas of state law that will determine who inherits property in which you held an interest. These laws affect only those types of property that do not require you to name a beneficiary upon your death, or do not otherwise pass to others without your direction. For example, when one opens an individual retirement account, one also names a beneficiary entitled to the balance on the deposit upon your death whether or not one has executed a Will.
Property in your name alone, as opposed to some manner of ownership with another individual, will pass through your estate whether or not you have executed a Will. The matter of who inherits this property depends on either the provisions of your Will if you choose to execute one or state laws of intestacy that make the inheritance decisions for you if you do not choose to execute a Will. If you are survived by a spouse and children, New Jersey state law dictates that your spouse is entitled to the first $50,000, and half of the balance of your estate; the children are entitled to the remaining balance. If there is no surviving spouse and there are surviving children, the children are entitled to the entire estate. Because these laws of intestacy are often quite different from one’s personal preference, a Will is something to seriously consider.
Property owned with another individual may pass to the surviving partner by operation of the law, or through the estate of the deceased owner depending on the nature of ownership. Property owned with another individual may be held as tenants in common or as joint tenants with rights of survivorship. Whether you decide to execute a Will or not, jointly owned property tends to pass to the surviving tenant. The manner in which you hold property can therefore impact those who may inherit if you fail to execute a Will.
If I am married, why can’t I leave all of my property to my spouse?
Answer: Many married couples that fail to execute a Will rely on either joint ownership or laws of intestacy to pass property. As mentioned in the above, intestacy will pass only one half of the estate to a surviving spouse. In many cases, one half of an estate is wholly inadequate to maintain the surviving spouse. While jointly held property will pass directly to the surviving spouse, this will fail to take advantage of the unified credit of the deceased spouse.
The unlimited marital deduction protects a spouse’s inheritance from the estate and gift taxes. If property is jointly held, the surviving spouse will inherit the entire estate. The marital deduction, rather than both the marital deduction and the unified credit, will have to be relied on to protect the assets passing to the surviving spouse from the estate tax. As a consequence, the unified credit of the first spouse to die will be surrendered, which can be avoided with a Will.
Can I make special provisions for my spouse without a Will?
Answer: No. A Will allows one the opportunity to determine exactly who will enjoy their property and how that property will be enjoyed. With a Will, trusts with special provisions limiting access to inherited property can be put into place. One can then choose to distribute property over time or upon the achievement of certain landmarks such as birthdays, graduation, or weddings. However, these are only available with a Will.
What are the roles and responsibilities of the individuals who will administer my estate?
Answer: There are three types of individuals who serve your estate with the first being the executor of the estate, the second being the trustee, and the third being the guardian. However, the choice of who will serve your estate and in what manner is available only through a Will.
The executor is charged with the responsibility of gathering your assets and paying all claims to third parties. Your executor serves as the administrator of your estate who offers your Will to probate, which sanctions the disposition of your property, and sees that all its instructions are carried out. In the absence of a Will, your closest living relative can post bond and petition to be the administrator of your Will, or the court may appoint a complete stranger to act as administrator of your estate.
The individuals named trustees of your estate supervise the assets that are held for others. Most commonly, trusts are held for children and other individuals you may not want to inherit substantial sums of money at inappropriate times in their lives. Often, the surviving spouse serves as another person entrusted to make decisions as to principal distributions for their benefit. Without a Will, inheritances for minor children pass directly to their legal guardian with little accountability to anyone.
Finally, a Will allows you to name a guardian who will be charged with the responsibility of raising your children. Without a Will, anyone can petition the court to be named guardian.
What is the federal estate tax?
Answer: The estate tax is applied to the fair market value of property owned by the deceased individual at the time of his or her death. Property or the interests of property can be valued as of the date of death or at the alternate valuation date six months after. One can use the alternate valuation date only if doing so reduces the overall estate tax burden. The estate tax return must be filed within nine months of the date of death.
