People who are going through life without an estate plan are failing to fulfill a basic responsibility. If you aren’t sure why you should put an estate plan in place, consider these three compelling facts.
Your Family Would Suffer the Consequences
Many people who fail to put an estate plan in place feel as though it is not necessary, because they are relatively young. In fact, you can look at it another way.
Senior citizens are going to have adult children who are self-supporting in their own right. A senior citizen should certainly have an estate plan in place, but adult children are not relying on their parents for everything.
On the other hand, if you are the parent of minor children, what would happen if you were to pass away unexpectedly without an estate plan? Who would care for your children? Would family members disagree with regard to the appropriate course of action? Would there be sufficient financial resources available to support your children? If you are married, what about your spouse?
Clearly, if you do not take steps to provide for your loved ones come what may, you are putting them at risk.
The Government May Consume Your Assets
There are death taxes in place that can consume a significant portion of the assets that comprise your estate. The federal estate tax carries a 40 percent maximum rate, and it is applicable on transfers that exceed $5.43 million in 2015.
Even if your assets are not taxable on the federal level, as a resident of the state of New Jersey, you can be exposed to the New Jersey state estate tax. This tax carries the lowest state-level exclusion in the country. Our exclusion in New Jersey is just $675,000, and the top rate is 16 percent.
There is also an inheritance tax in the Garden State, and it can be applied on transfers to each individual nonexempt inheritor.
If you put an estate plan in place, you can implement tax efficiency strategies. On the other hand, if you do nothing, the government may wind up consuming a significant percentage of your resources.
You Could Become a Ward of the State
A guardianship proceeding could be initiated if you were to become incapacitated late in your life. Ultimately, the state could appoint a guardian to manage your affairs, and you would become a ward.
To prevent this, you could name your own hand-picked representatives through the execution of legal documents called durable powers of attorney.
As you can see, there are some compelling reasons why you should develop an estate plan if you are presently unprepared. If you are ready to get started, send us a message through this link to set up a consultation: Warren NJ Estate Planning Attorneys.