Many people are not aware of the existence of the probate process. When a will is used to direct distribution of property after someone dies, the court will probate a will. In the state of New Jersey where we practice law, the court that would be required to probate a will is the Surrogate’s Court. The court would probate a will in accordance with state laws.
Probate is a necessary and effective legal process in the state of New Jersey. However, after all, it is in fact a legal proceeding. The person that you name to act as the executor of your estate may not have any experience at all with the probate process. For this reason, you may want to have the attorney that you work with to draw up your will help your executor with the estate administration tasks after you are gone.
This raises an interesting question: how do you find the right estate planning attorney in the first place? Plus, is a will always going to be the right choice? Many people equate estate planning to the creation of a will, but there’s more to it. Let’s look at the facts.
Finding an Estate Planning Attorney
When you are looking for the right estate planning attorney, you could ask around among your family members, your friends, and your associates. If someone that you know has had a good experience with a particular law firm, you would probably have the same experience.
You could also look for professional affiliations. The American Academy of Estate Planning Attorneys is an organization that is highly respected within the field, and you can search their database for a member near you.
If you live in or around Central New Jersey, we can be of assistance. We are members of the American Academy of Estate Planning Attorneys, and we would be glad to answer all of your questions and help you put a plan in place.
Alternatives to a Last Will
It is important to be well-informed when you are planning your estate. The document called a last will can seem to be synonymous with estate planning, and many people do use a will to facilitate future asset transfers.
However, there are other possibilities, and you should explore all of your options before you make any decisions.
When you’re living, for the most part, having assets in your own name is a very good thing. However, when you are planning your estate you may want to separate some of your assets from your own personal possession. Maintaining direct personal possession of your property as you rely on a will to direct the distribution may not always be the best idea.
One reason why you may want to create separation would be to protect assets from creditors and claimants. You may also want to remove assets from your own name to gain estate tax efficiency. The federal estate tax looms large with a 40 percent top rate.
There is a federal estate tax exclusion that is $5.45 million in 2016. Anything that you want to transfer that exceeds this exclusion is potentially subject to the estate tax. In New Jersey, we also have a state-level estate tax, and the exclusion is just $675,000.
Medicaid asset protection is another situation that can call for a divestiture of assets. Medicare does not pay for long-term care, and most people will need it. Medicaid does pay for long-term care, but it is a need-based program. It is not available to people who have a reasonable store of assets.
An irrevocable trust of some kind could be used to address all of these scenarios. When you look at the name of the trust, you can see that you cannot revoke it. Because you can’t revoke the trust and take back the property that has been conveyed into it, you are surrendering incidents of ownership from a legal perspective.
As a result, assets that have been conveyed into the appropriate irrevocable trust would not be subject to attachment, and they would not be counted when the Internal Revenue Service was evaluating your position relative to the estate tax exclusion.
An irrevocable trust could also be used to get money out of your own name before you apply for Medicaid to pay for long-term care.
We should point out the fact that there are different types of irrevocable trusts, and the optimal choice or choices will depend on the circumstances. A revocable living trust is another option that can be beneficial for a wide range of people. The point is that a last will is not your only option, and it may not be the best option.
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Call us at 908-222-8803 if you would like to discuss your estate planning objectives with a licensed attorney.