ESTATE PLANNING
The foundation of every estate plan consists of the following three
documents:
1. Last Will and Testament: This document sets forth how you
want your estate distributed upon your death. You must also decide
who shall serve as executor, trustee and/or guardian of your minor
children.
2. Durable Power of Attorney: This document enables another
person, whom you have designated as your Agent, to make a variety of
financial and healthcare decisions on your behalf in the event you have a
mental or physical disability.
3. Advanced Health Care Directive (Living Will Declaration): This
document enables you to decide that you do not want to be kept
alive by artificial means in the event you have an irreversible,
terminal illness.
Situations I have Encountered:
A. If you die without a Will (called "intestate"), your estate is
divided according to New Jersey's intestate laws. The intestacy laws
can be found at the web site of any County Surrogate. The Surrogate
will determine whether an administrator must be appointed, which
ordinarily depends on the size of the estate. Before the Surrogate
may appoint an administrator, all next of kin must renounce their
rights to be an administrator and a surety bond must be posted. In
situations where there is no immediate family, your property may go
to distant relatives or ultimately revert to the State. The point to
keep in mind is the last thing family members need when a loved one
passes away and while they are grieving is more stress because you did
not have a Will. Executing a Will doesn't take long, do it today!
B. Here are two reasons why a Power of Attorney is important:
Many people believe that a spouse can do anything for his or her
own spouse because they are married. Well, the HIPAA laws
(Health Insurance Portability and Accountability Act of 1996)
changed all that. Privacy laws prevent anyone from learning about
your medical condition or effecting your health insurance
policies. Another reason is that the IRS has stated that in order to
make a gift while you are incapacitated, your Power of Attorney must
explicitly provide for that ability. Gifting is a very easy way to minimize
estate taxes, which you do not want to lose simply because you are disabled.
If you become incapacitated for any reason, it will be too late to execute a
Power of Attorney. Do it today!