A Will is a legal document
which allows you to determine who receives your assets, and when,
or in what manner the beneficiaries may receive their share. A Will
also permits you to choose fiduciaries such as Executors (who will
manage the estate), Trustees (who manage trusts under your Will) and,
in the event there are minor children, who shall serve as their Guardian.
Without a Will, the State of New Jersey will determine who receives
your assets based on State law (the laws of intestacy). In addition,
without a Will the Surrogate's Court, based on the law, will appoint
the Guardian of your minor children and the Administrator of your
estate.
Requirements
Any person who is at
least 18 years old and of sound mind may make a Will. In order to
be valid in New Jersey, a Will must be in writing, signed by the person
making the Will (testator or testatrix) and the signing must be witnessed
by at least two people over the age of 18. A handwritten Will, known
as a holographic Will, may be valid if it can be proved that the signature
and the important provisions are in the same handwriting and the handwriting
is that of the testator or testatrix. This handwritten document, if
accepted by the Superior Court as the decedent's Last Will, must be
probated in Superior Court rather than Surrogate's Court. Accordingly,
this is a very expensive document to probate and a typewritten, formally
signed Will, is always preferable.
General Considerations
Self Help
Computer software programs and web sites now offer
"do-it-yourself" Will kits. Many of these programs are not
specific to individual states, or to any persons personal or family
circumstances. Instead, these programs offer general Will language
which may or may not create a valid Will in New Jersey. Even those
programs which claim to customize the document to individual states
may create an invalid Will if there is a mistake in the preparation
or in the circumstances surrounding the signing of the document. While
self-help programs and web sites can educate you, and thereby help
you save professional fees, they are rarely a substitute for professional
guidance.
Updates
It is important to review
your Will about every three years, as well as any time there is a
significant change in your circumstances, in order to insure that
it continues to reflect your wishes and complies with current law.
Even though the laws can automatically make some changes for you,
it is really best to keep your documents current. For example, if
you should divorce and not change a Will that leaves the assets to
your ex-spouse, those assets will be distributed as if your ex-spouse
predeceased you, under the laws of intestacy. This may, or may not,
be what you want.
Care of Your Will
It is also important never to mark up, change or even
unstaple a signed Will because this may compromise its validity. If
you wish to change any provisions of your Will it should be done through
a properly executed amendment ("Codicil"), if it is a simple
change, or through a new Will, if there are significant changes. With
the common use of computer programs, signing a new Will can often
be as inexpensive as signing a Codicil, and it avoids any risks of
inconsistencies between the various documents.
An original Will should
be kept in a safe, fireproof place. A photocopy of the Will should
also be kept among your important papers with instructions as to where
the original has been stored. A safe deposit box is an appropriate
place to keep a Will. A bank employee should be present as the box
is opened. If the Will is contained in the box, it will be released
to the named Executor. An alternative is to have the named Executor
and the successors sign the signature card for the safe deposit box.
Because a Will may not be located immediately after a death, it is
best not to rely on a Will for burial instructions. This information
can be contained in a private letter and/or Living Will. As explained
above, a Will cannot be probated until ten (10) days after death.
The Need for a Will
Many people have the
mistaken notion that if they die without a Will their spouse will
always inherit the entire estate. In New Jersey pursuant to N.J.S.A.
3B:5-3 the surviving spouse will inherit the entire estate only if
no descendant or parent of the decedent survives the decedent; or
all of the decedents surviving descendants are also descendants of
the surviving spouse and there is no other descendant of the surviving
spouse who survives the decedent.
If there are special
considerations for you or your family, such as a family member who
receives government benefits (e.g., a special needs child) which
may be compromised or eliminated if he or she receives an inheritance
outright, provisions can be made in your Will to protect that family
member's government benefits (such as SSI and Medicaid) while still
allowing them to benefit under your Will.
Tax Planning
Why a Will is Important
- Taxes and More!
As addressed above decedents estates in New Jersey
may be subject to Federal and New Jersey estate taxes. In addition,
beneficiaries inheriting from those estates may be subject to a
New Jersey inheritance tax. A properly drafted Will with included
trusts may help reduce tax liabilities. Tax laws are complex and
ever changing therefore I recommend Wills, trusts, and estate plans
be prepared by experienced counsel.
Who Should Pay the Taxes
A Will can also allow
the testator or testatrix to decide whether any taxes owing should
be paid from the assets of the estate before distribution to the
beneficiaries or whether the tax should be paid proportionally from
each beneficiary's share. This is particularly important for those
individuals who are leaving property to brothers and sisters and/or
nieces and nephews.
Tangible Personal Property
A Will may make separate
provisions for tangible personal property. Tangible personal property
is comprised of assets like jewelry, furniture and art. Stocks and
bonds are not considered tangible personal property. Pursuant to
New Jersey law, the Will may state that you will leave a list of
instructions as to how tangible personal property, that is not required
to be registered, should be distributed. Registered tangible personal
property such as automobiles, cannot be disposed of on such a list.
This list, which should be kept with your Will, may be changed as
often as you like without an attorney or witnesses. To avoid confusion,
discuss with an attorney how the list should be handled to assure
that the most current list is the one used
Assets Passing Under a Will
Any property passing under a Will is called a probate
asset. Not all assets are controlled by a Will. Property held in
joint names with the right of survivorship, as well as bank accounts
held in joint names, will automatically pass to the surviving joint
name. In addition, property held by married couples as tenants by
the entirety will automatically pass to the surviving spouse. Life
insurance policies, IRA's, annuities and 401(k)'s are examples of
assets that designate beneficiaries through a beneficiary designation
form and are, therefore, not controlled by a Will. Many brokerage
firms have created forms to designate a beneficiary for a regular
brokerage account. Only assets held in your sole name or with another
as a "tenant in common" and which do not pass under a contract will
pass under the terms of your last Will. This fact must be addressed
in planning to assure that your wishes are carried out even though
your Will may only control the distribution of some of your property.
Be sure to keep a copy of every completed beneficiary designation
form with your important records. Banks and brokerage firms have
occasionally lost them.
Settling The Estate
The process of settling an estate in New Jersey is
similar whether a person dies with or without a Will. A personal
representative must go to the Surrogate's Court of the county in
which the decedent resided to take charge of the estate. If there
is a Will, the Executor named in the Will is the personal representative.
If there is no Will, the personal representative, usually a family
member, is called an Administrator. Under New Jersey law, if there
is a surviving spouse then he or she is the first person in line
to serve as Administrator, followed by children, grandchildren,
parents and siblings. This may lead to family quarrels, as more
than one person may have equal right to serve as Administrator.
For example, all children of a decedent have an equal right to serve
in this capacity and renunciations must be obtained from all those
who will not be serving. This is yet another reason why it is always
advisable to take the time to have a properly and professionally
prepared Will.
The Surrogate must
qualify the Administrator. While a Will may provide that no "surety
bond" be required for the Executor, an Administrator may be required
to purchase a surety bond. A surety bond is a financial arrangement
in which the Executor or Administrator pays a fee to a company specializing
in these arrangements which company then insures the heirs against
certain wrongful acts of the Executor or Administrator. It is yet
another way the Surrogate and State law endeavor to protect heirs.
The cost of the bond premium, which can be hundreds of dollars,
is determined by the size of the estate. The bond premium often
costs more than the cost of having a Will prepared. The bond must
remain in effect until the estate is settled. Providing that no
bond is necessary ("waiving" the bond requirement) for an Executor
is a major advantage to having a Will.
There are many good reasons to have a Will, including tax planning,
sparing your personal representative the cost of a bond premium, and
planning for a family member who is entitled to government benefits.
The best reason for having a Will is the peace of mind that comes
with the knowledge that you have provided for your loved ones and
that your planning will make the distribution of your estate a smoother,
easier process for them.
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