Frank Demmerly is chair of the Estate and Trust Services Department of Archer & Greiner P.C. in Haddonfield, where he concentrates on estate planning, wills, trusts, planning for closely held and family businesses, estate administration, and estate, gift and transfer taxation.
Q. We are “just married,” there are two young children and all of our assets are in joint name between the two of us. In regard to our retirement plans, we have named each other as beneficiary. Do we really need a will since all of our assets will pass to each other?
A. Yes, everyone needs a will. It is true if one of you passes away, the assets in joint name, and which name the other as beneficiary, will pass to the surviving spouse. However, it has been our experience there are usually one or more assets which are nevertheless in one of your names alone. This could be a car, bank account, mutual fund or other asset which is not in joint name. A will is needed to “devise” that asset to the survivor.
Without a will, any assets in the name of the decedent will pass according to New Jersey laws governing distribution where there is no will, known as intestate laws. If one of you survives, and all of your children are both of your children, then the entire estate will pass to them. However, if either of you have children from a prior marriage, in the absence of a will, a portion of the estate may pass directly to children from the prior marriage.
Your real concern should be protecting your children if you both pass away. If both of you pass away, then the estate will pass to your children. However, since they are too young to own property, the state will appoint a guardian of their inheritance and/or the Surrogate Court will hold their inheritance for them. In either event, the inheritance will be distributed to them when they are 18. The state will also appoint a guardian to take care of them until they are 18.
Finally, if one of you survives the other, or neither of you survive and the estate passes to the children, the state will appoint a person to handle your estate. That person will be required to post a bond and pay for the bond out of the assets of your estate.
A will can change all of this.
First, a will enables you to devise your entire estate outright to your survivor. This avoids any intestate distribution or division of your estate.
Second, should you both pass away, you can devise your estate into trusts for your children. These trusts will normally provide for use of the trust funds for the children, with ultimate distribution to them when they reach certain ages of maturity. Most parents do not believe their children will be mature enough to receive an inheritance from their estate at the age of 18 and therefore select older ages. Quite commonly, parents will opt for distribution in phases at several ages, like 25, 30 and 35.
Third, in your will you can select the person who will handle your estate (the executor or personal representative). Quite likely this will be the other spouse. You can also select a contingent person in the event both of you pass away. Of course, you may also select a bank, trust company or other entity in the business of handling estates.
Fourth, you can select a trustee who will manage your children’s assets and provide the children and their guardians with funds for their benefit until the trust terminates and distributes to the children.
Finally, and most importantly, you, instead of the state, can select the individuals who will act as guardians for your children. This is important, since your children will be under the supervision and control of these individuals and will be living with them.
Q. OK, but what if I was not married and had no children?
A. If you do not have a will, then your assets will pass according to the New Jersey intestate laws. Would it not be better for you to specify how you want your assets to pass in a will? And if you do not have a will, the state will still appoint a representative for your estate. Wouldn’t it be better for you to select a representative for your estate in your will?
Q. I have heard a lot about Federal Estate Taxes, New Jersey Estate Taxes, and New Jersey Inheritance Tax. I don’t really want to have to pay any more estate or inheritance taxes than I have to. Can having a will reduce my death taxes?
A. Yes, in most instances a will and a thorough estate plan can reduce or eliminate Federal Estate Taxes, New Jersey Estate Taxes and/or New Jersey Inheritance Taxes. Therefore, it is prudent to consult with an attorney and other professionals about a will and estate plan.
DISCLAIMER: Information provided in “Ask the Lawyer” is for general informational and educational purposes only. It does not constitute legal advice, and may not be used and relied upon as a substitute for legal advice regarding a specific legal issue or problem. Transmission of the information is not intended to create, and receipt does not constitute, a lawyer-client relationship. Legal advice should be obtained from a qualified attorney licensed to practice in the jurisdiction where that legal advice is sought.
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