The term “estate planning” is an unfortunate misnomer which causes people to think only the wealthy or those with large “estates” need to engage in planning. Another unfortunate misconception is that only the elderly need to engage in estate planning. Estate planning can help everyone save money, make sure they receive proper care, and have their wishes respected by doctors and medical care providers. Estate planning can include setting up a will, power of attorney, and living will. This blog post explores how a will can help a younger person.
How can a will help a young person?
A will is the document that outlines how you wish your estate to be distributed when you pass away. While you may think that you do not have enough money or assets to justify the expense of a will, you are likely mistaken. If you pass away without a will, you are said to die “intestate.” If you do not leave a surviving spouse, this means that your heirs will have to apply to the local Surrogate’s court to have an administrator approved for your estate. Once approved, they will also have to purchase a bond, which functions like an insurance policy guarding against possible nefarious acts by the administrator. The bond must be renewed just like any other insurance policy, adding more expenses and meaning that more of your estate will be spent paying costs to the government and third-party companies instead of your heirs.
If you have a will when you pass away, you can select an executor (the person who will administer your estate) and even waive the requirement that they spend your money purchasing a bond until your estate is fully administered. In many cases, the cost of a simple will is less than the bond alone. Even if the only thing your will does is waive the bond requirement, you will save money which can be passed along to your heirs.
For those with children, a will can be an extremely important tool that allows you to appoint a guardian for minor children in the event both parents pass away and appoint trustees to hold the minor child’s inheritance.
What is the monetary threshold where administration becomes necessary?
If you pass away without a will and are a resident of New Jersey, administration through the Surrogate’s court is necessary when you have $10,000.00 upon your passing. The $10,000.00 threshold is not hard to meet—do you own a car? Have a bank account? Own real estate? Investments like CDs, stocks, and bonds where a beneficiary is not named? Once the threshold is met, expensive and time-consuming court proceedings will have to be opened to appoint someone to distribute your estate. The cost of a simple will could help your loved ones avoid these expenses and headaches.
There are a number of other reasons that engaging in estate planning and having a will drawn is beneficial for young people. If you would like an estate planning attorney to prepare a will for you, please do not hesitate contact us.