Wills, AHCDs, POAs & Trusts

There is a lot of misinformation circulating about wills, trusts and estate planning. Many think this type of planning is only needed for the wealthy, with the main objective of minimizing or avoiding estate and gift taxes. This could not be further from the truth.

Most married couples, especially if they have minor children, should have wills, advance healthcare directives (also known as “living wills” or medical powers of attorney) and durable powers of attorney in order to be prepared for any unexpected happenings in their lives such as premature death, accident or illness. In the case of minor children, a parent’s will should contain a minor’s trust since these persons are not old enough to own property outright. Such trust should stipulate when the minor gets income, when they get principal and what discretionary powers the Trustee shall have.

These “personal” documents should be reviewed and updated at least every five years, or in the event of life-changing circumstances such as divorce, death, illness or relocation to another jurisdiction.

If children have special needs due to handicaps or disabilities, “special needs” provisions should be included in the will and perhaps a separate “supplemental” needs trust should be created.

As part of this process, be sure that any beneficiary designations on financial products, bank accounts or life insurance are coordinated with the estate plan to achieve the intended outcome. Remember that joint titling of assets usually supersedes will directives, so pay attention to the proper titling of assets such as your home residence or other real estate.

Its important as an individual who is married, has kids, and/or significant assets, that you create and execute the proper documents if and when you face living changing (or ending) events.

First of all, you need a will.  You can write one by hand, if you wish.  This is called a “holographic” will.  It must be in your handwriting, signed and dated.  This kind of will can be submitted to probate, but it must be done so through the courts.

The best option is to create a written, signed, witnessed and notarized will. In New Jersey, it can be submitted (in most circumstances) to the surrogates office with a death certificate and simple information form. If it waives bonding requirements for your Executor, then money will not have to be spent on an insurance bond.

Second, you should execute an advanced healthcare directive.  Also called “living wills” or “medical powers of attorney”, this document states your wishes for medical care (or the withholding of that care) if you are terminally ill or incapacitated.  Without such a document, your loved ones will have to apply to court to have life support terminated.

Third, you should execute a power of attorney, appointing your spouse or other loved one as your “attorney-in-fact” to act on your behalf if you cannot.  It can give them immediate power or a power that only comes into effect if you become disabled.  There are also other versions of this type of document that may be appropriate.  Other documents needed might include cremation or organ donor directives.

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