NJ Estate Planning for the Very Wealthy

NJ estate planning

Though every person should take the initiative of proper estate planning, it is even more essential that the very wealthy do so. Many wealthy individuals have their financial lives buttoned-up, but have forgotten about planning for the future of their estates. The vital step that is most commonly skipped over is developing a plan that protects that accumulated wealth. Without a plan, the individual and family members are at risk for losing a significant sum of money.

Simply stated, estate planning entails arranging for assets, such as property and other valuables, to be properly distributed to heirs when faced with death or incapacity. This process also usually includes coming up with a plan to decrease estate taxes when assets are bestowed to heirs.

Though estate planning does involve a will, it can also mean establishing trust funds that can easily be transferred to heirs as well as naming a power of attorney who can manage all financial affairs if and when the individual is unable to do so anymore due to physical or mental reasons. Transferring assets before death is extremely helpful in avoiding family disputes and randomly disappearing assets. Also not uncommon as age increases, is dementia. Along with the possibility of dementia comes the potential for manipulation or exploitation of the individual by family members, friends, and other loved ones. Distributing the wealth before this point makes life easier for all parties involved.

Estate planning entails three main areas:

  • Distributing assets to the desired heirs
  • Ensuring that beneficiaries are not left with extreme taxes
  • Naming people that are responsible for making financial and medical decisions.

The first crucial task is creating a will and identifying someone who will be responsible for making sure all parts of the will are carried out according to your wishes. Next, you will most likely want to set up trust funds. A trust fund can legally determine to whom and at what point your assets are bequeathed to heirs. Trust funds also decrease the amount of taxes that beneficiaries will be required to pay and they eliminate having to go through the probate court process.

Beneficiaries should also be established for any life-insurance policies as well as for individual retirement accounts (IRAs) and other retirement plans, like a 401K. If you set up any of these accounts earlier in your life, it’s important to review the beneficiaries named, especially if you’ve gone through a divorce or other significant life change.

Another important step to consider is sitting down with your family and close friends to share with them your intentions for your assets, and what will be bequeathed to each person. After a person passes, there is potential for dispute about the decision(s) made, and this usually results from a lack of communication. Explain your decisions to family members and share your reasons for setting up your estate the way you did. This will decrease the likelihood of division between yourself and family members.

One final piece of advice is to consult with a person who is experienced in the field of estate planning. Different states require different documents and other formalities, and a professional will likely know the specifics for their state. Your estate planning attorney should also be up-to-date on changes in laws or new laws that have recently been passed.

 

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