There are a lot of people who know the benefits of Estate Planning when married with children. But there’s one demographic who will benefit from crafting a personalized estate plan even more so than families — single individuals.
An estate plan begins with a will or living trust. If you're young and healthy, the thought of something happening to you may have never crossed your mind. And if you're older and still single, you may not feel the need to get a will.
So, who is a will right for? You may need a will when you're single if:
• You have a positive net worth
• You own a home or have other assets that would need to be distributed
if you die
• You're worried about who would end up with your assets once you pass away
• You want to use your will to make financial gifts to individuals or charitable donations
• You want to leave specific instructions about how your pets should be cared for
• You have cosigned or joint debts that you don't want to leave someone else
Does that mean you don't need a will at all if you're single but have few assets or a significant amount of debt? Not necessarily. If you'd like to make sure your best friend gets your movie collection or your sister inherits your beloved dog, then a will can ensure that it happens.
If you are single and you die in New Jersey without having a will, then you have died intestate. (This is a legal term that means that you have no will to probate once you are dead. Therefore, since you don't have a will, your estate is distributed according to New Jersey's law of intestacy).
The Hierarchy For How Your Estate Is Distributed Without A Will:
Immediate Family - If your parents survive you, they are the default heirs. But if your parents have already died, your siblings will be the next beneficiaries.
Extended Family - If you die without parents, or siblings around to inherit your assets, the government will then try to track down any nieces, nephews. If that fails, they will look for any relation at all who can be found. This process can be tragic because, without a will, your assets may be left to relatives you don’t like, relatives you don’t even know. The Government - If all of the above fails, the government gets everything. Most of the single people I talk to have a good idea of who they don’t want their assets distributed to — and the government is high on their list. This is why estate planning is so important, especially for single people.
Other Considerations - If you become ill or incapacitated and can’t speak for yourself, decisions about your money and consent for medical procedures must fall to someone else. For financial decisions, many single people choose a family member or close friend. However, it is important to select someone that you trust to keep up with your finances in addition to their own. With medical decisions, you are selecting someone that has the authority to make treatment and healthcare decisions on your behalf. While some people name the same person that they chose for their financial power of attorney, it is not necessarily required. It is very important that the person you choose understands your wishes and will respect them when it comes down to it.
Other Options - If you are single and do not have any living relatives or that you want to give your assets to, there are many other options. You may feel as though you have no one to benefit from your estate, but there are always options. You may want to leave your assets to a close friend, a charity, create a scholarship for your alma mater, or even ensure the care of your beloved pet with a trust, your estate plan can account for this wish.
Estate Tax - New Jersey Estate Tax exemption increased from $675,000 to $2 million for the estates of resident decedents who die on or after January 1, 2017, but before January 1, 2018. (There is no Estate Tax assessed against nonresident decedent's estates.)
Inheritance Tax - New Jersey is one of six states that have an inheritance tax. In New Jersey when someone dies, their estate is possibly subject to estate taxes. There is no exemption from the New Jersey inheritance tax based upon the size of one’s estate. Even transfers from a very modest estate will incur the tax if the recipients are in a taxable category. The inheritance tax is assessed against the recipients unless the will directs otherwise. If this concerns you, you may want to consider planning alternatives and separate types of trusts or possibly charitable giving. Trusts can allow you to get very specific with how you want your assets to be divided and when. Trusts are also more private than a will as they do not go through probate. Trusts allow for greater flexibility and individual tailoring.
Assets Outside Of The Will. It is important to emphasize that whether you die with or without a will not all of your hard-earned assets must go through the administration process. Many assets that you acquire during your life pass outside of the will. These assets include;
A. A home that is in the joint names of you and another with the right of survivorship.
B. A bank account that is in the joint names of you and another with the right of survivorship, or in your name and payable to another upon your death.
C. A life insurance policy that names another person as a beneficiary.
D. IRA or 401K plan.
If the beneficiary or the survivor in any of the above types of scenarios dies before you do, and there is no successor beneficiary or survivor named, then the beneficiary will be your estate. Thus, the property would not pass outside of your estate. Thereafter, the assets would be distributed according to the New Jersey laws of intestacy.
Something to note is that whoever is listed as the beneficiary on these accounts will receive those assets regardless of what your will says about the accounts. For example, if your accounts say that the beneficiary is your brother but your will says that the beneficiary is your best friend, your brother will benefit from the account. It is important to update beneficiary designations on these accounts through the years in case family or friend dynamics change. Therefore, updating the account beneficiary directly is crucial.
Bottom Line: If you are single and you do not have a plan in place, your assets might go to people who you didn’t intend and people who you would not have selected could be making important decisions if you become incapacitated.
Van Tassel Law can help you to craft a personalized estate plan that passes on your legacy the way you want. And, if your single status changes because you've gotten married, become a parent or you acquire new assets, remember that your will should reflect those changes. I’ll be here to help you update your plan.
Contact me today at 201.664.8566 to get started with a free consultation.