Estate planning is an essential process for New Jersey households to ensure their assets are distributed according to their wishes after they pass away. Several tools are available to help households plan their estates and protect their loved ones.
Wills
One of the most common estate planning tools is a will. A will is a legal document that specifies how a person’s assets will be distributed after their death. It can also name a guardian for minor children and appoint an executor to manage the distribution of assets. A will can be changed or revoked at any time as long as the person making the changes is still alive and of sound mind.
Trusts
Another popular estate planning tool is a trust. A trust is a legal agreement in which one person, called the grantor, transfers assets to another person, called the trustee, to be held and managed for the benefit of one or more beneficiaries. Trusts can be used to manage assets during the grantor’s lifetime and can also be set up to distribute assets after the grantor’s death.
Power of attorney
A durable power of attorney is another important estate planning tool. This document grants authority to another person, called the attorney-in-fact, to make financial decisions on the grantor’s behalf in the event of incapacity or disability. It allows the attorney-in-fact to pay bills, manage investments and make other financial decisions without court intervention.
Health care directive
Finally, a health care directive, also known as a living will, is an essential tool for estate planning. This document specifies a person’s medical treatment preferences in the event they are unable to make their own decisions. It also names a healthcare proxy, who will make medical decisions on their behalf.
Planning for the future
Estate planning tools such as wills, trusts, durable power of attorney and health care directives are essential for households to ensure that their assets are distributed according to their wishes and that their loved ones are protected. It is essential to make estate planning decisions early to avoid problems arising from a family member’s untimely passing.