Estate planning is one of the most important ways you can protect your family, preserve your wishes, and reduce unnecessary complications after your death or during a period of incapacity. While many people assume estate planning is only necessary for the wealthy, nearly every adult can benefit from having the right legal documents in place.
The information below applies to estate planning for New Jersey residents. Estate planning laws vary from state to state, so if you live outside New Jersey, consult an attorney familiar with the laws of your state of residence.
Here are five common estate planning mistakes that can create avoidable stress, delays, and expenses for the people you care about most.
A properly drafted will serves as the foundation of your estate plan. It allows you to name an executor, identify your beneficiaries, and clearly express how you want your assets distributed.
Without a written will, your estate is distributed according to New Jersey’s intestacy laws rather than your personal wishes. While these laws provide a default plan, they may not reflect your family dynamics or intentions. Certain loved ones, friends, or charitable organizations you intend to benefit may receive nothing.
A written will also allows you to choose the person who will administer your estate. If you die without naming an executor, your next of kin must agree on who should serve. Unfortunately, families do not always reach consensus, which can lead to disagreements, delays, and unnecessary court involvement during an already difficult time.
Creating a will gives you the opportunity to make these important decisions rather than the state.
Even a carefully drafted will can create problems if it is not properly executed.
In New Jersey, a will that is “self-proving” can typically be admitted to probate by the Surrogate without additional court proceedings. To qualify, the will must contain specific statutory language, be signed by the testator, witnessed by two individuals, and properly notarized.
When those requirements are not met, the probate process becomes much more complicated. Instead of routine admission through the Surrogate’s office, the will must be presented to a Superior Court judge for review. That process can add legal fees, delay probate for several months, and postpone the executor’s ability to access estate assets.
Those delays can create real financial challenges. Until the executor has legal authority to act, they may be unable to pay ongoing bills, address financial obligations, or begin administering the estate.
Proper execution may seem like a technical detail, but it can make a significant difference for your family.
Many people automatically name their spouse or oldest child as executor without considering whether that person is the best fit for the responsibilities.
Serving as executor is an important legal and administrative role. The executor must gather assets, communicate with financial institutions, pay debts and taxes, maintain records, and distribute property according to the will. Depending on the size and complexity of the estate, the job can take months or even longer.
Rather than selecting someone based on family tradition, consider who has the skills and temperament to manage the process effectively.
A good executor is typically organized, dependable, detail-oriented, and comfortable handling paperwork and deadlines. Think about the people in your life who enjoy checklists, file their taxes early, and consistently stay on top of important responsibilities. Those individuals may be better suited for the role than someone simply because they are the oldest child.
Choosing the right executor can help your estate administration proceed more efficiently and reduce the likelihood of family conflict.
Many New Jersey residents assume estate taxes are no longer a concern because the state eliminated its estate tax several years ago. While that is true, New Jersey still imposes an inheritance tax in certain situations.
Although transfers to spouses, parents, grandparents, children, stepchildren, grandchildren, and qualified charities are generally exempt, inheritances left to other beneficiaries may be subject to New Jersey inheritance tax.
This often surprises families. For example, step-grandchildren may be subject to inheritance tax. Beneficiaries of retirement accounts may also face inheritance tax consequences, even though many people assume those accounts automatically avoid taxation. On the other hand, life insurance proceeds are generally not subject to New Jersey inheritance tax.
Thoughtful estate planning can help reduce or even eliminate unnecessary taxes by carefully considering both who receives your assets and which assets each beneficiary receives.
Reviewing these issues with an experienced estate planning attorney can help ensure your plan is as tax-efficient as possible.
Estate planning is not only about what happens after your death. It is also about protecting you during your lifetime.
A financial power of attorney authorizes someone you trust to handle legal and financial matters if you become unable to do so. A healthcare directive and medical power of attorney allow someone to make healthcare decisions on your behalf if you lose the ability to communicate your wishes.
Unlike inheritance, there is no New Jersey law that automatically authorizes a family member to make financial or medical decisions simply because you become incapacitated.
Without these documents, your loved ones may have no legal authority to pay your bills, communicate with financial institutions or insurance companies, or make important medical decisions. If your incapacity becomes long-term, your family may need to petition the court to appoint a guardian. The process of appointing a guardian can be time-consuming, expensive, and emotionally difficult.
No one likes to imagine these situations. However, putting these documents in place now can spare your family significant stress during an already challenging time and allow them to focus on your care instead of legal proceedings.
Even the best estate plan can be undermined by outdated beneficiary designations.
Retirement accounts and life insurance policies pass directly to the beneficiaries named on those accounts, not according to your will. If you have not reviewed these designations in years, they may no longer reflect your wishes.
This issue commonly arises after divorce, remarriage, or significant life changes. An ex-spouse who remains listed as the beneficiary may still receive the proceeds unless a court order provides otherwise. Likewise, failing to name a beneficiary could cause the asset to pass through your estate, potentially delaying distribution, reducing available tax benefits, or exposing the funds to estate creditors.
Review your beneficiary designations regularly and update them whenever your family or financial circumstances change.
Estate planning is not about expecting the worst. It is about giving your family clarity, reducing uncertainty, and making difficult times a little easier.
A well-prepared estate plan helps ensure your wishes are carried out, minimizes unnecessary delays and expenses, and gives your loved ones the legal authority they need when it matters most.
If it has been several years since you reviewed your estate plan or if you have never created one, now is an excellent time to meet with an experienced New Jersey estate planning attorney to discuss your goals and ensure your documents reflect your current circumstances.
Melanie M. Levan is a shareholder at Earp Cohn P.C. who focuses her practice on New Jersey estate planning, estate administration, guardianships, and commercial real estate matters. She works closely with individuals and families to create practical estate plans that protect their wishes, preserve their assets, and provide peace of mind. She has also been appointed by the court to serve as an estate administrator, guardian, and attorney for incapacitated individuals.
