An estate plan carries out a person’s wishes at the time of their death and appoints people to make decisions during life.
An estate plan commonly consists of three main documents:
• Last will and testament
• Durable power of attorney • Living will and health care proxy (medical power of attorney)
Last Will and Testament. The fundamental document is the last will and testament. The will takes effect upon death. The will must meet the formal requirements under New Jersey law in order to be effective in New Jersey
The will designates people and their roles:
• Beneficiaries – recipients of the decedent’s assets;
• Executors – the persons who will probate the Will, collect the estate assets
and distribute the estate assets to the beneficiaries;
• Trustees – the persons who will manage the assets placed in a Trust usually
for the benefit of either the surviving spouse or the children or both;
• Guardians – the persons who will care for minor children until they reach the
age of majority (which is age 18 in New Jersey).
Durable Power of Attorney. The power of attorney is in effect when a person is alive; it becomes effective when it is signed. When a power of attorney is “durable”, it remains in effect even if the person is incapacitated. The durable power of attorney authorizes the people selected to handle your financial matters. Common tasks include banking, including writing checks and paying bills, real estate, trading investments, communicating with social security, pension benefits departments, Medicaid/Medicare, and the IRS, hiring accountants, attorneys, and financial advisors, and any other related financial need.
It is helpful to have another person authorized to do this, but it should be a trusted person, such as a spouse or adult child. A durable power of attorney is important when a person becomes incapacitated. It allows finances to be managed without having to seek authority from a court, and before the finances become a problem.
Living Will and Medical Power of Attorney. The living will and health care proxy combines two documents into one. First is the living will which allows a person to make difficult medical decisions for themselves and relieves their family from the burden of making difficult decisions. A living will allows a person to direct whether or not they would want “heroic” medical measures, including artificial life support and all available medical procedures to sustain life in the event the person has an incurable severe medical condition. The second part is the health care proxy, sometimes called a medical power of attorney, which appoints people to make medical decisions in the event of incapacity (such as a coma).
The last will and testament, durable power of attorney, and living will and health care proxy are essential for New Jersey estate planning and administration. Depending on the size of your estate, special needs of disabled beneficiaries, and other factors, more complicated estate planning, including the use of trusts, may be necessary.