Estate planning basics for New Jersey seniors

Estate planning sounds like something for wealthy people. It is really about two simple questions. Who speaks for you if you cannot speak for yourself? And who gets what you leave behind, with as little hassle as possible?

A few documents answer both. Here is how they work in New Jersey.

What does a basic New Jersey estate plan include?

For most retirees, a solid plan has five parts:

• A will that names who inherits and who will handle your estate (your executor)
• A durable power of attorney for money and property
• An advance directive naming a health care representative and stating your wishes
• Up-to-date beneficiary designations on retirement accounts, life insurance and bank accounts
• A POLST form, if you are seriously ill and want your treatment wishes written as doctor's orders

Some people also need a trust, for example to provide for a child with a disability or to plan for long term care costs. An elder law attorney can tell you whether that applies to you.

Do I need a will?

If you die without a will, New Jersey law decides who inherits, and a relative must apply to be appointed to manage the estate. That may not match what you would have chosen, especially in blended families.

What makes a will valid in New Jersey?

• You must be at least 18 and of sound mind.
• A typed will must be signed by you and by at least two witnesses.
• A handwritten will can be valid without witnesses if the signature and the important parts are in your own handwriting. These often cause disputes, so a typed, witnessed will is safer.

Ask your lawyer to add a self-proving affidavit. Without one, a witness may have to appear at the surrogate's office after your death to confirm your signature. That can be hard to arrange years later.

Practical tips

• Keep the original in a safe, known place. The surrogate needs the original, not a copy.
• Tell your executor where it is.
• Review it after a death, marriage, divorce, move or new grandchild.

What is a durable power of attorney?

A power of attorney lets someone you trust (your agent) handle your money and property. That might mean paying bills, talking to the bank, filing taxes or selling a house.

The word "durable" matters. Under New Jersey law, a power of attorney ends if you become incapacitated unless it says otherwise. A durable power of attorney includes language saying it stays in effect if you lose capacity. That is exactly when your family will need it.

• Signing. You must sign in front of a notary public, and you must understand what you are signing.
• Real estate. If your agent may need to sell or mortgage a house, the document should be recorded with the county clerk where the property is located.
• Choosing an agent. Pick someone honest, organized and nearby, or at least comfortable with online banking. Name a backup.

Without one, your family may have to go to court to have a guardian appointed. That takes time and money. Signing a power of attorney while you are healthy avoids it.

What are advance directives and POLST?

Advance directives

New Jersey recognizes two kinds of advance directives. You can have one or both.

• Proxy directive. Names a health care representative to make medical decisions if you cannot. It is sometimes called a durable power of attorney for health care.
• Instruction directive. Often called a living will. It tells doctors and family what treatment you would or would not want in certain situations.

An advance directive takes effect only after a doctor determines you cannot understand your diagnosis and treatment choices. It must be in writing and signed by you. Your signature must be witnessed by two adults or by a notary, an attorney or another authorized official. You do not need a lawyer. The NJ Department of Health has forms and guidance.

Give copies to your health care representative, your doctors and your hospital. Talk through your wishes with the person you name. A form alone cannot answer every question.

POLST

The New Jersey POLST (Practitioner Orders for Life-Sustaining Treatment) is a medical order, usually for people with a serious illness or frailty. You complete it with your physician, advanced practice nurse or physician assistant, who signs it. It follows you across hospitals, nursing homes and hospice. A POLST does not replace an advance directive. Many people have both.

Will my family owe New Jersey taxes?

For most families, the answer is no. New Jersey has no estate tax for anyone who died on or after January 1, 2018. The state does still have an inheritance tax, and it depends on who inherits.

Class	Who is in it	NJ inheritance tax
A	Spouse, civil union or domestic partner, children (including adopted), stepchildren, grandchildren and great-grandchildren, parents, grandparents	None
C	Brothers and sisters, a son-in-law or daughter-in-law	First $25,000 untaxed, then 11% to 16%
D	Everyone else, such as nieces, nephews, friends and step-grandchildren	15% up to $700,000, 16% above
E	Qualified charities, religious and educational institutions, the State of NJ	None

Any inheritance tax is due within eight months of death. If you plan to leave money to a niece, a nephew or a close friend, ask your attorney or tax adviser about the cost to them.

Tax waivers

Even when no tax is owed, some assets need a state tax waiver before they are released. For bank and brokerage accounts, when no tax is due, the executor can often complete a self-executing waiver (Form L-8) and give it to the institution. Real estate always requires a waiver issued by the state Division of Taxation. When everyone who inherits is exempt, the executor files Form L-9 to get it. The state's guide to being an executor explains the details.

How does probate work in New Jersey?

New Jersey's probate process is simpler than in many states. It runs through the surrogate in the county where the person lived. Most surrogate's offices work by appointment.

If there is no will, a family member applies to the surrogate to be appointed administrator. That process has more steps and may require a bond.

Why do beneficiary designations matter so much?

Many of your largest assets may never pass through your will. IRAs, 401(k)s, annuities, life insurance and bank accounts with a payable-on-death beneficiary go directly to the person named on the account form. The form controls, even if your will says something else.

• Request a copy of every beneficiary form and check the names.
• Update forms after a divorce, a death or a new grandchild.
• Name a backup (contingent) beneficiary.
• Be careful naming someone who receives disability benefits. A direct inheritance could affect their eligibility. Ask an attorney about a special needs trust.

Joint accounts also pass outside the will, to the surviving owner. Adding a child to your bank account can create tax and family problems. Talk to a lawyer first.

How do I choose an elder law attorney?

A general estate lawyer can draft a will. An elder law attorney also understands Medicaid, long term care planning, guardianship and benefits for older adults. If you may need nursing home or in-home care someday, that experience matters. See our guide to Medicaid and MLTSS.

• Where to look. The National Academy of Elder Law Attorneys (NAELA) has a directory of New Jersey members. Some lawyers are also Certified Elder Law Attorneys (CELA) through the National Elder Law Foundation.
• Ask about fees. Many charge a flat fee for a basic plan of will, power of attorney and advance directive. Get the price in writing.
• Ask who the client is. If your children set up the meeting, the lawyer still represents you. Expect to speak with the lawyer alone for part of the visit.
• Bring a list. Include your assets, how each is titled, current beneficiaries, and the people you want to name.

Starting this with a parent? Our guide to the first conversation about care includes a checklist of papers to find.

Common questions

Does New Jersey still have an estate tax?

No. There is no New Jersey estate tax for people who died on or after January 1, 2018. The state still has an inheritance tax, but it does not apply to Class A heirs such as spouses, children and grandchildren.

Do my children pay inheritance tax on what I leave them?

No. Children, stepchildren, grandchildren, spouses, domestic or civil union partners, parents and grandparents are Class A beneficiaries and owe no New Jersey inheritance tax.

Does a New Jersey power of attorney need to be notarized?

Yes. You must sign it in front of a notary. To stay in effect if you become incapacitated, it must include language making it durable.

Do I need a lawyer for an advance directive?

No. New Jersey advance directives must be in writing, signed by you, and witnessed by two adults or a notary or other authorized official. The NJ Department of Health has forms.

Where do I probate a will in New Jersey?

At the surrogate's office in the county where the person lived. Bring a certified death certificate, the original will, a list of next of kin and photo ID.

This guide is for general information. Program rules and income limits change, so confirm with the official source before you apply.