ESTATE PLANNING CONSIDERATIONS FOR EVERYONE

By Stephen J. Caccavale

INTRODUCTION

Estate planning is not confined to those individuals having assets that exceed the monetary threshold established for incurring federal estate taxes, but should be considered by everyone with a family and the desire to control the disposition of their estate. In creating an estate plan, you will be able to dictate how your assets are passed on and avoid unnecessary legal costs for those who survive your death.

Without the basic estate planning documents discussed hereinbelow, your family may have to apply to the State Surrogate's Court in order to administer your estate, and/or acquire authority to deal with your affairs in case of your incapacity. Therefore, it is recommended that everyone consider and implement an estate plan. Highlighted below is an outline and brief discussion of the standard legal documents required to ensure that your affairs are in order and handled in a manner that you desire.

LAST WILL AND TESTAMENT

A Last Will & Testament ("Will") is a written document which sets forth an individual's wishes as to the disposition of her property after death. A Will is not operative until death, is revocable during a person's lifetime, and is applicable to the person's situation at the time of death.

OUTRIGHT DISTRIBUTION WILL

Without a Last Will and Testament, the distribution of an individual's estate would be governed by the intestacy laws of their state of domicile. This legal document provides for the outright distribution of all of your assets, after payment of debts and burial related expenses, in a manner that you can dictate. Most states require a Will to be self-proving, which means that it is notarized and witnessed. The number of witnesses required to self-prove a Will may vary from state to state. For example, New Jersey requires three (3) witnesses in order to meet the surrogate's requirement. Although holographic Wills (handwritten) are usually valid it is necessary to have the document notarized and witnessed in accordance with the state requirements to be self proving. In the event that you have minor children, it is important to dictate that any assets bequest to them conform with the Uniform Gifts (or Transfers) to Minors Act, and that you designate a trustee. At trustee is distinguished from a guardian in that the trustee controls/facilitates the management of your assets. A guardian is responsible for legal custody of the children. Since an outright distribution Will does not involve sophisticated estate planning techniques, it is a less onerous document to create. Every person should have, at minimum, such a document to ensure a smooth transfer of their assets in accordance with their wishes upon death.

DURABLE POWER OF ATTORNEY

This is a written document where the "principal" designates another person to act on the principal's behalf (as his "attorney-in-fact"), which is not terminated upon the subsequent incapacity of the principal. In fact, the standard form is to have the Durable Power of Attorney (DPOA) become effective upon the incapacity or disability of the principal. This document provides for the continuity of the management of an individual's assets in the event she is unable to manage her own affairs. The duration of said management may be for a short or long term, depending on the state of mental or physical incapacity. As long as the principal is competent, she would continue to dictate who will handle their affairs, as the DPOA may be revoked at any time and superceded by a new DPOA. There are technical requirements for the principal and attorney-in-fact and the document itself must set forth specific language demonstrating the principal's intent in order to be valid. It is important to understand that a standard power of attorney, which is not a "Durable Power of Attorney", may terminate upon disability. Therefore, it is important to ascertain the type of power of attorney that you may currently have or issue a Durable Power of Attorney.

ADVANCE DIRECTIVES FOR HEALTH CARE

Advance directives are legal documents which reflect your preference for your future health care and treatment in the event you become unable to make decisions for yourself. Everyone should have a advanced health care directive and a health care power of attorney. These documents may be prepared separately or incorporated into one document.

HEALTH CARE DIRECTIVE

A Health Care Directive (HCD) is a written set of instructions detailing your preferences for the type of medical treatment you wish to accept or refuse (including life sustaining treatment) and the circumstances under which you want these wishes implemented. This type of document often adds some level of comfort to your family or friends when being faced with such a difficult decision, as it allows you to express your wishes on treatment well in advance. Today most hospitals request a copy of this document prior to admission for surgery and treatment for other substantial medical issues.

HEALTH CARE POWER OF ATTORNEY

This document appoints an agent to be responsible for making health care decisions when you do not have the capacity to make these decisions for yourself. The HCD will dictate the degree of medical treatment and life sustaining procedures that the principal desires and the Health Care Power of Attorney authorizes the agent to make decisions in the event that such issues became a reality.

This newsletter provides information of general interest and is not intended, and should not be used as a substitute for consultation with legal counsel and other professionals. Teitelbaum & Caccavale, P.C. shall not be responsible for any damages resulting from any questions or omission contained in this publication. If you have any questions regarding specific issues raised in this article, you may contact the author directly at (973) 473-1400. TEITELBAUM & CACCAVALE, P.C. COUNSELORS AT LAW 881 Allwood Road, Clifton, New Jersey 07012; (973) 473-1400; Fax (973) 473-3999 1144 Hooper Avenue, CN 2044, Toms River, New Jersey 08753  (732) 240-4740 245 E. 30th Street, Ste. Lower East New York, New York 10016; ( 212) 447-7676 E-mail: tclaw@pipeline.com