If you have minor children, planning documents are essential. First, a Will allows you to select the individuals you want to raise your children by appointing guardians. Second, if you reside in the State of New Jersey, any amounts paid directly to a minor in excess of $5,000 is held by the Surrogate’s office. If the guardian wants to use money for your children’s benefit they either have to apply to the Surrogate in order to use the funds or the guardians must obtain a bond and can hold the funds. However, your Will can create a trust for the benefit of your minor children and name a trustee to manage the trust’s funds.
An estate plan must coordinate the distribution of your non-probate assets as well. If you create a trust in your Will, but leave life insurance or retirement benefits outright to a minor child, the county surrogate’s office will hold the funds. This defeats the purpose of having the trust in your Will. A comprehensive estate plan will ensure that non-probate assets will be go where you intend.
Most young people feel that they do not need to have estate planning documents because they do not have sufficient assets in order to plan. Many times, the young person is not considering assets such as life insurance, retirement benefits, and other employer provided death benefits. When all assets are added up, an individual’s net worth can be much more than their bank account balance.