Estate Planning is for the Living – Asset Management for Every Circumstance

Once upon a time, estate planning revolved largely around disposition of assets after your death. This was most often managed through a will, though some property might be titled to pass automatically to a surviving spouse or other family member. In the past quarter of a century, living trusts have gained popularity. But, most people think of them purely as an alternative means of passing property after death, overlooking the power of estate planning in asset management.

However, a thorough estate plan addresses much more than what will happen to your belongings after you die. While that’s always been true, other aspects of the estate plan have grown in importance over time, due in part to:

• An aging population with increased life expectancy
• The increasing costs of medical care and long-term care
• More stringent regulations regarding access to medical information

Asset Management as Part of the Estate Plan

The general assumption is that as long as you are alive and well, you will maintain both control of and the benefit of your assets. That is generally true, although there may be circumstances under which you choose to assign control or a beneficial interest in a particular asset to someone else. However, asset management becomes far more complicated if you become incapacitated or pass away.

In assessing client needs and making recommendations for an estate plan, we consider five different scenarios:

• Who will control and benefit from assets when you are alive and well? Typically, this will be you, but there are circumstances under which you may want to grant control to another party for convenience, or create a beneficial interest for another person, such as a child or grandchild.
• Who will control and benefit from assets when you are incapacitated? No one wants to contemplate being unable to make his or her own decisions, but preparation is your best defense against the unexpected. You will typically want to appoint a capable person you trust to manage your affairs for your benefit and the benefit of your dependents if you become unable.
• Who will control and benefit from assets when you pass away, leaving a surviving spouse? Passing assets is often simpler and more straightforward when the deceased leaves a spouse behind. However, every situation is different. When one or both spouses have children from outside the marriage, intestate succession may break up the estate in unexpected ways, making it difficult to maintain core assets such as the family home. And, some assets are better passed through means other than the estate, such as joint ownership with rights of survivorship.
• Who will control and benefit from assets when you pass away unmarried? Whether you have never been married, your spouse predeceases you or you are divorced, passing assets when you die without a competent surviving spouse requires forethought—especially if you have minor children or young adult children who are still dependent on you. The situation is similar when your spouse is incapacitated, and therefore unable to assume control of the assets after you pass.
• Who will control and benefit from assets when your heirs are facing challenges? Most people ultimately leave the bulk of their assets to their children, but that isn’t always as simple as writing a will or allowing assets to pass through intestate succession. For example, when an adult child has special medical needs, passing assets directly can disqualify him or her from much-needed government assistance. Similarly, passing assets to an adult child at a difficult time in his or her life can result in dissipation of assets or seizure by creditors.

New Jersey law provides structures and procedures to address all of these concerns. For example:

• Advance healthcare directives and financial powers of attorney or joint ownership put decision-making power in the hands of someone you trust if you become unable to conduct your own affairs
• Creation of an effective will or living trust helps ensure that property passes to those you want to provide for, rather than according to the terms of the New Jersey intestate succession statute
• Titling property with rights of survivorship or creating a living trust can simplify the process of passing property to a surviving spouse, eliminating gaps in support
• A special needs trust can provide assistance to a disabled loved one without jeopardizing access to Medicaid and other assistance
• Creation of a trust with restrictions on disbursements can allow you to provide for loved ones who may have debt problems, addictions, or otherwise be unable to receive and manage assets directly

The issues in play and the best approach to managing them vary with your goals and family circumstances. Scheduling a consultation with an experienced estate attorney is the first step toward ensuring that you, your family, and your assets are protected under whatever circumstances may arise.