For some people, a simple will may be perfectly appropriate.

You own a home, have a few bank and retirement accounts, want everything to go to your spouse and then to your children, and there are no unusual tax, business, family, or asset-protection issues.

But as your financial life becomes more complicated, the question changes.

It is no longer simply: Who gets my property when I die? It becomes: What actually happens to the people and property I leave behind?

Those are very different questions.

Ralph Had a Will. That Wasn’t the Problem.

Years ago, we handled an estate involving a man we will call Ralph.

Ralph had been with his live-in girlfriend for approximately 35 years. They shared a home and a life together, but they were not married.

Ralph wanted her to receive his estate. So he did what many people assume is enough: he wrote his own will.

He wrote it in his own handwriting and left everything to her. And the surprising part? The will was valid.

New Jersey law can recognize a handwritten will when the statutory requirements are satisfied. So this wasn’t a story about a DIY will being thrown out of court. It was worse. The will worked.

It transferred Ralph’s property exactly as he intended. But Ralph had planned for who would inherit his property without planning for what would happen when she inherited it.

Because his longtime partner was not his wife, the inheritance did not receive the same New Jersey inheritance-tax treatment that property passing to a spouse generally receives.

The resulting New Jersey inheritance tax exceeded $750,000.

His partner didn’t have $750,000 sitting in a checking account. The estate’s wealth included the home where they had lived together for approximately 35 years. Ultimately, the tax burden forced her to sell that home.

Ralph had accomplished his stated goal on paper: he left his property to the woman with whom he had spent decades of his life. But the plan failed to accomplish what he almost certainly wanted in practical terms: allowing her to continue living securely in the home they had shared.

That is the difference between simply having a will and having an estate plan.

A Will Tells Us Who Gets Something. Planning Asks What Happens Next.

A simple will primarily answers a distribution question.

Who gets the house? Who gets the money? Who receives your personal property? Who serves as executor?

Those are important questions. But once your financial or personal circumstances become more complicated, good estate planning needs to ask additional questions.

Will the beneficiary face inheritance taxes? Will assets have to be sold to pay taxes or expenses? Does the beneficiary need protection from creditors? What happens if a beneficiary is going through a divorce? What if a child is financially irresponsible? What if you own a business? What if you have children from a prior marriage? What if the person you want to protect is not legally your spouse? What happens if you become incapacitated rather than die? What happens to the business while you are incapacitated? What happens if your beneficiaries inherit substantial assets outright at the wrong time?

A will alone may not solve those problems.

When Has Your Life Become Too Complicated for a Simple Will?

There isn’t a particular dollar amount at which everyone suddenly needs a trust. Complexity is not measured only by net worth.

• A significant amount of wealth or multiple types of assets
• A business or professional practice
• Real estate beyond your primary residence
• An unmarried partner whom you want to protect
• A blended family or children from a prior relationship
• Beneficiaries who are minors or young adults
• A beneficiary who may need protection from creditors, divorce, poor financial decisions, or other risks
• Family members whom you intentionally do not want to inherit
• Property in more than one state
• Significant retirement accounts
• Estate or inheritance-tax exposure
• Concerns about incapacity and who will manage your assets or business
• A desire to control how and when beneficiaries receive an inheritance rather than giving everything outright

In those situations, the estate-planning conversation should be broader than, “Who do you want to leave everything to?”

Business Owners Have Another Layer of Risk

For business owners, a simple will can be especially inadequate.

Your business may be one of your largest assets, but its value may depend heavily on you.

What happens if you die unexpectedly? Who has authority to operate the business? Who can access accounts? Who can make payroll? Who deals with employees? Who communicates with customers? Can your spouse or children actually run the business they inherit? Is another owner entitled to purchase your interest? Where does the money come from to complete that purchase?

And perhaps even more importantly: What happens if you don’t die but are unable to work for six months?

Estate planning for a business owner should address both death and incapacity.

The goal isn’t merely to transfer ownership after you die. It is to give the business the best opportunity to continue functioning while you are unavailable and, when appropriate, still be there when you return.

Unmarried Couples Need to Be Particularly Careful in New Jersey

Ralph’s story illustrates a problem that many unmarried couples don’t realize exists.

New Jersey no longer imposes its separate estate tax for people dying on or after January 1, 2018, but the state still has an inheritance tax. Whether inheritance tax applies depends substantially on the relationship between the person who died and the person receiving the property.

A surviving spouse is exempt. Certain other family members and legally recognized relationships are also exempt.

An unmarried significant other who does not fall within one of those exempt classifications can receive very different tax treatment. That distinction can become extremely expensive when substantial assets are involved.

Simply writing, “I leave everything to my partner,” does not make the tax issue disappear. Ralph learned that distinction too late.

Sometimes the Most Expensive Estate-Planning Mistake Is the One You Don’t Know You’re Making

Ralph wasn’t careless. He actually took action. He thought about what he wanted. He wrote it down. And he created a document that ultimately accomplished the legal transfer he intended.

What he didn’t know were the questions he should have been asking.

That is one of the biggest reasons to consult an estate-planning attorney when your assets, family structure or financial life become more complicated. The value isn’t merely having someone type a will. It is having someone look at the entire picture and ask: “If we do this, what happens next?”

For Ralph and his partner, advance planning – including consideration of an appropriately structured trust and the inheritance-tax consequences – could have produced a very different result.

Instead, after approximately 35 years in their home, Ralph’s partner had to sell it to address a tax bill he never anticipated.

Simple Will vs. Comprehensive Estate Plan

A Simple Will May Address	A Comprehensive Plan May Also Consider
Who receives probate assets	Whether a trust is appropriate
Who serves as executor	NJ inheritance-tax and federal tax considerations
Guardians for minor children	Asset titling and beneficiary designations
How certain property is distributed	Unmarried partners and blended families
	Protection/management of inheritances
	Business succession and continuity
	Financial and healthcare incapacity planning
	Liquidity for taxes, expenses, or business obligations
	Whether the plan will work as intended in the real world

The difference is not simply will versus trust. The difference is document preparation versus planning.

Your Estate Plan Should Solve the Problem, Not Just Create the Documents

A will may be all that some people need.

But the more complicated your assets, relationships, business interests and goals become, the less useful it is to think of estate planning as simply “getting a will.”

The real goal is to develop a plan for what happens to your family, your wealth and your business if you die or become incapacitated.

Ralph had a will. His will was valid. His property went to the person he wanted to receive it. And yet the outcome was very different from what he likely imagined.

That is why the question isn’t simply: “Do I have a will?” The better question is: “Will my estate plan actually accomplish what I think it will?”

If you have accumulated substantial assets, own a business, are part of an unmarried or blended family, own multiple properties, or simply aren’t sure what would happen to everything you have built, it may be time for a more comprehensive estate-planning review.

Tomes Law Firm, PC helps individuals, families and business owners in Monmouth and Middlesex Counties develop estate plans designed around their actual financial and family circumstances – not simply a stack of documents. Call us today to schedule a time to discuss your estate planning needs at 732-333-0681