A Will is a legal document designating the manner in which your property shall be distributed upon your death. If you are at least 18 years of age, you can execute a Will. Your Will should specifically (a) name your beneficiaries, (b) the amounts of the bequests to each beneficiary (i.e. specific dollar amount or a percentage), and (c) the manner in which the beneficiary is to receive the bequest (i.e. outright or in trust for the benefit of the beneficiary). Your Will also designates who will collect your assets, pay your debts and distribute the balance to your heirs - your beneficiaries. The one who has the important responsibility is called an executor. If you have minor children, your Will can name a guardian who will take care of those children and their property. If a trust is created under your Will, the party appointed by you to administer the trust assets is referred to as a trustee.

If you die without a Will, you die "intestate". Your estate (other than jointly held property, retirement plans (i.e. IRA's, 401(k)'s, etc.) with designated beneficiaries, or life insurance policies with designated beneficiaries) is administered and distributed in accordance with the state’s intestacy laws. If your property is distributed pursuant to the intestacy laws, the wrong people may receive your property or they may receive the wrong amount. When you die without a Will, the Court will choose an administrator - sometimes a stranger - to oversee your property. An agreement among your nearest relatives as to who will be administrator may be required.

If you die without a Will, the Surrogate will request that the person(s) seeking to be appointed administrator post a fiduciary bond to insure the proper administration of your estate. Your estate may also incur additional costs in selecting a guardian for your minor children.

Additional expenses of administration, and the uncertainties as to who may end up with your assets can be avoided by having a Will.

If you have not yet made a Will, we strongly urge you to do so now. A Will insures that the person or organizations that you (not the intestacy laws) actually choose receive the type and amount of property you want in an efficient and cost-effective way.

Wills may also incorporate Trusts for your beneficiaries. Such testamentary Trusts have many important benefits. Testamentary Trusts can continue to provide for financial security of those close to you as well as reduce estate taxes. You assure prudent investment management by allowing you to select a knowledgeable Trustee. You protect your hard-earned assets from undesirable influences outside your family. The principal purpose behind making a Will, after all, is to protect your family members, or other beneficiaries.

Simple Wills are designed primarily for small to moderate size estates. Estate tax planning is not the purpose of Simple Wills; instead, these Wills' primary purpose is to avoid the inconvenience of intestacy, to designate your executor, guardian, and possibly a trustee, and relieve the estate of a fiduciary bond.

A simple Will, however, fails to provide a means of relieving the surviving spouse’s estate of a heavy tax burden created by the inheritance of all the decedent’s property. Estate taxes are the most onerous of federal taxes. Estate taxes begin at a 37% rate once the $675,0000 (increasing gradually to $1,000,000 by 2006) exclusion amount has been exceeded. By not making a Will containing certain tax-saving provisions, you may unwittingly reduce the property remaining for your beneficiaries. A properly drawn Will may reduce, and in some cases eliminate, death taxes.

The use of a trust in a Will for the benefit of your spouse and other family members, such as a credit shelter trust, often reduces this estate tax burden. Moreover, the transfer of life insurance policies to an irrevocable trust (an insurance trust "ILIT") may also reduce estate taxes. You should carefully investigate the tax savings benefits of such a document. The overall savings in taxes and administration costs normally outweighs the charge for a Will.

Smith & Doran, PC can provide you with competent advice in the preparation of one or more of the legal documents discussed above. We welcome the opportunity to assist you. If you would like to speak to someone concerning your particular situation, please contact Thomas J. Gaynor at (973) 292-0016 or e- mail him at TGaynor@Smith- Doran.com.