February is the month of love—a time to cherish the people who mean the most to us. While estate planning might not seem romantic, ensuring your loved ones are protected is one of the most profound ways to show you care. Whether it's securing a future for your spouse, children, or a cherished family member, estate planning is all about love in action.
When it comes to estate planning, one of the most common concerns is asset protection. But before diving into strategies, it's important to clarify: What are you protecting your assets from? The answer to that question will determine the best strategy to take. Whether your goal is minimizing taxes, securing government benefits for a loved one, or shielding assets from long-term care costs, the right approach depends on your specific situation.
1. Estate and Inheritance Taxes: Do You Need to Worry?
- No NJ Estate Tax: New Jersey no longer imposes an estate tax, so you don't need to worry about state-level “estate tax” planning.
- Federal Estate Tax: Unless your estate exceeds the multi-million-dollar federal exemption (currently over $13,990,000 per person in 2025), federal estate tax is not a concern.
- NJ Inheritance Tax: If your estate passes to a spouse or children, you won't owe inheritance tax. However, if you plan to leave assets to a non-exempt beneficiary (such as a sibling, niece, or friend), this could trigger an inheritance tax.
2. Protecting a Loved One with Special Needs
If you have a child with a disability to whom you wish to leave a portion or all of your estate, a Supplemental Benefits Trust (also known as a Special Needs Trust) is essential. This type of trust ensures that assets left to your disabled child will not jeopardize their eligibility for “means tested” government benefits like Medicaid or Supplemental Security Income (SSI). Without this protection, an inheritance could force them to “spend down” assets to qualify for such benefits.
At Serra Law Group, we offer a Supplemental Benefits Trust as part of an estate planning package, making it more affordable for families looking to protect their loved ones.
3. Avoiding Probate: Is It Necessary?
Probate—the legal process of settling an estate—often has a bad reputation, but in New Jersey, it's not as complicated as many believe. If your estate is passing to a spouse or children, the probate process is generally straightforward and inexpensive. While some people choose to use a living trust to avoid probate, it's not always necessary. Moreover, setting up a living trust can be far more expensive than preparing a will (for more on this, check out our blog: The Probate Boogeyman – Real or Make-Believe?)
4. Protecting Assets from Long-Term Nursing Home Costs
If your primary concern is long-term care costs and Medicaid eligibility, an irrevocable trust may be an option. However, it's important to understand the trade-offs:
- Assets must be transferred into the trust and cannot be removed later.
- You must name someone else as the trustee, meaning you give up direct control over those assets.
- The five-year Medicaid look-back period applies, so this type of planning must be done well in advance of needing care.
While an irrevocable trust can protect assets from being spent on nursing home care, it requires careful planning and a willingness to give up control. It's also important to note that having an irrevocable trust does not replace the need for a will—you still need a comprehensive estate plan.
Final Thoughts
Estate planning isn't just about paperwork—it's about protecting those you love the most. Whether it's securing your spouse's future, providing for a child with special needs, or ensuring your assets are preserved for your family, every decision you make today is a heartfelt gift for tomorrow.
This Valentine's Day, show your family how much they mean to you by putting a plan in place. 💞 At Serra Law Group, we'll help you navigate the process with care, ensuring that your legacy—and your love—stand the test of time.
📞 Let's create an estate plan that speaks from the heart. Call us today. 💕
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