What is the Difference Between a Trust and a Will?
While the two have the same general purpose, there are some key differences between a trust and a will.
We can help you understand if a will, a living trust, or both are necessary as a part of an effective estate plan. We will look at your personal preferences and individual situation and offer advice and guidance to ensure your family receives the assets you put aside for them after your death.
The Purpose and Scope of a Will in Estate Planning
Most people are at least somewhat familiar with the role a will plays in a New Jersey estate plan.
Dictating the Distribution of Assets
When we create a will for you, we discuss your assets, your heirs, and the distribution you desire. You will also name an executor to oversee the distribution of your assets.
Protecting Minor Children
If you have minor children, your will can name a guardian to oversee their care and fiduciaries to oversee the money they inherit until they are old enough to manage it on their own.
Reducing Confusion and Disputes After Death
Having a valid will in place makes it easier for your remaining family members to manage probate and distribution without disagreements and in-fighting.
Entering a will into probate in New Jersey is a quick process that requires a short visit to Surrogate’s Court — usually just the office of the elected official — for validation of the will. As long as the Surrogate or an approved clerk sees the signature of the deceased and two other witnesses along with a notary stamp, they will validate the will and officially name the designated person the executor.
Without a will, this process can be somewhat more complicated.
For a legal consultation, call 856 770 2744
Understanding Living Trusts
Living trusts are sometimes also known as revocable trusts. This trust goes into effect immediately. Initially, you will serve as the grantor who funds the trust and the trustee who manages it. You can also serve as the beneficiary. As such, you can put assets into the trust, remove them, and manage other transactions.
As a part of the process, you will also name a successor trustee and successor beneficiaries. As soon as you pass away, the successor trustee gains control of the trust. From this point on, they can manage the payouts to the successor beneficiaries. This means your family has access to this money immediately without waiting to probate the will and distribute the assets.
A living trust allows your estate to avoid probate, assuming it contains all your assets that do not already have named beneficiaries. This gives you and your family some privacy since trusts are not a matter of public record.
Major Differences Between a Trust and a Will
A Trust Goes into Effect Immediately
A will only affects what happens after you die, while a living trust goes into effect immediately.
However, in either case, you can plan for what happens if you are ever unable to make decisions on your own. With a trust, we can include a provision that the successor trustee receives decision-making powers if you become permanently incapacitated through an accident or illness.
If you opt for a will, we can include a power of attorney to give your family members access to your financial accounts and permission to manage them if you are no longer able.
You have much more control over how they use the money with a living trust, however.
A Trust Does Not Need to Go Through Probate and Is Not Subject to a Waiting Period
When it comes to a will that requires probate, there is a 10-day waiting period from the date of death. Then, even once the Surrogate validates the will, the executor must take various steps before your family members have access to their inheritance.
This can be a problem if money is tight and your income was providing for their daily needs. With a living trust, there is no waiting period. They can have access to the money within hours, or according to your stipulations.
Similarities with a Trust and Will
There are no tax advantages to a will or a living trust. The amount your heirs owe will be the same for either. New Jersey law exempts spouses and children from paying state inheritance taxes, but other family members may owe. The exemptions for federal death taxes are significant, meaning most families will not need to pay these fees anyway.
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Talk to a New Jersey Estate Planning Attorney About Your Family’s Future Today
Bratton Estate and Elder Care Attorneys can help you create a personalized estate plan that works to meet your needs and ensures your family’s continued financial stability. In many cases, we use living trusts and wills together to form an effective plan for managing the distribution of your estate after you pass away. This allows us to take advantage of the benefits of both without experiencing the downfalls of either.
Call us today at 856 770 2744 to schedule a time to learn more from an estate planning attorney.