In estate planning, you will often hear about two types of important documents that relate to dividing up your property and other assets: trusts and wills. They have a relation to each other but are separate.
If you own any assets, you might have specific desires as to who will receive them upon your passing. You can set up a trust to ensure that specific beneficiaries receive those items. That way, as soon as you pass away, the trust will pass to your beneficiaries.
You can put all types of property in your trust, including your retirement plans and life insurance policies. While you are still alive, you will still remain in control over your property as the trustee. After you pass aware or become incapacitated, the persons named in your trust will become your successor trustees. A successor trustee will hold the responsibility of following your trust.
As long as you choose to set up a revocable living trust, you can change it at any time. For instance, you may decide you want an asset to go to a different beneficiary. Until you die, your revocable living trust will be an important document that can be altered.
There are irrevocable trusts as well. An irrevocable trust cannot be changed even while you are still alive. Irrevocable trusts have their advantages for certain people. Talk to your lawyer if you want to explore this type of trust.
Why Do I Need a Trust if I Have a Will?
Plenty of individuals create trusts in lieu of or in addition to wills. A living trust allows you to pass property to your beneficiaries without the property going through probate. Probate can be costly and time-consuming. New Jersey has progressive laws to speed up the time it takes for a will to go through probate. Still, a living trust can make the exchange of property more immediate.
You may want to have both a will and trust. There are some things a will can do that a trust cannot. For instance, if you have minor children, your will is the document that can name their guardian when you die. You cannot name your children’s executors in your trust. You can only do that through your will.
Your trust can work hand-in-hand with your will. Remember that your estate could be caught up in probate, even with a will. Property that you earmarked in your living trust will be distributed at once. Plus, any property that you have named in your trust documents will not be in the public eye. By contrast, a will that has gone through probate will not be private.
What about all the court challenges you often hear about when relatives and loved ones contest wills? The same does not happen with trusts. Therefore, if you think that your children, grandchildren, or others may contest items in your will, you can bypass some problems by working with a lawyer to set up a trust that clearly names your beneficiaries.
Are There Limitations to Who Can Be a Beneficiary?
You can name any person to be your beneficiary. For example, you may want to name all your children as beneficiaries. You can also name an organization or other entity to benefit from your assets when you die. Many individuals use their trusts to support favorite charities and groups.
What Are the Benefits of Having a Living Trust?
It is important to remember that you do not need to be considerably wealthy to benefit from having a living trust. Some of the biggest reasons that individuals set up trusts include:
- They like the privacy of knowing that any assets named in their living trust will not become public record.
- They have discovered that they can save their beneficiaries’ money by creating a living trust.
- They have property in multiple states and can avoid state-specific probate by putting the property into a trust.
- They experience peace of mind knowing that if they become mentally incapacitated, their desires will be followed out.
- They can avoid an irresponsible beneficiary receiving assets through the probate process.
- They can ensure that a child by a previous marriage does not get disinherited by their current spouse.
How Can I Set Up a Trust?
A living trust is a complex document. Therefore, it is important to work with a lawyer if you wish to create one. With your lawyer’s help, you will choose the type of trust you want, figure out which property you want to put in the trust, name your successor trustee, and name your beneficiaries. After your document has been created, your lawyer will help you move assets into your trust.
Planning for the future now makes sense because it will alleviate many of your worries. By creating an estate plan, you can ensure your beneficiaries will have less stress upon your passing. An estate plan can protect your assets and lessen the burden for your family.
Warren Wills, Trusts, and Estates Lawyers at Herold Law, P.A. Guide Clients Through the Living Trust Process
If you are considering making a living trust, you will greatly benefit from experienced legal counsel. Speak with one of our Warren wills, trusts, and estates lawyers at Herold Law, P.A. for help. Call us at 908-647-1022 or fill out our online form to schedule an initial consultation. Located in Warren, New Jersey, we serve clients throughout the surrounding areas, including Plainfield.