Revocable living trusts and wills are both legal vehicles to help you manage your assets, both now and after you are gone. In reality, you can have both a will and a revocable living trust in New Jersey, as both ensure different things for you, depending on your situation. It’s crucial to seek professional legal guidance to understand the different tools available, and the benefits and drawbacks of including them into your plan, such as the advantages and disadvantages of a revocable trust.
If you need advice on which legal vehicle best suits your situation, consulting an experienced trust attorney can be beneficial. At The Matus Law Group, our New Jersey trust attorney can offer professional guidance tailored to your specific circumstances, helping you plan with confidence. We can assist you in making informed decisions that protect your legacy and provide for your loved ones according to your wishes. Contact us today at (732) 785-4453 to schedule a consultation.
What is a Trust?
A revocable living trust allows you to maintain control over your assets while you are alive, but then easily pass these assets on after your death while protecting them from probate costs. When a trust document is created, your assets are then transferred into the living trust which you have control over while you are alive, and then your designated successor trustee if you die or become incapacitated. When you die, your trustee can easily take over without the need for any court approval.
Your revocable living trust can be fully customized to your own needs with the help of a New Jersey estate planning attorney. A living trust will protect your interests should you at some point become incapacitated at which point your trust will be managed by your successor trustee. This protects your financial life as long as you are alive and then disburses your assets to your wishes upon your death.
Revocable living trusts can establish many things as far as how your assets are managed and disbursed. A living trust in New Jersey enables you to
- Establish timed disbursements of your estate to beneficiaries
- Avoid probate costs
- Decrease estate taxes
- Reduce creditor exposure
- Allow for lifelong access for special needs dependents
- Manage business or personal assets if you become incapacitated
What is the Difference Between Living Trust and a Trust?
In understanding estate planning, it’s important to clarify the terms often used interchangeably, such as “trust” and “living trust.” Essentially, there is no fundamental difference between these two as “trust” is a broad term that includes various types of trusts, including living trusts.
A trust is a legal setup where a trustee manages assets for the benefit of certain beneficiaries. This arrangement allows for the structured management or distribution of assets, tailored to the preferences of the person who sets up the trust (the grantor).
A living trust is specifically established during the grantor’s lifetime, hence the term “living.” The main goal of a living trust is to handle the grantor’s assets while they are alive and to facilitate the transfer of these assets to the beneficiaries after the grantor’s death, usually avoiding the probate process.
Living trusts can be revocable or irrevocable. In a revocable living trust, the grantor has control over the assets and can change or terminate the trust at any time during their life. An irrevocable living trust, however, means that the grantor gives up control of the assets once the trust is made; changes cannot be made to the trust easily.
Both types of trusts offer distinct advantages depending on the financial goals and needs of the grantor. A New Jersey trust attorney can offer tailored guidance in helping you set up a trust, effectively managing and protecting assets according to your wishes.
Disadvantages of a Living Trust
Living trusts can be a great option for estate planning, especially for those with multiple properties outside of the state or beneficiaries that require special attention. However, before you move forward with a living trust, there are some disadvantages that you need to consider.
First, it is important to keep in mind that establishing a living trust is more complicated than creating a last will and testament. As such, there will likely be higher legal costs needed to set up the trust. These fees can possibly be offset by the savings you will make by avoiding probate, but this will still depend on the specifics of your estate.
Second, it is important to remember that a living trust needs to be constantly updated. If a person uses a living trust to manage their estate, all new property they acquire will need to be titled under the trust’s name. Otherwise, the property will not be included in the trust and will not be governed by the instructions left in the trust.
Lastly, it is important to note that a living trust is not a guarantee that the owner’s estate will be exempt from probate when they pass away. This is because it may be unlikely for all the properties owned by the grantor to be titled under the name of the trust. People tend to acquire new properties throughout their lives, and they may decide not to title every single property under the trust. Any property not held in the trust will go through probate after the owner’s death and will be distributed according to the state’s intestacy laws, or as instructed in a pour-over will.
What is a Will?
A will is another estate planning vehicle in New Jersey that will set out your wishes regarding the distribution of your assets as well as the care of your children. Your will names an executor, or the person who will handle the matters of your estate, how any taxes or debt will be paid, who will act as guardian to your children, and how personal property will be distributed to your beneficiaries.
The downside is that if you only have a will at the time of your death, your estate will be subject to probate, which can be time-consuming as well as costly.
Living Trusts Vs. Wills: Weighing the Pros and Cons
New Jersey wills and revocable living trust documents serve different purposes yet can frequently overlap. Whereas a will goes into effect when you die, a revocable living trust goes into effect as soon as it is created and remains under the control of the grantor until he or she dies or becomes incapacitated.
A living trust may be more labor-intensive to create and manage and may also have associated costs. But a living trust will avoid the expense and time-consuming probate process that you will be subject to with a will. With a living trust in New Jersey, the beneficiaries of the estate have immediate access to assets in the trust. In the case when the terms of the will and trust conflict, the trust will supersede the will and probate will have no authority over it.
Many estate planning attorneys will suggest that an individual have both a will and a living trust in New Jersey. It’s important to discuss your particular needs with an estate planning attorney in New Jersey to understand how either document will fulfill them. At The Matus Law Group, we would be happy to discuss your needs in a consultation.
| Aspect | Living Trust | Will |
|---|---|---|
| Implementation | Goes into effect upon creation | Goes into effect upon death of the individual |
| Control | Under the control of the grantor | Only becomes effective upon death |
| Creation and Management | May be more labor-intensive and costly to create | Typically simpler and less costly to create |
| Probate Process | Avoids the probate process | Subject to the probate process |
| Access to Assets | Beneficiaries have immediate access to assets | Access to assets may be delayed due to probate |
| Conflict Resolution | Trust terms supersede will in case of conflict | Will dictates asset distribution despite trust existence |
