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 are in New Jersey and 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 attorneys 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 trust is a legal arrangement where the ownership of your property is transferred to a trust, managed by a trustee for the benefit of your chosen beneficiaries. Under New Jersey Law, the Uniform Trust Code controls the creation, operation, and termination of the trust.
Creating a trust involves a grantor—the person who establishes and funds the trust—drafting a trust document. This document outlines how the properties are to be managed and eventually passed on to the beneficiaries. The trustee, appointed by the grantor, is responsible for administering these assets according to the trust’s terms.
For a trust to be enforceable, the grantor must have the legal capacity to create it, meaning they must be of sound mind and legal age at the time of the trust’s establishment. If these conditions aren’t met, the trust may be void or voidable.
A common type of trust is the revocable living trust. This provides the ability to retain control over your assets throughout your lifetime while offering the flexibility to modify the trust as your circumstances or intentions change. When you pass away or become incapacitated, a designated successor trustee takes over, managing and disbursing your assets according to the trust’s stipulations and without the need for court approval. This protects your financial life as long as you are alive and disburses your assets as per your wishes upon your passing.
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
- 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 a 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 all of 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.
| Disadvantages of a Living Trust | Description |
|---|---|
| Complexity and Cost | Establishing a living trust is more complex and costly than creating a last will and testament. Higher legal fees are typically involved, though these might be offset by avoiding probate, depending on the estate’s specifics. |
| Ongoing Maintenance | A living trust requires regular updates to include any newly acquired property. If new assets are not titled under the trust, they won’t be governed by the trust’s instructions and may be subject to probate. |
| No Guarantee of Probate Avoidance | Not all of the owner’s estate may be exempt from probate, especially if properties are not titled under the trust. Any property not included in the trust will go through probate and be distributed according to state laws or a pour-over will. |
What is a Will?
A will is another estate planning document that specifies how you want your assets distributed after your death. It is a legal instrument through which you can outline your final wishes regarding the dispersal of your possessions and the guardianship of your children.
In New Jersey, when you create a will, you designate an executor. This individual is tasked with managing the affairs of your estate. The executor’s responsibilities include paying any taxes or debts owed by the estate and ensuring that your personal property is distributed according to your wishes. Additionally, if you have minor children, the will allows you to appoint a guardian to oversee their care and upbringing.
However, it’s important to understand that a will only takes effect upon your death and is subjected to probate. Probate is the legal process where a court oversees the administration of your will to confirm its validity and ensure that your property is distributed correctly, which can be time-consuming and expensive.
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.
Working with a skilled New Jersey trust attorney at The Matus Law Group
Understanding the roles of trusts and wills in estate planning is essential for managing your assets effectively, both during your lifetime and after. In New Jersey, you can incorporate both a revocable living trust and a will into your estate plan, each serving unique purposes based on your individual needs. However, knowing which one best fits your needs can be challenging.
Given the intricacies and legal nuances involved, it’s advisable to seek professional guidance to navigate these decisions. At The Matus Law Group, our New Jersey trust attorneys can help you understand how best to integrate trusts and wills into your estate plan. We can provide clear, straightforward advice tailored to your specific situation, helping you achieve peace of mind about the future of your assets and loved ones. Contact The Matus Law Group today at (732) 785-4453 to further ensure your estate planning is as effective and comprehensive as possible.
