Will and Probate Basics
A will is the form of succession planning most people know best. Your will dictates who will receive your property after your death, and appoints an “executor” to manage your estate and ensure that your wishes are carried out. Most wills must be “probated,” although there are special rules to make the process easier when the estate is small. The executor will be responsible for paying debts of the estate, liquidating property that is not passing directly to an heir, and distributing assets to the heirs under the terms of the will.
The executor will have access to some of the estate assets during probate, and may use these funds to pay debts of the estate and costs of administration. Depending on the complexity of the estate, probate may take several months or longer, so heirs cannot expect to receive inheritances immediately.
Living Trust Basics
A living trust is designed to pass property without the need for a will and probate. The creator of the living trust places the assets into the trust, legally transferring ownership to the trust and designating himself or herself both trustee and beneficiary. The grantor no longer legally owns those assets. However, as beneficiary of the trust, he is entitled to the benefit of the assets. And, as trustee, he has the authority to make decisions regarding how those assets will be used for his benefit. So, in the grantor’s lifetime, transferring the assets to the trust has little practical effect.
In the trust documents, the grantor will name successor beneficiaries and a successor trustee. When the grantor passes away, control over the trust passes immediately to the successor trustee, and the successor beneficiaries can begin to receive the benefit of the trust immediately.
Differences Between a Will and Living Trust
Administration of Your Estate
One significant difference between a living trust and a will is when and on whom the burden of management falls. When you create a will, the only additional responsibility you take on is to ensure that the will is updated if your life circumstances change. For example, if you marry or divorce, it will likely be necessary to revise your will. Most of the time and effort is invested after your death, by your executor.
A living trust, on the other hand, requires some work during your lifetime. A will can be written in such a way as to provide for the disposition of any property, including that acquired after the will is executed. However, any property acquired after the creation of a living trust must actively be placed into the trust. If you hold property outside the trust, that property must pass through a will, joint ownership with a right of survivorship, or by intestate succession.
Public Availability of Information
When a will is submitted to probate, it becomes public record. As such, information about the heirs and the property passing through probate is publicly available. While most people won’t have the interest or knowledge required to go looking for this information, this may be a consideration for those who place a high premium on privacy or have specific reasons for keeping financial information confidential.
Most details regarding the property placed in a living trust and how those assets are used on behalf of beneficiaries is private.
Is a Will or a Living Trust Right for You?
Only you can decide which type of estate plan is best for you and your family. If you’re ready to take the first step toward protecting your family and your legacy, contact us. to schedule a consultation with one of our New Jersey estate lawyers.