Estate Planning by Creating a Last Will and/or Living Trust
Creating a Last Will and/or a Revocable Living Trust is very effective when planning for your estate. Each document must be written and is legally enforceable. A trust or Last Will can be simple or it can be more complicated. Costs for either document will vary widely depending on the size and complexity of the estate, but many attorneys will charge a flat fee for either document.
Once the document is prepared, be sure to let family members or those named in the will or trust know where to find it. Anybody who has possession of your will- often your attorney- is obliged to turn it over to the executor or trustee so it can be filed with the county surrogate upon your death.
“It’s common to leave copies of trusts with your attorney or designated trustees: Confiding with trusted family members on the location of your important family documents is absolutely essential in the event of unexpected death or incapacity.”
A Checklist to Consider With Your Last Will and Testament
Is it Better to Have a Trust Instead of a Will in New Jersey to Avoid Probate?
The use of a Last Will is more common than a Trust. A will is subject to probate but probate is simple and inexpensive. In fact, in most family consultations I recommend that clients sign a Last Will rather with or without a testamentary trust contained within the will rather than having a Revocable Living Trust done. In Florida everyone pushes the use of trusts but in New Jersey they may not be the best tool for your estate planning goals.
One common reason for setting up a trust, rather than a will, is to avoid court proceedings, known as probate.
Wills must be filed with the Surrogate’s office to be probated, meaning they become public documents. Probate proceedings can be costly and time-consuming, sometimes taking as long as a couple years, if there is a will contest by contentious family members.
Administrative fees and commissions come out of the estate and can cost between 1% and 5% of the estate. Then there is the State of New Jersey to deal with if an inheritance or death tax return is to be filed. The New Jersey Division of Taxation is a nightmare to deal with and audits and close examination frequently demanded.
Another reason some people prefer trusts is that it makes it easier to handle your health care and personal decision-making if you become medically incapacitated. You can stipulate in your trust that your assets be used to pay for your care, and the trustee will be able to disburse money from your estate without going to court.
With a trust, your assets are simply transferred to the designated trustee (or trustees) upon your death. A brief “pour-over will” usually declares that any remaining assets not owned by the trust be transferred into the trust upon your death.
You can also set up a “trust within a trust” or a trust within a will, usually for a single or multiple beneficiaries. Upon your passing, the executor you name carries out the instructions of the will. A trustee plays a similar role, but usually for a much longer time- typically until all assets are distributed from the trust to the beneficiaries. A trustee is also usually given some discretionary authority over if and when distributions can be made to beneficiaries.
The responsibilities of a trustee are considerable. Including paying or negotiating with creditors, notifying and paying beneficiaries, filing income tax returns and managing investments.
Whether you have a will or a trust, any debt you have at the time of your death will need to be settled. If your assets aren’t liquid, creditors could force the sale of your property to get paid.
Of course, a trustee or an executor can negotiate with creditors to repay debts over time.
Call Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or e-mail him at firstname.lastname@example.org today and speak to him personally. He welcomes your call.
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Estate Planning Attorney
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