Should I have a Will or a Trust? Understanding the differences. And… Does it matter?
I’m frequently asked the question of whether it is better to have a will or a trust as the cornerstone of an estate plan. As an estate planning attorney, probably the best advice I can give you to decide which document is best suited for you is to explain each type of document in simple, plain English. That’s what I have to do on this page.
A Last Will generally spells out how you want your estate distributed upon your death. Your will can establish conditions for the distribution of your estate and stipulate that assets are to be distributed all at once or over time. For example, if you have young children or grandchildren, a trust can be written inside of your will or as a standalone document so that each child gets their inheritance in installments upon reaching certain milestones, such as age 25/30, graduating from college, or marriage. This way their funds are not squandered like the “prodigal son or daughter” referred to in the Bible.
The use of a will is more common in states like New Jersey which have a simpler probate code than other states, like New York. Usually, the presence of only one person close to the deceased, called the executor, is required to probate a will. Some people advocate setting up a trust rather than a will to avoid probate in New Jersey.
With a trust, your assets are transferred to a trustee (or trustees) that you select while you are alive (an inter vivos trust), or upon your death (a testamentary trust). A brief “pour over will” usually accompanies the trust and declares that any property and/or assets not already placed into the trust will at time of death be transferred into the trust after your death.
Fred Discusses Frequently Asked Questions About Making A Last Will and Testament and/or a Trust
Here are some additional common questions with answers about Last Wills and Trusts in New Jersey.
Q: What goes into setting up a Last Will or Trust?
A: Each document is written and when signed and notarized is legally enforceable. You can make your last will or trust as simple or complicated as you want.
Costs vary widely depending on the size and complexity of your estate, but many attorneys will charge a flat fee for either document. Be sure to get a fee from your attorney before you proceed.
Once your document is finished, be sure to let family members or those named in the will or trust know where to find it should you die or become seriously hurt or sick. Anybody who has possession of your will – often your attorney – is obligated to produce it upon your death, if requested by the executor named in your will.
“It’s common to leave copies of your last will or trust with your attorney or designated representative. Confiding with trusted family members about the location of your important family documents is absolutely essential in the event of unexpected death or incapacity”, says Fredrick P. Niemann, Esq., a New Jersey law firm Freehold (Monmouth County) New Jersey.
Q: Does a court or judge get involved with a Last Will or Trust?
A: Wills are filed upon death with the Surrogate’s Office of the county where the deceased person lived. Wills are not made public or filed until death.
Trusts generally are not filed with the County Surrogate or the courts following the death of the trust maker.
Q: Who’s responsible for administering my Last Will or Trust when the time comes?
A: The executor you name in your last will carries out the instructions of your will. A trustee plays a similar role in a trust under your will, but usually for a much longer time- typically until all assets are distributed to the named beneficiaries. A bank or financial institution can be named to act as a co-executor or co-trustee of your last will and trust with a trusted friend or family member. A trustee is often given (some) discretion if and when distributions should be made to beneficiaries. For example, a support trust for minor children can give your trustee the discretion on how much money should be distributed for their education, spending allowance, social life, and budget.
The responsibilities of executors and trustees of an estate can be significant. They include paying bills, negotiating with creditors, dealing with beneficiaries, filing a final income tax and/or estate tax return(s) and managing investments, among other responsibilities.
Q: What happens to the debt(s) I leave behind?
A: Whether you have a will or a trust, any and all debts you have at the time of your death need to be settled and paid. If your assets aren’t liquid, creditors can 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 or settle payment at a reduced amount.
Q: Are there special benefits to setting up a Trust vs. a Last Will in New Jersey?
A: One reason some people prefer trusts (and I generally agree) is that it makes it easier to handle your care if you become medically incapacitated. You can stipulate in your trust that your assets be used to pay for your health care and support. The trustee is then able to disburse money for your benefit from your trust estate without going to court.
Without a trust, you need a power of attorney with life care and financial decision-making authority to act on your behalf, otherwise a guardianship is required by law. You definitely should have a well written power of attorney.
Q: Where should I keep my will?
A: You should keep your will in a safe, but accessible, place. I normally recommend that you keep it in a home safe or with your attorney’s office. A secure location is extremely important and notice to trusted persons of its location is also important.
I also suggest that you keep a photocopy of your will at home for reference and annual review.
Q: Who should get copies of my will?
A: It is not legally required for anyone other than you, the client, to have copies of your Will. If you wish, we often make copies for anyone you desire. You should keep a copy of your Will in your confidential files. Our office will not make copies for anyone other than you or someone you authorize.
Q: When should I review my will?
A: I suggest that you review your will every time there is a significant change in your family or financial situation. At a minimum, you should review your will at least every three years. You may receive periodic letters from this office about this.
Q: What are some changes that would cause me to review my will?
- Death of a beneficiary
- Marriage, divorce or remarriage
- Birth or adoption of a child
- Death or change of personal representative (executor, trustee)
- Death or change of a child(ren)’s guardian
- If you change your mind about who gets your estate
- If there is a significant change in the value of your assets
- If you retire
- If you buy, inherit, or receive assets as a gift
- Finally, any time you feel uneasy about your will
Q: How do I change my will?
A: Do not write on your will. Changing your will is often done by a Codicil. However, if you are changing beneficiaries or changing the dollar amounts being given to beneficiaries, it is a better practice to redo the will. I recommend that you contact us if you want to make changes and to make certain all changes are legally made.
Q: How do I revoke my will?
The best way to revoke a will is to tear up the original and copies. Normally, you should not revoke your will unless you are having a new one prepared first.
If you revoke your will and die without one, your property will be distributed according to State Law, and that may not be what you want.
Q: Will my New Jersey Will be valid if I later move and become a resident of another state?
A: If you execute a valid New Jersey Will while you reside here and you later move to another state, you should have your Last Will reviewed by a lawyer in the state to which you move to ensure it is valid in that state.
A Will that is valid in New Jersey is generally valid in the state you move to. However, because the laws in all states are different, you should have your will reviewed by a lawyer in the state to which you move to ensure it is valid in all important respects. Most states have adopted the Uniform Wills Act. One of the provisions of this Act is that if your will is valid in New Jersey, it is good in the state where you move. However, it is always worth checking.
Q: Who is entitled to receive a copy of your will upon death?
The question of who receives a copy of the will after death is a common one. Despite what most people think, there is no requirement that a copy of the will be read aloud to all family members gathered in a room. Instead, the original will is supposed to be given to the executor named in the will or to the lawyer for the estate. The attorney then distributes a copy of the will to the people who have an interest in it.
So who exactly should receive a copy of the will? My answer is the executor or personal representative of the estate is entitled to a copy of the will for obvious reasons. They represent the estate in all probate matters.
Anyone who is named as a beneficiary should also receive a copy of the will. This includes the guardians of any minors who are named as beneficiaries in the will. If it is expected or even possible that the validity of the will may be challenged, the attorney should send a copy to those who aren’t included in the will and are contemplating challenging it. This begins the clock on the time allowed for them to challenge the will.
If the will funds a trust, the trustee and successor trustee are entitled to a copy of the will. The estate’s accountant is usually given a copy of the will as well, as is the IRS if the estate is taxable.
Q: What if I have questions about my Will?
A: If you have questions about your existing Will and/or whether you should have a Trust or a Last Will prepared, then please contact Fredrick P. Niemann, Esq. at firstname.lastname@example.org or call him toll-free at (855) 376-5291. He welcomes your inquiry.
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Last Wills Attorney
New Jersey Wills attorney serving these New Jersey Counties:
Monmouth County, Ocean County, Essex County, Cape May County, Mercer County, Middlesex County,
Bergen County, Morris County, Burlington County, Union County, Somerset County, Hudson County, Passaic County