Trust vs. Will: What’s the Difference?
Trust vs will: what’s the difference? Both are legal arrangements that distribute property to your friends and families but operate in different ways. It’s an important thing to think about, but something that most people don’t do: over 60 percent of Americans has done no estate planning.
Keep reading to see how trusts and wills differ, and to figure out which one is the best fit for what you need.
Wills
Wills are legal documents that only take effect when you die. As a part of a will, you appoint an executor to distribute your property to your friends and relatives. Wills can only handle property that you own outright.
Wills require a Probate Lawyer and are entered into public record once they take effect. This means that the flow of property and money has to be overseen by a court, which can extend the time it takes for the estate to be distributed.
Wills also operate in areas that trust, as financial vehicles, cannot. For example, you can name guardianship of dependents in a will and can specify any final wishes that you may want, like memorials or funeral arrangements.
Trusts
The largest difference between trusts and wills is that trusts can be put into effect before you die. A trust is a legal entity that manages your funds and assets on your behalf. Your money and property are no longer in your name, but in the name of your trust.
There are three main types of trusts that you can choose from. Revocable living trusts are trusts that name you as a trustee. You still have a lot of power determining where your money goes and what remains in your name.
Irrevocable living trusts turn control over to someone else that you’ve named as a trustee. You cannot remove funds from that trust yourself, nor can you reverse the decision of creating that trust and turning it over to someone else.
Testamentary trusts are trusts created as a part of someone’s will. Upon someone’s death, a trust is created by the will’s executor. This is done to hold funds for a specific period of time before they are distributed, to reduce the will’s tax burden, or for other administrative and financial reasons.
Keep in mind that since testamentary trusts fall under the will probate process, they will be overseen by a court and entered into the public record.
Trust vs Will: Each Fits Different Needs
Now that you know how to compare a trust vs will, you’re able to figure out which one is best suited for your needs. Don’t wait until the last minute to write your will or set up a trust. Having either (or both!) set up well in advance can leave you with peace of mind knowing that those you love will be taken care of once you’re gone.
Check out the Estate Planning section of our blog for more information about end-of-life planning!
Hiring a probate lawyer – The crucial reasons to consider
No one wants to mull over death and make the necessary arrangements after they crossover. However, sometime sooner or later, you need to get into this discussion. It is essential to discuss the wills and the probate process to make sure that your last wishes get attended the way you want it to.
Are you thinking about how to go ahead with the probate process? Are you planning to delve into this for a decedent or yourself? In both situations, you need to get in touch with a probate lawyer. A lawyer can provide you the best guidance. To know more about this, you can get in touch with Silverstone Law FL.
There are several reasons for joining hands with a probate lawyer. A few important ones are as follows:
o The lawyer can secure an estate from a legal claim
Not many people realize that estates get several legal claims. And the probate process can draw in the ones who want to leverage from the testator’s demise. A probate lawyer ensures that the decedent’s wish gets fulfilled without any hindrances.
o Drafting the will
People might think they can write their will by themselves! However, it is not an easy task. Since, it is one of the most crucial documents that you will draft in your life, declaring essential life decisions, it is crucial to get it correct. To make sure that you write the will in a risk-free way, you need to get in touch with a probate lawyer. Today, most Americans don’t have an estate plan or will, which results in troubles later. Hence, it is essential to consult an expert lawyer and draft your will.
o Lawyers can expedite the probate process
Legal processes sometimes are unpredictable! Hence, the probate process at times can get slightly delayed. It is all the truer when the settlement process gets managed by a person who doesn’t have apt know-how about the probate process. While this might not be feasible always, the expert probate attorneys can help to minimize the impact of problems that came in the process.
o Lawyers can provide guidelines and answer the necessary questions
Regardless of the situation that you are in, a probate lawyer can offer the answer to all the questions a person has on the probate process. It helps to reduce the confusion and also take decisions with confidence. The probate process can, at times be very complicated. A layperson is not aware of the legal jargons. Here an expert attorney can help in understanding the legal procedures, terms, and formalities.
o The estate attorneys make sure the debts get paid correctly
There is a limited timeline within which people need to settle their debts. Also, the inheritances need to get released within the correct time as well. An expert lawyer ensures timely payment. If there are ample debts, the probate process might become slightly complicated. It is here that the lawyer can ensure that timely payments reduce the hassles.
A probate lawyer ensures that the probate process takes place correctly. They also provide all the necessary guidance and help during the probate process, so that people are free to voice their queries and make the correct decision.
Wills, Estates, and Trusts: What to Do When a Parent Dies
In the United States, almost three million people die per year. What happens to their belongings when they die?
Depending on the situation, the estate goes into probate. Probate is a long and sometimes frustrating process for determining who gets what. But everything rests on how your parents set up their will, estate, or trust.
A parent’s passing is heartbreaking for the entire family. Regardless of how your parents set up their estate, there are some things you should do.
Read on to learn what to do when a parent dies.
Obtain a Death Certificate
You might need help with how to handle an estate. It depends on how your parents set up their finances. But the first thing you’ll need is a death certificate.
It’s often necessary to turn off gas, electricity, Internet service and more. But without a death certificate, customer service people won’t discuss any of this with you.
If your loved one dies at home, call 911. Someone needs to come and pronounce your loved one as deceased. Be sure and notify the parent’s family doctor as well.
Arrange for the Funeral
Many people have prepaid burial plans. If your parent had one, call the designated mortuary. They’ll handle everything for you.
If there was no plan, it’s tougher. Don’t do this all by yourself. Ask family and friends to help make funeral arrangements.
Notify Family, Friends, and Employer
Have family and close friends help you notify anyone you can think of that should know about the death.
If your parent was still working, call his employer. There may be a final paycheck or even life insurance or other survivor benefits due.
Speaking of life insurance…
Call the Life Insurance Company
If you know your parent had a life insurance policy, call the life insurance company. They’ll need a copy of the death certificate too.
Are you the sole beneficiary of the life insurance policy? If your parent has a surviving spouse, you might not get the entire policy payout.
Social Security
Notify the Social Security office of your loved one’s death. They’ll also need a copy of the death certificate.
Cancel any payments your parent was receiving. You don’t want to end up owing money to the Social Security Administration.
Cancel, Cancel, Cancel
The Social Security office notifies Medicare of your parent’s death. But cancel your parent’s Part D Medicare (prescription drugs). Also, cancel any extra Advantage plans.
Cancel life insurance as well and close out credit card accounts. Notify the three big credit bureaus as well.
To avoid identify theft, cancel your loved one’s voter registration and driver’s license.
Know What to Do When a Parent Dies
It’s never easy when a loved one dies. But you should know what to do when a parent dies. Get legal help if necessary.
Get a death certificate right away. Then notify family and friends and get help arranging the funeral if it wasn’t already planned.
Call the life insurance company as well as the Social Security Administration. Then cancel everything that’s no longer necessary.
Remember to take good care of yourself throughout this process. If you need help finding a good lawyer, please check our directory.
After You’re Gone: What Happens If You Die Without a Will?
No one likes to think about the end. Many people wonder what happens if you die without a will. Death is a heavy subject, but if you don’t have estate planning, then everything you own by the state’s wishes and no your own.
People tend to put off creating a will because it addresses the finality of life. It’s important to take the time because dying “intestate,” can lead to problems not only with the dissolution of your assets but also hurt feelings of family members.
We’ll go through what happens when you don’t have a will and the issues your family members face.
Intestate Succession Laws: What Happens if You Die Without A Will?
The purpose of a will is to determine who your assets go to and proclaim the guardian of your underage children. You also choose the executor of your state such as Peck Ritchey, LLC who is in charge of making sure your final requests are heeded.
Without it, the state disperses your property via the intestate succession laws. Any property or accounts co-owned are not subject to these laws and instead, go to the co-owner. Also, any life insurance policies are given to the beneficiary and not determined by the state.
Dying Without a Will When You’re Married
When you’re married with a wife and children, the assets are divided with all or some other percentage of it going to your wife. The rest is distributed among your children, siblings, and parents.
It doesn’t matter if you promised your oldest son to give him your coin collection. If it goes to your mother, she has control of it and doesn’t have to give it to you.
This can lead to heartbreak and distress for family members who argue over the distributed property. The state does not follow your wishes. It follows the letter of the law.
What Happens if You’re Single or Divorced?
The rules are straight forward when you’re married, but it gets complicated if you’re single or divorced. If you have a partner but aren’t married, the state doesn’t recognize them for the distribution of assets.
If you’ve lived with the person for 20 years and had a life with them, unless you are legally married, that person won’t get anything. There are some states that recognize domestic partnerships, but you’ll need to check your state’s laws.
If you are single, then relatives are found and assets distributed. If you have no children, parents or siblings, then it can go to aunts, cousins, etc. If there are no relatives, then the state takes your assets.
The state chooses guardians for underage children based on their best interest.
Problems with Dying Without a Will
The state doesn’t recognize your wishes even if they’ve been verbally stated with witnesses. They also don’t recognize family feuds, so if you hate your brothers, he can still end up getting a portion of your estate.
If you lived with someone the rest of your family doesn’t approve of, then they can make sure that person gets nothing of your estate. All property goes to relatives and doesn’t recognize a girlfriend or boyfriend.
Get Your Will Completed
What happens if you die without a will? It could lead to family turmoil and broken hearts. Take the time to visit a lawyer and complete your will.
If you want items to go specifically to a person in or outside of your family, a will is the only way to guarantee that happens.
If you’re interested in learning more about creating a will, then explore our site.
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Do I Need a Will? 4 Reasons You Should Draft a Will Right Now
Death isn’t something most of us like to think about, but it’s going to happen. It’s very important to think about what you will leave behind when you go.
Are you’re family taken care of? Are your assets protected? All these questions and more are important and it’s never too early to start thinking about it. If you’re thinking “do I need a will?”, then you’re at the first step of the process.
If you’re wondering whether you need a will, keep reading to find out why you should.
1. If You’re Married
If you’re married, you should have a will to protect and help care for your spouse. In the case of your death before theirs, you should put into writing what you want them to receive.
If you don’t have a will, your spouse would be likely to inherit your assets when you die. But there’s a chance they might not, so don’t leave it all to chance. Also, if there’s someone else you want to inherit your assets, you need to include them in the will.
You’ll need a will attorney to help you draft and finalize your will, but once it’s done, you’ll have peace of mind.
2. You Have Children
If you also have children, you will need to make a will. Your children are likely to inherit your assets after your spouse, but this isn’t a guarantee.
If you want your children to inherit after, or before, your spouse, you need to put into a will. Things could get messy in court if this isn’t done, so make sure you do it before you die. If you have a child you don’t want to inherit anything, you need to put this in writing too.
A will is also important if your kids die before they become adults. You can name an executor of your estate as well as a guardian for your kids, who will be responsible for raising them.
3. You Have Elderly Parents
If you have elderly parents and you die before them, your will can help protect them. A will can help prevent them from losing their benefits from the government.
If you don’t include them and they get your life insurance payout, they could lose their benefits. A will will stop this from happening.
You can direct your assets to your parents in installments instead of a lump sum to help them in the long term. It will help to pay for any nursing home or care costs as well as general living expenses.
4. You Have Pets
If you have pets that will get left behind after you die, you will need to make a will. A will can help ensure they don’t end up in a shelter when you die.
In your will, you can choose someone to care for your pet after you pass. You can also set up a pet trust that will provide financial care for your pet once you go.
This will help to cover vet bills and standard maintenance costs of the animal.
Do I Need a Will? The Answer Is Yes
If you’ve been thinking to yourself “do I need a will?” and these points apply to you, the answer is yes. If these four points are things that you have in life, you need to make sure to write up a will as soon as possible.Want to learn more about trusts? Check out our blog post for the pros and cons of trusts.
The Pros and Cons of Putting Property in a Trust
Is it smarter to leave your home or land in a trust instead of a will? Here are the up- and downsides of putting your property in a trust to discuss with your attorney.
Do you know what’s going to happen to your land or property when you pass away?
While a will is better suited for smaller assets like your grandmother’s fine china, placing a home or vacation property in a trust may be more advantageous for everyone involved.
But they also present their own disadvantages too.
While there are several types of trusts, they all generally fall under two main umbrellas:
The Two Main Types Of Trusts
A trust is a legal document outlining how you’d like your property and other assets distributed after you die.
You can create:
A Revocable, or Living, Trust
A revocable or living trust allows you to maintain full legal control and ownership of the trust, including the properties and assets, until the time of your death.
This means you can add/remove assets or properties anytime you want, change beneficiaries, and even dissolve the whole thing should your situation change. Managing a revocable trust is much easier with the help of an estate planning lawyer.
However, since the property or land will technically remain in your possession, a revocable trust does not protect your assets from creditors hoping to seize them upon your death.
And it also doesn’t exempt your home from the estate tax.
These two downsides may be alleviated with an irrevocable trust.
An Irrevocable Trust
Irrevocable trusts pass the legal ownership of the trust, including the assets and properties, to a trustee.
It also puts the management of the trust on someone else’s shoulders, which may be needed in the case of incapacity as you near your final days.
An irrevocable trust works just like it sounds: once you and your financial advisor or attorney draft a final version, an irrevocable trust cannot ever be changed.
This means you won’t be able to add or remove assets and properties, or even dissolve the trust if you so wish.
Another key difference: a revocable trust keeps your assets tied to your estate.
But when you have an irrevocable trust, your property or land is essentially removed from your estate’s value, which means you’ll save money in taxes after your passing.
This is just one upside to consider; here are a few more.
The Pros of Putting Property In a Trust
You may want to consider leaving your family lake house or always-appreciating downtown property in a trust because:
Trusts Spare Your Loved Ones the Probate Process
Many people don’t know this, but if you leave property in a will, your family will need to go through the probate process before they’re allowed to claim it.
Probate is the court-supervised process of compiling a person’s assets, paying off bills and taxes, and distributing the remainder of the estate to rightful beneficiaries after one passes away.
If you have properties in different states, your loved ones will need to find attorneys in each state to deal with the different probate laws and fee structures.
Go with a trust and none of this will happen.
You outline who will receive your property and there’s never a probate process on your loved one’s plate.
No Hefty Probate or Attorney Fees
The cost of hiring different attorneys and the time expense of traveling back and forth for these court dates, which could take up to a year to finish, are bad enough.
But if you use able accountants and leave your property in a will and your beneficiaries need to go through probate, they’ll also have to pay probate costs which could total up to 3% of your asset’s value.
No probate, no probate costs with a trust.
In fact, you’ll take care of all the costs of your trust for your loved ones because you pay them upfront when your attorney creates it.
Trusts are Also Private
The probate process takes place in court and wills becomes public record after you pass away. So everyone you’ve ever known will be able to see who received what after your death.
Since trusts are taken care of outside the court system, none of this information will be made publicly available. Your beneficiaries can claim their inheritance without intrusion or fuss.
Your Beneficiary Receives Your Property Immediately
It could take weeks or a year for your intended to finally receive your property or land with a will as the probate process wraps up.
But your designated beneficiary will receive the property in a trust immediately. Plus, he or she can also sell the property if they so choose without going through the ordeal of selling a house during probate.
All these sound like wins.
Though that doesn’t mean you shouldn’t consider the few negatives as well.
The Cons of Putting Property In a Trust
You may not dig the fact that:
Setting Up a Trust is Slightly More Involved than a Simple Will
Due to the somewhat extensive paperwork you and your attorney will need to file, the trust creation process can take more time than a standard will. It also increases the more properties or assets you’ll need to transfer ownership over to.
Which leads us to…
Assets Must Be Retitled In the Name of the Trust
When you leave assets in a trust, you’ll need to retitle them in the name of your trust.
If you skip this important step, your property may not go to the rightful inheritor after you pass and your beneficiaries will need to comply with the choice a probate court selects.
Remember, you may lose control of your properties after you transfer ownership, depending on the type of trust you choose.
This detail might create issues with your homeowner’s insurance and title insurance as these may no longer be in your name.
You’ll want to speak with your insurance company to find out:
- If or how your trust will change your policy
- Whether your title insurance will still cover you for liens, easements, etc.
So now that you know more about why you may want to put your property in a trust, the next step is discussing your thoughts with an expert.
Is a Trust Right for You?
Everyone has a unique financial situation; a solid strategy for some may not be the best move for you.
That’s why working with a financial advisor and attorney you trust is so crucial for your estate planning.
You’ll want someone to deeply asses your portfolio and goals to figure out if putting your property in a trust is the optimal solution for your needs.
So start looking for a professional with years of experience handling trusts and wills to help you make the right decision for your loved ones today.
Ask an Estate Planning Attorney in New Jersey: Strategies for Estate Planning During a Divorce
Many spouses take out life insurance plans and list themselves as beneficiaries to pensions, 401k plans, and other retirement benefits. The idea is to provide protection to the spouse and family in the event of a death. A divorce, especially if one of the spouses remarries, dramatically changes the couple’s original estate plan. While the divorce is underway, each spouse has certain rights to retirement accounts and each must meet his or her legal obligations until a divorce settlement is reached.
A time will come when assets get divided. Soon thereafter, the estate plan needs to be revised. Below is a list of four things a divorced spouse should do to get his or her estate plan updated to reflect the end of the marriage. Check back next week for four additional strategies for estate planning during a divorce.
- Update health care proxy: If you listed your former spouse as the person you authorize to make health care decisions for you, you will need to choose a new decision maker.
- Revoke power of attorneys: If you and your spouse have executed powers of attorney, you will need to make changes. You can revoke the power of attorney, execute a new one, and be required to notify your ex-spouse of the revocation.
- Automatic restraining orders: When you file for divorce, an automatic restraining order is placed on your assets. Neither spouse can change beneficiary designations while the divorce is pending absent written agreement.
- Update your will: Remove your current spouse from your will and appoint a new executor or person responsible for distributing your gifts following your death. If you have young children, think about guardianship options and naming an alternate guardian, in the event your former spouse dies or loses custody of the children at a future date.
Contact an Estate Planning Attorney in New Jersey
One of the last things people think about when they are getting a divorce is updating or creating an estate plan. Estate planning is not something you undertake for yourself alone. You do it for your loved ones to help your family after you pass away. Your ex-spouse may no longer be in the picture, so thinking about and updating your estate plan should be an immediate step following your divorce. The Giro Law Firm serves the Bergen County, New Jersey community and surrounding areas. We help individuals with all of their estate planning needs, including the drafting of wills. Make sure that your belongings are left to the people or organizations that you choose with limited headaches and fees for them to receive your gift. A will is not the only thing an estate planning attorney can help with. Talk to an Estate Planning Attorney in New Jersey today about powers of attorney, health care proxies, and Medicaid planning for long term medical care.
The Giro Law Firm is a New Jersey and New York law firm located in Newark, NJ that handles a wide range of legal matters that affect the elderly and disabled populations, including retirement, guardianship, health care, long term care planning, Social Security, Medicare/Medicaid, among other legal services. To request a consultation with an Estate Planning and Divorce Attorney New Jersey, click here or call (201) 690-1642.
