You know you’re getting older when you start to think about socking away some money for retirement instead of enjoying that second cup of latte every day. Sure, that foamy cup of wonder gets you through a long afternoon at work, but foregoing that second treat and putting the money toward a retirement account and watching that account grow, will also give you a warm feeling inside.
As long as you are squirreling away some of your hard-earned money for your future, why not be proactive and make plans now for that inevitable event that is discussed in hushed whispers, i.e. your eventual demise.
Now before you just click the “x” and exit right from this post because you think it doesn’t pertain to you, well… if you’ve not got a will or trust in place, why not just give this post a read anyway?
Most people have heard of a Last Will and Testament which is a legal document memorializing a person’s wishes upon their demise. Usually we think of a will as a device to provide funds or possessions to family members and friends after we are gone. Sometimes a will becomes an instrument for deciding how your “official sendoff” will transpire. You may smile when you read that, but, not only does planning ahead allow the luxury of having the last word, but it spares your loved ones the added anguish of planning your final details while grieving their loss.
Some people prefer to use a trust in the place and stead of a will for their final disposition needs and the types of trusts and their benefits will be discussed later.
Keep in mind that wills and living trusts basically perform the same function – they state your wishes to the letter. Having a will or a trust prepared by a probate attorney is a prudent move because should you die intestate (without having prepared a will), your assets will be distributed not based upon your wishes, but according to the state in which you reside. Without your presence or your forethought to differentiate between family members or friends who would benefit from the proceeds distributed after your death, the state will merely distribute the assets with no regard to your various beneficiaries’ financial situation or ability to manage those assets. An even worse scenario is if your relatives cannot be located, the assets will go straight to Uncle Sam.
So, where there’s a will, there’s a way – that is, to get your good financial intentions into the right hands, and this is especially so, if you have children. If you want to transfer the guardianship of minors, a will is way to go. The downside of using a will for the dispensation of your assets is that any funds or property bequeathed must go through the probate court. A living will bypasses the probate court and the assets are transferred directly to beneficiaries. If there are sizable assets, your will may languish in the probate court a significant amount of time while the government validates the authenticity of the instrument as well as ensuring all your debts and taxes are paid and your assets are appraised, before the distribution of the assets can take place. This process may take up to one year, and more if the will is contested. During this time period, the fees and attorney time involved for probating your will can devour up to 10 percent of your estate’s value!
The beauty of a living trust is that, while it may take longer to prepare and be more costly to get this document in place, upon your death, the process of distributing the assets is much more streamlined and you will avoid the probate fees. With a living trust, it is YOU that controls the beneficiaries and you are the one who is privy to the details of the trust, unless of course you desire to share that information with anyone other than your trusted attorney who prepared the trust document. This is because a will becomes a matter of public record as the probate process for your estate traverses the probate court system. A trust, on the other hand, is not subject to any court or government scrutiny as it is not a public document. You are also permitted to transfer the management of the trust to a trusted person if you become incapacitated and are unable to perform this task. Unlike a will, a living trust cannot be contested thus incurring legal fees and time to meet with your attorney or attend probate hearing regarding the issue, but, be mindful that continual adjustments of the assets, and fine tuning the document will cost you, where a simple will gets the job done, unless there are codicils added down the line. Finally, a living trust allows you to avoid certain estate taxes if that document is prepared and funded correctly. This is why it behooves you to seek and consult with a savvy probate lawyer right here in New Jersey who specializes in trusts and estates to get your trust in place per your wishes.
Whatever document you decide works best for you will at least give you the satisfaction of knowing you have expressed your wishes while you are of sound mind and body and taken care of your family members and friends long after you have departed this good earth.