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Do I need a Will or a Trust?

The estate planning attorneys at Backes & Hill, LLP will help you determine whether you need a simple will, a more comprehensive will, or a revocable living trust.  Here are some of the differences:

Simple Will – At a minimum, a will should appoint the Personal Representative (also referred to as the Executor) of your Estate and authorize him or her to do certain things, such as pay for your funeral/cremation, settle your accounts and pay your bills, sell or distribute your real and personal property in accordance with your written wishes, and generally make the task of probating your estate much easier.  (“Probate” is the legal process whereby your will is “proved” in a court and accepted as valid.  Probate proceedings are public record, which is one reason some people prefer to use a revocable trust instead.)

A simple will may also name a guardian and/or custodian for minor children.  I may also have special gift provisions and/or instructions regarding personal property.  Typically, your will reference a hand-written list of specific gifts, and anything not given prior to your death will be distributed by your Personal Rep in accordance with your written and signed instructions.  For example, after signing your will, you can later create a hand-written list that says things such as that you want for your grandmother’s wedding ring to go to your favorite niece, Jillian, or your fully restored ’66 SS Impala is to go to go to your cousin, Jake.  Just make sure you keep the list with your will.

Comprehensive Will – A more comprehensive will might be required if you have minor or “special needs” children or own real property in more than one state.  For example, your will can create one or more living trusts for your children (and/or pets!) upon your passing.

For example, if you have a large estate and/or a large life insurance policy, you may not want your child(ren) to receive their entire inheritance upon turning 18.  Instead, you can provide that their inheritance is held in trust until they turn a certain age or graduate from college.  Assets/money held in trust can still be used by the trust’s Trustee to care for the child(ren), paying for their housing, healthcare, education, etc.  You can also provide for their inheritance to be distributed in chunks–some when they turn 18, some when they turn 21, some when they graduate from college and/or turn 25…or 30…or 35.  You decide and then we write it up so you know that your wishes will be followed.

Using a will as the primary means for transferring the assets in your estate upon your death may make sense if:

  • You have a relatively small estate;
  • You are relatively young;
  • You do not own any real estate outside your state of residence;
  • You want your estate plan to be as simple as possible and do not mind having your will made public record;
  • You do not trust others to administer your estate without a judge overseeing everything; or
  • You want to get something in place quickly, perhaps before traveling out of the country, with the intention of replacing it later with a more comprehensive estate plan, perhaps one using a…

Revocable Living Trust – There are three key elements to any trust:

(1) its creator, the Trustor (may also be referred to as the settlor, grantor, or “trust maker”), who deposits something of value, such as cash, stock, real property, etc. with…

(2) its Trustee, who owns the property for the benefit of another, who is called…

(3) the Beneficiary, the person who gets to enjoy the benefits of the asset without actually owning it.

Trusts are generally used in order to avoid having to go through probate, which helps to maintain privacy as nothing has to become a public record the way a will does when it is probated.  Click here for more information regarding the probate process.

Another benefit is that trusts make it easy to manage and transfer assets in the event you become incapacitated or die.  If you are unable to serve as the Trustee of your trust, your Successor Trustee can step in and manage the trust and its assets.

For a trust to work, all of your assets will need to be transferred into the name of the trust–your home and any other real property you own, vehicle, bank/portfolio accounts, certificates of deposit, your ownership interests in a partnership, LLC, or corporation, your retirement/pension/401K plans, etc.  Anything not owned by the trust will be subject to probate.

Part of your trust package will be a “pour-over will,” which directs that any assets owned outside the trust are to be transferred into the trust so that they may be administered with the rest of the trust assets.  However, if required, the pour-over will must then go through the probate process, so it is important to title everything into the trust, or have it transferred automatically by title (right of survivorship) or beneficiary designation.

The Trustor is typically also the Trustee; if you are married, you and your spouse will be joint settlors and co-Trustees.  If you are facing serious illness or old age, you may wish to name a co-Trustee to help you with the administration of the trust.

Upon your death, your trust becomes irrevocable and the Successor Trustee takes over and disposes of the trust assets according to the provisions of the trust agreement.

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Ready to get your estate plan in place? Contact us now!

Backes & Hill, LLP serves clients throughout Mercer County and the surrounding area, including into Pennsylvania and New York. From its office in Lawrenceville, the firm represents clients in a variety of practice areas, including personal injury, employment law, and estate planning. Call 609-396-8257 or contact us online to schedule a meeting. 

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