While a Last Will and Testament is an important first step to protect your estate, you won’t be fully protected without creating an Irrevocable Trust
You may think once you have a Last Will in place that your assets are protected and you are finished with your estate planning. However, the truth is, your estate can still enter probate if you only create a Last Will. Here is why you should also consider setting up a trust, and which kind of trust may be right for you.
Isn’t a Living Will enough?
A Last Will is a document that dictates your wishes for estate distribution and management after your death. You determine who your beneficiaries are, decide how assets will be distributed, and designate who the executor of your estate will be.
If you don’t have a Will, you will die “intestate,” and your estate will be distributed according to the court’s determinations. This process can be long and complicated for your family members, so you want to do everything you can to make things easier for your loved ones.
However, even if you do create a Last Will, your estate could still enter probate. For example, if a family member or friend were to contest your Last Will after you die, meaning they argue that they were not compensated sufficiently under the Will or were unfairly left out, your estate would then enter probate court.
For these reasons, creating a Last Will is not enough to protect your assets.
Setting up a trust
When you create an estate plan, setting up a financial trust is a good way to protect your assets and control how they will be distributed and managed after you die. This ensures that your wishes are followed and that your legacy is protected.
A trust also allows you to:
- designate beneficiaries for specific assets
- receive added tax protection
- specify asset distributions, such as timing and amounts
- protect your estate from probate, estate taxes, and creditors
- set up a long-term care plan for the end of your life
Just like you will designate an executor to manage your estate in your Last Will, you’ll choose a trustee to manage your trust. However, a trust is different because you are giving the trustee rights as a third party to hold assets on your behalf.
Types of trusts
There are two types of living trusts to be aware of: revocable trusts and irrevocable trusts.
- Revocable Trusts. A revocable trust can be amended or even revoked while you’re still alive. Once you die, the trust becomes irrevocable, meaning it can no longer be changed.
- Irrevocable Trusts. This trust can only be altered or revoked under certain, strictly defined circumstances or by court order. Once an irrevocable trust is established, you give up your rights of control to the trustee.
Whichever type you choose, the benefits of creating a Living Trust include:
- reduced estate taxes for large estates
- protections for minor children
- setting up distribution rules for your children throughout their lifetime
- ensuring your assets stay with your family members
- avoiding probate
- keeping your wishes and your assets private (as opposed to estates that enter probate, where assets and proceedings become public information)
- having your assets managed by a trustee, should you become incapacitated
There are many benefits of creating a Living Trust. The first thing you need to decide, however, is how much control you want to have over your trust assets, thus determining if you should create a revocable or irrevocable trust.
When you’re ready to sit down with a certified elder law attorney, our team at Elder Law Department at Goldberg Law Group is ready to help you create an estate plan that is right for you. We’ll walk you through the process of creating a Last Will and Testament, and we can provide trustee services, executor services, and estate administration assistance as well.
Contact Elder Law Department at Goldberg Law Group today at 973-228-1795, or visit one of our three New Jersey locations, to learn more about how we can make the process easier for you and your family.