People call our office looking for a “simple” will and powers of attorney. For most folks, estate planning is something on a to-do list that gets checked off when completed. Our clients, however, understand that estate planning is an ongoing process that requires maintenance over time to ensure that the client’s goals are met.
Occasionally, folks come into the office wanting a living trust because they “hear” (usually from friends) that the living trust does this or that. Some of the time, what they have to say is correct – a living trust does have benefits over a simple will. Let’s discuss what those are.
1. Living Trusts Are Completely Revocable. One of the primary goals that clients have for their estate plan is that the plan must allow them to maintain control and flexibility during their lifetime. Living trusts can be changed at any time during the person’s life. You can revoke it entirely, amend some portions of the trust, if you like – all without disturbing the protections it affords in cases of disability or death. While you can change a will during your life time, each execution of the will has to be carefully done or else it risks noncompliance with the court system.
2. Living Trusts Mean Your Estate Administration is Completely Private. When a person dies with just a will or “intestate” (without a will), it means that the courts have to get involved with the process. The will needs to be submitted to the Surrogate (here in NJ), who approves the will or doesn’t and issues powers to the executor called Letters of Administration or Letters Testamentary. This entire process is completely public. You know this to be true because of all of the reports of what celebrities have in their will and the challenges that can be raised to that will.
Compare that with a living trust. A living trust is a contract, which means, among other things, it’s entirely private. The public can’t find out who is named as a beneficiary of the trust or what assets are going where. That’s true for the regular public as well as a potential heir that has been “disinherited.” Unlike probate, where every document is public – a living trusts allows a person to plan their estate in privacy.
3. A Living Trust Is More Flexible Than A Will. Here, I’m really talking about the ability to add and remove assets from the trust during your lifetime. In addition, if you have a summer home in Florida or New York, leaving that property in a will likely means hiring an attorney in that state and paying the required fees to make the transfer. That can reduce the overall value of that property by 5% or more.
A living trust, on the other hand, allows the real estate to pass to your loved ones without that unnecessary travel and expense. Although there are grey areas when it comes to estate planning, I can say without a doubt that people with real estate in more than one state should absolutely have a living trust in place.
As you can see, a living trust offers significant advantages over a simple will. If you see yourself in one or more of these scenarios, you ought to visit with an estate planning attorney to learn about your options.
Posted by Victor J. Medina
Medina, Martinez & Castroll, LLC