SHOULD I HAVE A TRUST OR A WILL?

UNDERSTANDING THE DIFFERENCES.

AND… DOES IT MATTER?

 

fniemann@hnlawfirm.com

 

NJ Trusts Avoid Probate in NJ

 

NJ Trusts are often used in place of wills partly as a way to avoid probate proceedings and to keep financial matters private. There are other reasons to set up a trust rather than a will.

 

A NJ trust can establish strict guidelines for distributions to young beneficiaries and others you are concerned about. 

 

A will generally spells out a one-time distribution of assets, while a trust can establish conditions to the distribution of assets and family property over time.  For example, if you have young children or grandchildren, a trust can be written so that they get their inheritance in installments upon certain milestones, such as a birthday, graduating college or marriage.  This way their funds are not squandered like the "prodigal son or daughter” referred to in the Bible.

 

Frequently Asked Questions About
Trusts in New Jersey

 

Here are some common questions and answers about trusts and wills in New Jersey.

 

Q: What goes into setting up a trust or a will in New Jersey?

 

A: A trust document is written and is legally enforceable.  Either a trust or will can be simple or be more complicated, and therefore more expensive.

Costs vary widely depending on the size and complexity of the estate, but many attorneys will charge a flat fee for either document. Be sure to get a quoted fee from your attorney before you proceed.

 

Once the document you pick is written up, be sure to let family members or those named in the trust or will know where to find it. Anybody who has possession of your trust - often your attorney - is obliged to produce it upon your death, if requested by the trustee named in your trust.

 

"It's common to leave copies of trusts with your attorney or designated trustees”, say Fredrick P. Niemann, Esq., a New Jersey lawyer located in Lyndhurst (Bergen County) and Freehold (Monmouth County) New Jersey.

 

"Confiding with trusted family members about the location of your important family documents is absolutely essential in the event of unexpected death or incapacity.

 

Q: What role does the probate court play in either scenario?

 

A: One common reason for setting up a trust, rather than a will, is to avoid court proceedings, known as probate.

 

Wills must be filed in the probate part of the NJ Superior Court to be probated, meaning they become public documents. If your will is challenged, court proceedings can sometimes be costly and time-consuming, taking as long as a couple years, if there is a will contest or contentious family relatives.

 

Probate and Administrative court fees come out of the estate; costs vary between ½ percent and 3 percent of the estate.

 

The use of a will is more common in New Jersey with simpler probate procedures.  Usually the presence of only one person close to the deceased, often the executor of the will or a family member is required to probate a will.

With a trust, your assets are simply transferred to the designated trustee (or trustees) upon your death. A brief "pour-over will" usually declares that any remaining assets not within the trust at time of death be transferred into the trust upon your death.

 

You can also set up a "trust within a trust" or a trust within a will (known as a testamentary trust), for a single beneficiary or multiple beneficiaries, like children or parents.

 

Q: Who's responsible for overseeing my will or trust in New Jersey?

 

A: The executor you name in your NJ will carries out the instructions of your will. A trustee plays a similar role in your trust, but usually for a much longer time- typically until all assets are distributed to the beneficiaries. A bank or financial institution can be named to act as a co-trustee.

 

A trustee is also usually given some discretionary authority if and when distributions should be made to beneficiaries.

 

While the titles sound simple, the responsibilities of executors and trustees are significant. They include paying or negotiating with creditors, notifying and paying beneficiaries and creditors, filing the final income tax and estate tax return and managing any investments.

 

Q: What happens to the debt I leave behind?

 

A: Whether you have a will or a trust, any debt you have at the time of your death in New Jersey will need to be settled. If your assets aren't liquid, creditors could force the sale of your property to get paid.

 

Of course, a trustee or an executor could negotiate with creditors to repay debts over time.

 

Q: Are there other benefits to setting up a trust in New Jersey?

 

A: Another reason some people prefer trusts is that it makes it easier to handle your health and medical care if you become medically incapacitated. You can stipulate in your trust that your assets be used to pay for your care, and the trustee will be able to disburse money from your estate without going to court.

Without a trust, the person who becomes your guardian could run into complications getting power to tap your assets, especially if the trustee is different from your executor.

 

If you have any questions about whether you should have a New Jersey trust or a Last Will & Testament prepared by a qualified NJ attorney, then please contact Fredrick P. Niemann, Esq. at fniemann@hnlawfirm.com or call him toll-free at (888) 800-7442.

 

New Jersey Trust attorney serving these New Jersey Counties:

 

Monmouth County, Ocean County, Essex County, Cape May County, Mercer

County, Middlesex County, Bergen County, Morris County, Burlington County,

Union County, Somerset County, Hudson County, Passaic County