CONFUSED ABOUT THE DIFFERENCE BETWEEN A WILL AND A TRUST?

If you are confused about the difference between a will and a trust, you are not alone. Both documents help protect families and indicate who will receive certain assets and make decisions upon a family member's death. However, wills and trusts operate very differently, and it's important to understand their differences. 

The Will Defined

A will is a written document that spells out how your property will be distributed when you die. It must be signed and witnessed. A will can be revoked or amended any time before the maker's death. A will cannot make any provisions for incapacity because it only comes into existence when the maker of the will dies.

A will lets you direct who you would like to receive your assets and who you want to raise your children upon your death. However, those are the only main things that a will can accomplish. If you die with a will in existence, your family will have to go through a court process known as probate. Probate is a public process that can also be time-consuming and expensive.

The Trust Defined

A trust, on the other hand, is a written agreement designating someone (a trustee) to be responsible for managing your property. A revocable living trust is the most common type of trust, and it holds the title to your property while you are alive. A revocable living trust makes it easy to transfer your assets to people you choose in the event of your death or incapacity. While you are living and are mentally competent, you are the trustee in control of your property, and you can change or dissolve the trust at any time.

When you die with a trust in place, the assets that are in the trust transfer directly upon your death to your heirs and your family avoids the public probate process.

Which is Best?

Every family is different, and it is difficult to make generalizations about whether a will or a trust is better overall. However, in general if you have minor children, a child or grandchild with special needs, have a certain amount of assets (valued at more than $100,000), or own real estate, a trust may be the best option for your family. The best way to determine the best course of action for your family is to consult with knowledgeable New Jersey estate planning attorneys who can develop the most effective plan for you.

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