Almost everyone thinks of a Last Will and Testament when they consider estate planning. However, under certain circumstances, one of the most useful estate planning tools is the revocable living trust. Estate planning is not just for the rich and famous or extremely wealthy. It is important for every person to have a financial plan for their beneficiaries to follow after they pass away. One of the options available is the revocable living trust.
Revocable Living Trust
A revocable living trust is an estate planning document that divides assets following a person’s death, similar to a last will and testament. Assets may include a family home, vacation property, savings or checking accounts, investments, retirement plans, or even family heirlooms. The revocable living trust is created during a person’s lifetime and is, as the name suggests, revocable. The assets of this trust may also be used by the creator during his or her lifetime, which is quite different from a last will and testament.
Differences Between a Last Will and Testament and a Revocable Living Trust
Due to the fact that most people seem to gravitate towards a Last Will and Testament, this listing shows the differences between a revocable living trust and a last will and testament. Understanding these differences will help you determine which estate planning document is right for you, or if you may want to consider including them both in your estate plan.
- Wills are completely public information as they go through the probate process, trusts are completely private.
- Wills distribute an estate to adult beneficiaries following someone’s death, whereas a trust allows the distribution of assets to minor children incrementally throughout their lives, which allows a guardian to care for them following his or her death.
- Wills only divide and distribute property following a death, whereas a trust can easily transfer assets to beneficiaries during a person’s lifetime, or after a person’s death.
- Wills are required to go through the probate process, which is a legal process involving the courts, whereas a trust is private and never needs to go through the probate process.
- Wills are unchangeable after they are executed, and can only be changed by executing an entirely new will. A trust can be flexible and can be changed throughout a person’s lifetime.
- Trust assets receive the benefit of FDIC protection up to $250,000 per each beneficiary up to a total amount of $1,250,000.
- Wills tend to be easily challenged, whereas trusts are more difficult to challenge after a person’s death.
Contact an Experienced Estate Planning Attorney
If you are considering beginning the estate planning process, you likely have many questions. We would welcome the opportunity to answer your questions and help you determine what estate planning documents are right for your unique financial situation. Contact an experienced New Jersey estate planning attorney at the law firm of Giro Law at 201-690-1642 to help you understand how to protect your legal rights and how you can best protect your assets for your beneficiaries following your death.