Estate planning may not be at the top of most New Jersey residents' to-do lists. Contemplating mortality doesn't make for lively dinner conversation. However, you should consider it sooner rather than later, since no one knows what could happen in the future.
As you sit down to discuss the type of plan that will best express your goals and wishes, you may have heard a question you didn't anticipate: "Have you considered a revocable living trust as part of your plan?" More than likely, you hadn't since you only considered a basic estate plan. Aren't trusts for the rich? Actually, many people could benefit from this type of trust, but understanding both the advantages and disadvantages first can be very important.
What could you gain from a revocable living trust
This type of trust could provide you with the following advantages:
- Privacy: Unlike a will, the details of your trust generally do not become eligible for public view. Since the law does not require filing this document with the court clerk upon your death, it can remain private.
- Organization: Since your assets go into the trust through a process called "funding the trust," you will need to track down titles, account statements, stock certificates and other documents regarding your assets. This process forces you to organize your financial life and understand exactly what makes up your estate.
- Incapacitation: If an illness or injury makes it impossible for you to take care of your finances and make decisions on your own (even temporarily), your successor trustee can step in and takes care of the trust's assets. This could potentially help eliminate the need for your family to go through certain complex court processes, such as conservatorship proceedings.
- Probate: If you bequeath your property through a will, it must go through probate. During this process, your family members won't have access to the assets you intend for them to receive. With a trust, they could have access to them immediately.
Essentially, you might be able to avoid numerous court processes through the use of a revocable living trust.
It's not all good news, however
The above may make a revocable living trust attractive, but there are downsides as well:
- Funding: Yes, this was mentioned as an advantage above, but it can also be problematic, time consuming and frustrating. It may not be easy to find all of the documentation you need, and transferring title to your assets can take a significant amount of time and effort.
- Cost: Setting up a revocable living trust comes with a cost, especially if you want it done right. However, many people ultimately find it money well spent.
- Contests: The amount of time that your beneficiaries and heirs have to file a contest to your trust is typically substantially longer than for a will.
- Last will and testament: Executing a trust doesn't necessarily mean don't need a will. What happens if you forget to put all your assets into the trust? Without a will, the state will determine who receives those assets not titled to the trust.
Even with these perceived "cons," depending on the situation, a trust may still be the best way to achieve your estate planning goals. In addition, you don't have to create and implement a trust alone. In fact, it would probably be in your best interest to take advantage of the legal resources available to you to make sure that everything complies with current law and accomplishes your goals the first time. Your family may thank you.