Most people know they need a will. And they’re right – a will is one of the most important documents you’ll ever sign. But there’s a common misconception that a will is all you need. For many New Jersey families, a will is the starting point, not the finish line.
A revocable living trust can help fill some of the gaps that a will, by its nature, just can’t address. Here’s a look at the differences, and why a trust might be worth considering.
What a Will Does Well
A will lets you decide who gets your assets when you pass away, who manages that distribution (your executor), and if you have minor children, who you want to serve as their guardian.
But a will has a built-in limitation: it only takes effect after you pass away, and it has to go through probate.
What is Probate, and Why Does It Matter?
Probate is the court-supervised process of validating your will, paying your debts, and distributing your assets to your beneficiaries. Luckily, in New Jersey, probate is a relatively streamlined process. However, it’s still a public, court-supervised process that takes time.
Here’s what that can mean in practice:
- Privacy: A will that goes through probate becomes public record. Anyone can see who got what. A living trust, by contrast, is generally administered privately. The details of your estate stay within your family.
- Time and Cost: Probate isn’t always expensive, but it does add steps. A properly funded living trust can allow your assets to pass to your beneficiaries without going through that court process, which can save time and reduce administrative friction.
- Out-of-state Property: This is the big one. If you own real estate in another state, your estate may face a separate probate proceeding in that state. This is called “ancillary probate:” a New Jersey court cannot distribute property situated outside of its jurisdiction, so a court in that state will have to do it. If the out-of-state property is owned via the living trust, this can often avoid the need for ancillary probate.
What About Incapacity?
This is one of the biggest advantages a living trust offers that a will simply can’t.
A will only works after death. But what if you’re alive but unable to manage your own affairs, due to illness, injury, or cognitive decline? A revocable living trust can name a successor trustee to step in and manage your assets for your benefit, typically without needing court intervention. With just a will, your family may need to pursue a guardianship or conservatorship to gain that authority, which can be time-consuming, costly, and stressful during an already difficult time.
In this way, a trust can function both as an estate planning tool and an incapacity planning tool.
What a Revocable Living Trust Doesn’t Do
I want to be clear about the limits. A revocable living trust is not a magic shield.
- It doesn’t protect assets from your creditors. Because you retain control over a revocable trust, creditors can still typically reach those assets.
- It doesn’t eliminate the need for a will. Even with trust-based estate plans, we draft a “pour-over” will that catches any assets you didn’t get around to transferring into the trust and directs them into it at your death.
- It doesn’t reduce taxes on its own. A revocable living trust generally doesn’t change your income tax or estate tax picture while you’re alive.
- It requires some up-front work and ongoing maintenance. You have to actually fund the trust. That means retitling property, like your home, bank accounts, and brokerage accounts, into the trust’s name. A trust that isn’t funded is like a safe with nothing inside of it.
Who Should Consider a Living Trust?
There’s no one-size-fits-all answer, but a living trust may be worth exploring if:
- You own real estate in more than one state.
- You want to keep your estate affairs private.
- You’re concerned about incapacity planning and want to avoid court involvement.
- You have a blended family and want to control how assets flow to children from different relationships.
- You have a beneficiary who may need help managing an inheritance.
The Bottom Line
A will is essential, but it’s not always enough on its own. A recovable living trust can work alongside a will to give you more control, more privacy, and a smoother path for your family.
The best way to figure out whether a trust makes sense for you and your family is to talk through your specific situation with an estate planning attorney. What works for one family may not be right for another, and a good plan is built around your actual goals, not a template.