Wills and Trusts FAQ

Here are some common questions and answers about wills and trusts.

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

A: Each 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 drawn 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 will- often your attorney- is obliged to file it in court upon your death.

“It's common to leave copies of trusts with your attorney or designated trustees”, say Fredrick P. Niemann, Esq. of Hanlon Niemann, a New Jersey law firm located in Lyndhurst (Bergen County) and Freehold (Monmouth County) New Jersey.  “Confiding with trusted family members on the location of your important family documents is absolutely essential in the event of unexpected death or incapacity.

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

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

Wills must be filed in a probate court to be executed, meaning they become public documents. Court proceedings can be costly and time-consuming, sometimes taking as long as a couple years, if there is a will contest on contentious family relatives.

Administrative court fees come out of the estate; costs can be between 1 percent and 3 percent of the estate.

The use of a will is more common in states like New Jersey with simpler probate procedures.  These are hearings with an uncontested will. 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 be transferred into the trust upon your death.

You can also set up a "trust within a trust" or a trust within a will, usually for a single beneficiary.

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

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

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

While the titles sound simple, the responsibilities of executors and trustees are considerable. They include paying or negotiating with creditors, notifying and paying beneficiaries and creditors, filing the final income 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 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?

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

Without a trust, the person who became your guardian could run into complications getting power to tap your assets.

NJ Estate Planning | Will | Trust | FAQ