Two core documents used in estate planning are a will and a living trust. Both are intended to control the management and distribution of a decedent’s property, so it may seem that they are redundant to some degree. However, they have differences in functionality that may make it advisable to have both. And, in fact, they can work together to achieve a more efficient administration of the decedent’s estate.

A will is a legal document that specifies how the creator (known as the testator) wants his or her property distributed after death. A will is only a written set of instructions, so the ownership of assets is retained by the testator until death. At that point, the will must go through probate, the court process of administering a testator’s estate and supervising distribution of its assets.

Like a will, a living trust distributes wealth from the creator (known as the settlor) to beneficiaries. However, the trust is a separate legal entity to which the settlor transfers ownership of designated assets. The settlor serves as trustee during his or her lifetime and thus has nearly unlimited control of the trust until death. The settlor can sell, transfer and encumber the trust assets. He or she can also add or remove beneficiaries for any reason or no reason at all.

Upon the settlor’s death, the assets in the trust do not go through probate. Instead, the successor trustee named in the trust takes over its management and distributes its assets to the designated beneficiaries, all of which is done privately. Since probate can be a lengthy and expensive proceeding, placing most of the assets in a living trust saves time and money.

Nevertheless, a will can serve a valuable supplementary purpose, known as a “pour over” provision. A trust only controls the property that is transferred to it, so any assets the settlor fails to include may be left without a beneficiary. A will, on the other hand, typically includes a residuary clause, directing how to distribute any of the testator’s property at time of death that is not named in the will or otherwise disposed of. The clause can provide that the residuary of the estate goes to the trust, where it will be distributed according to the trust terms. This is an important reason a person planning their estate should consider creating both a trust and a will.

The Law Offices of James C. Zimmermann has an extensive estate planning practice with five offices across Sussex, Bergen and Passaic counties in New Jersey. Call 973-764-1633 or contact us online for a free initial consultation.