When you live in New Jersey and decide to make significant decisions about your future, you can utilize a will and a trust. Knowing the differences between them can help provide the protection you require for your assets or children.
Understanding the differences between a will and a trust is essential
A will and a trust are legal documents allowing you to name who you want to receive your property after you pass away. You can also choose a guardian for your minor children using a will. The three most significant differences between a will and a trust include the following:
- Timing
- Control
- Probate
A will does not come into effect until you die. If you use a trust, your assets are placed in it and managed until you die. After passing away, they’ll be distributed per your wishes. You control who is named your trustee, the person designated to handle the distribution of your assets. Another significant benefit of using a trust is its ability to avoid probate. Without this legal document, the state will decide how your assets are distributed.
Protection for your children
If you’re concerned about one or more children who have problems managing money, you might be afraid they will spend all the funds you leave to them in their inheritance. Establishing a trust is an excellent way to protect your child. The money in the trust will be managed by a trustee, ensuring it isn’t squandered.
Managing assets of minor children
Using a trust can also be helpful if you die leaving minor children behind. If you have a trust, the assets in it will be managed by a trustee and expenses for the minor children will be taken care of as needed.
Protecting a spouse in a second marriage
Utilizing a trust can also be beneficial if you didn’t create a prenuptial agreement to address who receives your estate when you pass away. You could set up a trust to provide income to your surviving spouse and preserve and control assets for any children from a previous marriage.
Understanding the differences between a will and trust can make you better informed to make the right decisions when leaving assets behind or if you have children.