Margaret, a widow in her late 60s, is planning her estate to ensure that her sizable assets are efficiently distributed to her three adult children and her favorite charities. Like many in her situation, Margaret is exploring the best way to achieve this, considering whether to set up a trust, a will, or both.
Jason Marx, Partner in Tax, Trusts, and Estates at Mandelbaum Barrett PC, guides us through the important distinctions and synergies between wills and trusts. While these tools are not mutually exclusive, understanding their roles can help Margaret—and others like her—make informed decisions about estate planning.
The Role of a Will
A will is a foundational document in any estate plan. It outlines how an individual’s assets should be distributed after their passing. If Margaret passes away without a will (known as dying intestate), the state laws where she resides will dictate how her assets are distributed. This could potentially ignore her wishes to leave certain assets to charity or distribute her estate in a specific way among her children.
The Role of a Trust
A trust, on the other hand, can be established during Margaret’s lifetime to manage and distribute her assets. Trusts offer greater flexibility and control, allowing Margaret to make lifetime gifts, manage her assets, and even avoid probate for certain properties. By transferring assets into a trust while she’s alive, Margaret can convert them from probate to non-probate assets, streamlining the distribution process and potentially reducing delays.
Complementary Tools
Jason Marx emphasizes that a well-rounded estate plan often includes both a will and a trust. The will can capture any assets not placed in the trust, ensuring they are distributed according to Margaret’s wishes. Meanwhile, the trust can handle specific assets or charitable donations, offering privacy and potentially avoiding the probate process, especially in states where probate might be costly or time-consuming.
Handling Multi-State Assets
Margaret may also need to consider the implications of owning assets in different states, such as real estate in New York or New Jersey while residing in Florida. Jason advises that her will would control these assets, but using a trust could avoid the complexities of ancillary probate in multiple states, simplifying the overall estate administration.
Margaret’s situation highlights the importance of careful estate planning, especially when balancing the needs of family and charitable intentions. By understanding the roles of both wills and trusts, and how they can complement each other, Margaret can create a plan that ensures her assets are distributed efficiently and according to her wishes.
To contact Jason Marx, please call 973-607-1271 or via email at jmarx@mblawfirm.com