Are there any alternatives to a will?
Wills are the most-common legal instrument used to pass property onto others and make critical decisions about your end-of-life and what happens next. However, they aren’t the only option available. In fact, while having a valid will is always going to be recommended, you may wish to consider alternatives that can assume many of the duties a will typically performs. These alternatives can directly address a will’s shortcomings, including the fact that all assets transferred through a will must first go through probate.
Common alternatives to a will include living trusts, designating assets, and joint tenancies. Each of these options has its own pros and cons and should be seriously weighed and considered. None are capable of entirely replacing a will on their own, but they can collectively come into action following your death to achieve your goals with as minimal drawbacks as possible.
If you are looking to find an alternative to a will or are concerned about taxes or having your assets caught up in probate, contact an experienced New Jersey estate planning attorney at the Van Dyck Law Group. Our attornies can walk you through your options and help counsel you through the important decisions regarding how you will enact your wishes once you have passed on.
Writing out a living trust is the most common way to pass assets outside of probate, and it is considered a viable alternative to a will. A will works to distribute your assets after death, while a living trust is established while you are alive.
When a living trust is formed, all of the assets and properties you select will be placed “in trust.” These are then managed by a trustee, who can distribute them according to your wishes at the designated time or situation. Trusts can also be maintained over a long period of time, paying out proceeds from investments or other holdings on a regular schedule.
Much like a will, many forms of a living trust are able to be changed or revoked by you at any time. Though you have a designated trustee, you can choose to remain in control of your assets for the remainder of your life.
There are also trusts known as “irrevocable” trusts because they leave the control of the person creating them. There are potential tax advantages to such a trust, as well as other benefits that can pertain to legal goals or requirements. Discuss these options with an estate planning attorney to learn more.
People may choose to place nearly all of their worldly assets into a living trust instead of a will because a living trust enables those assets to bypass the probate process in many instances. In will-only estates, probate fees, taxes, and other costs can swallow up to 10% of the total estate’s value. That is a sizable amount of money that might better be used by beneficiaries or your chosen purpose.
Additionally, living trusts allow for the continuity of care for your estate. Because trusts transfer immediately to the care of the trustee once activated, no one will have to wait for the probate process to conclude before assets are distributed. Generally speaking, your appointed succeeding trustee will be able to distribute the assets immediately, unless directed otherwise, as there is no reason to have to go through a court approval process.
Designating Beneficiaries on Eligible Accounts
Note that, in addition to placing assets in a trust, you also have the option to designate direct beneficiaries on many of your most important holdings. That includes your bank accounts, retirement funds, real property, and certain investments. Any asset or instrument designated “transfer upon death” will allow the holdings to be immediately dispersed to your chosen loved ones upon your death, without them having to endure the lengthy and expensive probate process.
Many instruments, such as life insurance and retirement plans, request a designated beneficiary by default. Even though designating beneficiaries for these instruments is just a matter of filling out a simple form, many people do not take the time to do so. Know that many accounts, such as your bank accounts, life insurance policies, pension plans, IRA accounts, and stocks and bonds are all accounts that are payable on death if there is a listed beneficiary.
If you are interested in designated beneficiaries on your eligible accounts, you’ll just need to request the appropriate forms from your bank or brokerage company. It is important to remember that if you are married, some of your accounts may belong partially to your spouse. Even if you would like your assets to go to them, it is still advisable to have forms filled out designating that you wish to transfer the accounts’ contents entirely to their control in order to ensure smooth disbursement once the time comes.
Jointly Owned Property (Joint Tenancies)
Another way to ensure that your property can avoid probate is to consider jointly owning the property. For instance, if your house belongs to both you and your spouse, in the event of your death, the property will automatically belong to them.
Joint tenancies are most common with married couples, but it is not a requirement to be married to hold a jointly owned property. In fact, you can jointly sign a title or deed with any party you choose, in most instances. However, things can be slightly more complicated if you are trying to achieve joint tenancy with someone other than a spouse. The law automatically presumes that assets will pass to the surviving spouse, but with someone else, such as an adult child, the assets are presumed to not automatically pass to the surviving joint tenant unless there is a “Joint Tenancy Agreement”. Such an agreement must be documented and signed, confirming that the parent intends for the asset to be passed to the adult child — or whatever joint owner will now hold the property.
Do I Need a Will at All?
Yes. While any assets held or transferred outside of your will can still be dealt with according to your plans, all estates should have a will. This document should, at a bare minimum, name an administrator of the estate and provide basic instructions for carrying out the decedent’s wishes. Even if the will is redundant with other documents, such as one describing preferred funeral and burial arrangements, a will is fully recognized by state and local laws. It is the first document courts and other legal professionals will look to when administering the estate and asking important legal questions about what the decedent would have wanted.
Contact an Experienced Estate Planning Lawyer
Planning ahead for what happens when you pass allows you to know with confidence that your intentions are clearly documented and put in place according to the law. It also can prevent many legal headaches for your loved ones in the future. If you want to be able to skip the probate system entirely, reduce your tax burden, plan for charitable giving, or achieve other goals, you have options. While having a will is vital, know that there are other steps that you can take to ensure that your loved ones won’t have to wait months or years to access the assets that you want them to have.
If you are interested in estate planning, contact an experienced estate planning lawyer from the Van Dyck Law Group. Our firm has decades of experience in helping people with their estate planning. We would love to sit down with you, listen to your story, and help you plan so that your legacy is carried out exactly how you want it to be.
Contact us today online or by calling (609) 293-2562 to schedule your no-risk, confidential consultation. We are here for you today so that your wishes will be carried out in the future.