For most individuals, the central reason to create an estate plan is to ensure that their property passes according to personal wishes once they are gone. If that is one of your goals, you must also think carefully about how your estate will be handled during the probate process. A key decision is whether to rely primarily on a Last Will and Testament or a Trust to pass on your assets. To offer some guidance, the attorneys at Legacy Care Law Firm explain Will and trust basics and highlight important differences to help you make the right choice for your New Hampshire estate plan.
The Role of a Last Will and Testament
A Last Will and Testament remains the most widely recognized estate planning document. In its simplest form, it communicates your intentions regarding property, dependents, and other important matters at the time of your death. A Will allows you to make detailed gifts, such as leaving a family heirloom or a particular stock portfolio to a chosen beneficiary. You may also distribute percentages of your overall estate, such as leaving half of everything you own to one child and the other half to another.
A Will also serves an important administrative purpose. Within the document, you appoint an Executor who will be responsible for overseeing probate once you have passed away. The Executor ensures that debts are paid, assets are inventoried, and gifts are transferred according to your instructions. In addition, a Will provides your only formal opportunity to nominate a Guardian for minor children, ensuring that your wishes about who will raise them are clear if tragedy occurs.
Trusts Explained
A Trust is not simply a document but rather a legal relationship involving three parties: the Grantor, the Trustee, and the beneficiaries. The Grantor is the individual who creates the Trust and transfers assets into it. The Trustee is the person or institution that manages those assets for the benefit of the beneficiaries, who are the ultimate recipients of the property.
Trusts fall into two main categories. A testamentary trust is created within a Will and only becomes effective when the Grantor passes away. An inter vivos trust, also known as a living trust, takes effect during the Grantor’s lifetime once the necessary legal steps are completed. Living trusts are commonly used in modern estate plans because they provide flexibility and can help avoid probate.
The terms of the Trust are set forth in a written agreement. That document specifies how and when assets are to be distributed to beneficiaries. For instance, the Trustee might be directed to release funds for a child’s education or to stagger distributions over a number of years to a young beneficiary who may not be prepared to manage a large inheritance responsibly.
Comparing a Will and a Trust in New Hampshire
Choosing between a Will and a Trust is a significant part of the estate planning process. Because estate planning touches on numerous goals, the decision to use a Will or a Trust as your primary distribution tool is rarely straightforward given that each offers advantages and limitations. Before making such an important choice, it is best to consult with an experienced New Hampshire estate planning attorney. There are several common considerations, however, that may influence your decision, such as:
- Privacy Considerations: One significant distinction between a Will and a Trust is that a Will becomes a matter of public record during probate. This means that the details of your gifts, as well as the overall size of your estate, are accessible to the public. A Trust, on the other hand, does not pass through probate and remains private. Many families prefer this option when they want to keep financial matters confidential.
- Probate Avoidance: Assets titled in the name of a Trust are not subject to probate in New Hampshire. This means they can pass directly to beneficiaries without the delays, costs, and public nature of the probate process. For families who wish to transfer wealth quickly and privately, a Trust can be an appealing option.
- Distributing Assets Over Time: Some individuals worry about leaving a large lump sum to a young or inexperienced beneficiary. A Trust agreement permits you to structure distributions in stages, such as providing a portion at age 21, another at 25, and the remainder at 30. This arrangement can help prevent reckless spending and encourage financial maturity.
- Flexibility in Estate Planning: Another benefit of a Trust is its adaptability. A revocable living trust, for instance, can be amended or revoked entirely while the Grantor is alive, allowing for adjustments as circumstances change. In contrast, a Will can be updated through a codicil or by drafting a new Will, but those changes do not offer the same level of ongoing management flexibility that a living trust can provide.
- Planning for Minor Children: New Hampshire law, like the law in most states, prevents minor children from inheriting property outright. If you have young children or plan to start a family, a Trust allows you to safeguard their inheritance until they reach adulthood. The Trustee can also be given authority to use Trust funds for the child’s health, education, or general support until that time.
Is a Will or Trust Right for You?
There is no one-size-fits-all answer to whether a Will or a trust is right for your New Hampshire estate plan. Some New Hampshire residents may find that a carefully drafted Will meets their needs, especially if their estates are relatively simple. Others may prefer the privacy, flexibility, and probate-avoidance advantages of a Trust. For many people, the answer is not one or the other. Instead, a Will and a trust are used together as part of a comprehensive estate plan. For example, you might choose to use a trust as your primary asset distribution tool with a “Pour-Over” Will serving as a backup tool that transfers any remaining assets into a Trust at death, ensuring comprehensive coverage. Having a Pour-Over Will in your estate plan ensures that assets you inadvertently left out of your trust or that were added to your estate shortly before your death get “poured over” into your trust to avoid unintentionally leaving behind an intestate estate.
Can We Help You Decide Whether a Will or Trust Is Right for Your New Hampshire Estate Plan?
For more information, please join us for an upcoming FREE seminar. If you would like assistance deciding whether a Will or a trust is right for your New Hampshire estate plan, contact our estate planning attorneys in our North Andover, Woburn, and Beverly offices at (978) 969-0331. Our Salem and Nashua, New Hampshire office can be reached at (603) 894-4141.
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