Setting up a Living Trust with a Passaic County NJ Attorney
A living trust, also known as a revocable living trust, is one way in which people protect their assets during and in the afterlife.
Estate planning is an important aspect of preparing for your family’s future that requires expert management. Depending on the circumstances of one’s financial life and wishes, different people will take different approaches to protect their assets during life and preparing them to be distributed to loved ones at the time of their passing.
A living trust, also known as a revocable living trust, is one way in which people protect their assets during and in the afterlife. In New Jersey, a living trust is a legal document that places your assets – including your valuables, real estate, vehicles, bank accounts, and investments – in trust during the course of your lifetime and specifies where you would like those assets to go upon your death. A living trust allows you to continue using these assets, as well as strictly control how and by whom they will be distributed upon your death. Therefore, you can continue to live in and use the properties named in the trust, operate the vehicles, and spend the money.
When one puts their assets into the hands of a trust, the trust becomes the technical owner of those assets. However, the person who creates the trust can change the written instructions for what will happen to the assets in the case of death at any time. This means the trust can be augmented or even eliminated during the course of your lifetime. Most people name themselves as the trustee to maintain complete control of asset management. Additionally, a successor trustee is named; this person will take over the trust in the case of the trust maker’s death and distribute the assets as specified in their written instructions.
Why have a revocable living trust?
The main benefit of having a revocable living trust in New Jersey is that it is protected from probate and interference by the state of New Jersey. Upon the death of an estate holder, there is generally a court procedure to approve the last will and testament before its specifications can be put into motion. Depending on the estate’s size, assets named under this will can be frozen for up to a year and a half if those assets value over $675,000. Additionally, the estate is responsible for various probate fees. Because New Jersey does not have a streamlined probate process, all estates for which there are a last will and testament must undergo this full process.
On the contrary, however, all assets within a trust are not subject to the probate process. As such, they can be distributed immediately based on your written specifications instructing distribution. Note that all assets within the trust, regardless of the state in which they reside, are subject to this probate protection, so probate laws in the other states in which you have assets can be bypassed as well.
Upon your death, the person you have named your successor trustee will manage and distribute your assets. They are bound by law to follow your specific instructions and abide by the dates and time frames you have outlined. For example, if you wish to withhold a child’s inheritance until they reach a certain age, your successor trustee will legally manage those assets in the trust until that time.
Another reason it is wise to place your assets in a revocable living trust is that though assets within are still subject to New Jersey estate tax and inheritance tax, court approval is never required for its formation, nor is the trust ever under the purview of public record, unlike a will, which becomes public record as soon as it is probated.
What assets shouldn’t go into a revocable living trust?
The more assets are in a trust, the bigger the benefit the trust-maker receives. Some assets, however, cannot or should not be placed into a revocable living trust. These assets include retirement savings and health savings accounts. A trust could be named as the primary or secondary beneficiary of a retirement savings account. Still, if one were to transfer the retirement savings into the trust, it would be considered a withdrawal of the account’s funds. A health savings account must have you as its owner; thus, it is wise instead to name the trust as the primary or secondary beneficiary.
Contact a Little Falls Living Trusts Attorney Today
At The Montanari Law Group, our estate planning attorneys support clients in Wayne, Clifton, Little Falls, and throughout Passaic and Essex counties in all matters regarding the establishment and management of revocable living trusts in New Jersey.