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.
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.
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.
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.
To schedule a consultation with a team member today regarding your estate planning needs, please call 973-233-4396 at our Little Falls office for a free consultation or fill out our online form.