Living Trust Lawyer in NJ

Anyone researching estate planning will inevitably come across the topic of living trusts. These legal entities can serve as an important part of an estate plan that requires special consideration due to the nature of the assets and family dynamic of the plan’s creator.

While living trusts can be an excellent tool for certain individuals, they are not always necessary, and sometimes can even make a relatively simple situation unnecessarily complicated. Read on to find out more about what living trusts are, how they work, and whether you should be considering one in your estate plan.

What Is a Living Trust?

A trust is a legal entity that is funded with assets of the trust maker, and placed into the care of a trustee for the benefit of one or more beneficiaries. For a living or “inter vivos” trust, this occurs while the trust maker is still alive.

Living trusts come in two formats: revocable and irrevocable. They are created through the formation of a trust document which will lay out instructions for how assets in the trust will be held, managed, and distributed.

When a living trust is made to be irrevocable, the instructions within the trust for managing the assets cannot be altered after its creation. This means that the assets effectively move out of the control of their original owner and will be managed by the named trustee going forward. This is not a decision to be made lightly, as it is a permanent choice, and typically irrevocable living trusts are created with an eye on avoiding estate taxes. Given that New Jersey does not currently have an estate tax, and the federal exemption is above $10M per individual, most people do not need to consider creating this type of entity.

When a trust is revocable, it can be altered or revoked entirely at any time during the life of its creator. Once the creator of the trust passes away, it becomes irrevocable and the assets within the trust must be managed and distributed according to its instructions. Unlike the irrevocable living trust which is only necessary in very specific circumstances, a revocable trust has many benefits that may apply to a broader section of the public.

Benefits of a Revocable Living Trust

The primary reason that most people create a revocable living trust as opposed to a standard last will and testament is to avoid the probate process. Probate involves gathering one’s estate and having an executor named in the last will pay off any outstanding debts and distribute the remaining assets according to the will’s instructions.

In some states this process can be very cumbersome, and clogged court systems can result in delays of months or even years. Fortunately, in New Jersey probate is not considered as difficult to deal with as in many other states across the country. But what if someone holds assets in multiple states?

If a person has many properties or investments spread across multiple states, then using a revocable trust is likely a very good idea. When they pass away, rather than having to hire attorneys in each state where they hold assets to carry out the probate process, the trust will avoid this undertaking completely and instead pass all of the property to the beneficiaries named within the trust document automatically. In this situation, a great deal of time and money can be saved by using a revocable trust instead of a last will.

Other concerns that may cause someone to opt for a revocable trust over a last will include added control over their assets and the ability to keep their assets private, as anything going through probate will be on the public record.

Privacy alone, absent special circumstances, is usually not enough of a reason to create a revocable trust. However, the ability to exert more control over one’s assets may be. Trusts can contain very specific instructions for how a beneficiary is to receive their distribution of the assets, including options like:

• Holding all of the assets until they reach a certain age
• Distributing for health, education, and welfare up to a certain age
• Delivering pieces of the estate to the beneficiary over a period of time

In addition, trusts can shield assets from the creditors of a beneficiary, giving peace of mind to anyone who wishes to give their assets to someone who might have money issues now or in the future.

Many of the same options for distributing assets through a revocable trust can be done using testamentary trusts, which are clauses within a last will that create a trust if certain conditions exist at the time of the will maker’s passing, for example the existence of minor children.

Downside of Using a Trust

Living trusts can be an excellent estate planning option for people in certain situations, such as those with many properties out of state or beneficiaries that need special attention. However, there are some downsides to using a living trust that should be considered before moving forward.

First, it should be mentioned that creating a living trust involves more legal work than creating a last will and testament, and as such will typically involve higher legal fees to create. These fees may be offset by the savings of avoiding probate, but that will depend on the specifics of an individual’s estate.

Second, it’s important to understand that a living trust requires constant maintenance to remain up to date. When someone uses a living trust in their estate plan, any new property acquired will need to be titled in the name of the trust and not their personal name, or it will not be included in the trust and cannot be governed by its instructions.

Last, it should be noted that just because someone has a living trust does not mean that they will completely avoid probate when they pass away. This is because it’s unlikely that every piece of property owned by someone will be held within the trust at the time of their passing, as people tend to acquire new property throughout their lives and may choose not to title all of their property in the name of the trust. Any property not in the trust at the time of the individual’s passing will go through probate, and be distributed either according to the state’s intestacy laws or instructions provided in a pour-over will.

A pour-over will is a catchall document that states that anything not included in the trust at the time of its creator’s passing will be distributed according to the instructions contained in the pour-over will. This is designed to avoid having property distributed through the state’s intestacy laws, which are complicated and often result in unintended beneficiaries receiving a portion of the estate.

Should You Hire an Attorney?

Ultimately, the decision of whether or not to include a living trust in one’s estate plan will come down to the specific details of their assets and family dynamic. When you work with an estate planning attorney, they will review the entire estate to determine whether there are any potential issues that may arise based on the different options available, and advise you as to which method is best suited for your needs.

At Rosenblum Law, we offer affordable flat-fee estate plans customized to meet the specific goals of our clients. We use innovative technology and a hands-on approach to provide an estate plan that covers all the bases and can be created in just a few hours of your time. Call us today to get started with a free consultation.