Advantages of Creating a Living Trust in New Jersey
New Jersey residents may wonder if designing a living trust is worth the cost and effort. New Jersey estate planning normally involves creation of a will. A will may or may not create a trust at the time of death.
People usually create a revocable trust, also called a living trust, in order to avoid probate. The probate process involves determining if a will is properly executed and appointing an executor to act on behalf of the estate. A living trust is created during the lifetime of the beneficiary, as opposed to after death under the terms of a will.
The process of creating a trust involves appointing a trustee to hold legal title to property for the beneficiary of the trust. Individuals may be their own trustees.
Advantages of a Living Trust
There are several advantages to creating a living trust. The main benefit is the time and expense saved from avoiding the probate process.
Privacy is another significant benefit of a living trust; a will becomes public record when it goes through the probate process. A living trust is not filed with the court, so the contents are shared only with beneficiaries.
Additionally, New Jersey-based assets such as bank accounts, stock in New Jersey corporations and real property in New Jersey are subject to state estate and inheritance tax liens if owned individually.
After death, these assets cannot be transferred until tax waivers to release the liens are obtained from the New Jersey Transfer Inheritance Tax Branch. Obtaining these waivers may take over a year. Putting the assets in a living trust means the liens are not imposed upon death.
A living trust is also an advantage if property is owned in multiple states. Typically, probate proceedings are required in each state where the deceased owned property. However, probate in these instances can be avoided by transferring the title to the property into the living trust.
Finally, living trusts provide a distinct advantage if the grantor becomes incapacitated. The trustee is normally allowed to manage the assets transferred to the trust before the incapacity.
Creating a Living Trust
With the help of an estate planning attorney, creating a living trust in New Jersey is a simple and efficient process. To create a living trust:
- Craft the trust document that names the trustee and specifies who inherits trust property.
- Sign the document in the presence of a notary public.
- Transfer property into the name of the trustee.
A living trust is a valuable gift to leave loved ones after death. An experienced New Jersey estate planning attorney can help to structure a trust appropriately, determine whom to appoint as a trustee and assist with establishment of the trust.