A primary goal of estate planning for many people is to avoid the sometimes lengthy and costly probate process. Creating trusts to hold your assets can be an effective way to transfer your property without requiring probate. For those who want to retain control over their assets during their lifetime but want those assets to pass to heirs directly, without court intervention, a revocable or “living trust” is often the answer. A revocable trust is one that you create to hold assets during your lifetime, but that you can control, change the terms of, or dissolve at will.
Control Your Assets in Your Lifetime; Avoid Probate at Your Death
When you create a revocable trust, you appoint a trustee to hold title to the assets for the benefit of the named beneficiaries. You may want to appoint yourself as trustee, and name a successor trustee to assume the role when you die. You will hold the legal title to the assets placed in the trust for the benefit of your heirs whom you have designated as beneficiaries of the trust after your death. As trustee of your own revocable living trust, you will still be able to fully control your assets being held in the trust, and they will pass to your beneficiaries without the necessity of probate.
While a revocable trust has the advantage of avoiding probate, it is taxed during your lifetime in the same way as any other asset, and is subject to state and federal taxes after your death.
Because you may continue acquiring assets after the creation of any living trust, it is usually necessary to also have what is called a “pour-over” will—this document will distribute any assets that have not been transferred to the trust.
Why Consider a Living Trust?
- Your distribution of assets will remain private. No one will have access to any information about it other than the beneficiaries. A will, in contrast, is filed with the Surrogate’s Court and becomes a matter of public record, something you may wish to avoid.
- If you own property in other states, ancillary probate proceedings will be required in each state where your property is located. By placing the property in your living trust, you can avoid these time consuming and costly ancillary proceedings.
- If you should become incapacitated, the trust allows for the continued management of your assets held in the trust by your named successor trustee.
- There is no 10-day waiting period to withdraw trust fund assets, so distribution of assets can begin immediately following your death; probate of a will cannot begin until the 11th day following a death in New Jersey.
- The trustee of the living trust will be able to withdraw and begin to distribute the trust assets without having to waiting to obtain an Inheritance Tax/Estate Tax Waiver from New Jersey Division of Taxation, as is required with a will. This, along with the lack of a waiting period, can expedite the distribution of assets among the heirs.
A revocable living trust is not right for every situation, and it does not provide the tax protection or asset protection of an irrevocable trust. But for those who want to retain full control of their property while they are alive, it does have certain advantages. Whether to use this as an estate planning device is something you should consider carefully after discussing it with your attorney.
Estate Planning Advice for the Jersey Shore Area
Whether you are ready to begin planning for the distribution of your estate or need to update your estate planning strategy, you can get the expert advice you need at the firm of Barnes Law Group, LLC. Put our more than 20 years of New Jersey estate planning experience to work for you. We take the time to get to know you and understand your needs and your goals, in order to work out an individualized estate plan that is exactly right for you and those you want to receive the benefits of your estate.
Call today for an appointment to sit down with a knowledgeable estates and trusts lawyer at Barnes Law Group, LLC, in one of our two conveniently located offices in North Wildwood and Egg Harbor Township.