A few years ago, New Jersey enacted its version of the Uniform Trust Code. The trust code is a comprehensive series of laws on the subject of trusts. Any uniform law is typically written by legal scholars on a given subject with the idea that the various states will enact some version of the uniform laws. In essence, a uniform law is scholarly suggestion to a state as to how its laws on a given subject—in this case, trusts—should look. New Jersey took the suggestion of these scholars and enacted its version of the Uniform Trust Code, which is substantially similar to the model form of the Uniform Trust Code that the scholars published.
As a result of enacting the trust code, New Jersey’s law on trusts is much more uniform and more easily understood. Before the trust code, if you wanted to know something about the law of trusts, you had to research the issue, find various cases that discussed the issue you were interested in, and read those cases. Often, the cases were extremely old and written in a manner that makes the cases very difficult to understand. And as with any case law on a subject, you are likely to find one case that says X and another that says Y, leaving you wondering if the real answer is Z.
A uniform law is intended to end this type of research. Now, if you want to know something about trust law, you first turn to the Uniform Trust Code of New Jersey and see if one of the statutes directly or indirectly addresses the issue you are researching. In many cases, it will.
Since the enactment of the trust code, I have recommended trusts to more clients. For instance, I tell everyone who calls my office looking to have a Will drafted about the concept of a bloodline trust. Essentially, a bloodline trust works as follows:
Mr. Smith has four children. She wants to leave her entire estate to her four children when she dies. In her Will, she could simply say, “I give my entire estate to my four children equally.” This is a simple Will. An equal and outright disposition of Mrs. Smith’s entire estate to her children. Such a Will has the benefit of simplicity, which is no small benefit.
However, if one of Mrs. Smith’s children has a judgment against him or if he is getting divorced or if he is sued later in life, then the money Mrs. Smith left that child will be subject to that child’s legal issues. In addition, if the child dies five years after Mrs. Smith, then the money Mrs. Smith left the child will probably pass to the child’s spouse, not Mrs. Smith’s grandchildren. If the spouse remarries, Mrs. Smith’s grandchildren may never benefit from the inheritance that Mrs. Smith left to their parent, her child. Instead, the second spouse will benefit from Mrs. Smith’s money. This is something Mrs. Smith would have never wanted to occur.
If Mrs. Smith has a bloodline trust drafted into her Will, then her inheritance will pass to four separate trusts, one for each of her four children. The child who is the beneficiary of the trust can even serve as the trustee of the trust, so the child does not have to ask anyone for access to his money and there is no administrative fees being charged.
Now, if the child gets sued or divorced, the inheritance is protected from his personal problems. If the child dies five years after Mrs. Smith, Mrs. Smith’s money will pass to the child’s children, Mrs. Smith’s grandchildren, not the child’s spouse.
In my opinion, this is the best way for someone to leave their money, but it is slightly more complicated than an outright, simple Will. As I say, simple has its benefits and those benefits should not be underestimated, but sometimes, it is worth the hassle of making things more complicated. In my opinion, this is one of those situations.