The Only Thing You Have To Fear Is Fear Itself

By concentrating my practice in one area—elder law—I see the same issue arise time-and-time again, so I understand the public’s reaction to certain issues and know that people will have that reaction before the reaction happens.  For instance, whenever I mention the word “probate” or tell a client that they will have to open “an account for the trust” they just signed, I know the client is going to immediately be confused and intimidated by that word and phrase.

The thing is, sometimes the only thing we have to fear is fear itself, not the reality of the situation.  Probate is the process of proving the validity of a last will and testament.  While that sounds like a lot of legalese and complicated, in New Jersey, the process of submitting a last will and testament to probate is extremely simple.

If a person has an attorney draft their Will, the Will is probably valid.  The requirements of a valid Will are quite minimal.  A person could handwrite their Will, and the Will would be a valid Will.  When a lawyer drafts a Will, he is going to ensure that it devises your estate to your family, that it nominates a person to serve as executor, and that it is signed, witnessed, and notarized in the proper format.  Once those requirements are satisfied, the Will is a valid, self-proving Will, which means that the executor does not have to find the witnesses to the Will in order to submit the Will to probate.

The process of probate takes about twenty to thirty minutes in total.  The Surrogate’s Office—the elected county official responsible for admitting Wills to probate—will ask about ten questions of the executor.  All of the questions are basic questions about the decedent and his family.  Since most people who are nominated to be executor in Wills are family members (the spouse or children of the decedent), the answers to the questions are typically answers that the executor knows off the top of his head because they involve his family.

The cost of probate in New Jersey is about $180.  The cost could go up slightly if the Will is on the longish side, since the cost is based on the number of pages to the Will.  The cost of probate in New Jersey is not a percentage of the value of the estate; in fact, you do not have to tell the surrogate the value of the estate in the vast majority of cases involving the probate of a Will.

Now, in some states—not New Jersey—the cost of probate is based upon the value of the estate and can be quite expensive, but unless you own real estate in another state, you don’t have to worry about submitting a Will to probate in any state other than New Jersey.  In some states—not New Jersey—you do need to hire an attorney to submit a Will to probate because the process is complicated.  But not here, so for most people who come to see me, what happens in other states is, at best, a curiosity.

Similarly, opening an account in the name of a trust (or a “trust account”) sounds like a complicated process, but as with submitting a Will to probate, the fear this process invokes is perceived, not based on the reality of the process.  If Mrs. Smith creates a trust naming her daughter Mary as Trustee, Mary may need to open an account or multiple accounts in the name of the trust.

The legal document that creates a trust—what most people would call the trust—is actually the trust agreement.  A “trust” doesn’t exist until assets are titled in the name of the trust.  So how do you title assets in the name of a trust?

Say Mrs. Smith’s trust is called the “Mrs. Smith Trust.”  When the trustee, Mary, opens an account in the name of the trust, she would title that account as “Mary, Trustee, of the Mrs. Smith Trust.”  Mary could open one bank account in the name of the trust or two or more accounts.  Mary could open bank accounts, brokerage accounts, mutual funds, etc.

Like a person, a trust could own any asset that a person could own.  So, if Mary could own an asset, Mary as trustee could own that same asset.  The only difference is, Mary’s assets would be titled “Mary” while the trust’s assets would be titled “Mary, Trustee, of the Mrs. Smith Trust.”  That is the only difference.