Living Trusts

A revocable living trust is sometimes referred to as a “Will-substitute,” because a living trust is a substitute for a last will and testament. In New Jersey, a state in which probate is a simple and inexpensive process, the benefit of a living trust is minimal; however, for New Jersey residents who own real estate in states other than New Jersey, a living trust can be a useful part of their estate plans.

When speaking of trusts, we talk about three parties: the “Grantor,” the “Trustee,” and the “Beneficiary.” The “Grantor” is the person whose assets are used to fund the trust. The “Beneficiary” is the person for whom the trust was designed to benefit. The “Trustee” is the person who administers the trust’s assets and income for the benefit of the Beneficiary.

Living Trusts can be used as a probate-avoidance tool, particularly for individuals with real property in more than one state.

With living trusts, the Grantor, the Trustee, and the Beneficiary are typically the same person, during that person’s life. When the person dies, a successor Trustee steps in and distributes the assets held in the trust to the successor Beneficiaries, for instance, the children.

In New Jersey, whether you need a living trust depends on your personal goals and circumstances. A living trust can be helpful because it allows your assets to transfer privately and quickly without going through probate, provides a plan for someone to manage your assets if you become incapacitated, and gives you control over how and when your beneficiaries receive their inheritance. It also helps keep your financial matters private since, unlike a will, a trust is not filed in court.

That said, New Jersey’s probate process is generally simpler and less expensive than in many other states, so a living trust isn’t always necessary. For many people, a well-prepared will, along with powers of attorney and healthcare documents, can be enough to ensure their wishes are carried out. Ultimately, whether a living trust is right for you depends on your family situation, financial goals, and how much privacy and control you’d like to maintain.