For years I have written articles informing people that the process of submitting a last will and testament to probate in New Jersey is simple. The topic typically comes up in a conversation about revocable living trusts. And while the process of probate has not changed in New Jersey, today, I am going to take a different position.
But first, some basics. A Will is a document through which you appoint a person to manage your affairs after your death (an executor) and direct (or devise) to whom your property will pass. A Will only controls probate property. Probate property is essentially all property that does not have a named beneficiary and that is not jointly owned with another person. For instance, if you own your house in your name alone, then your house is a piece of probate property.
A Will is not effective until you die. Your dying is essentially a condition precedent to your Will being effective. This is one reason we call them Last Wills because a person can have many Wills before he dies but only his Last Will matters.
A revocable living trust is, for all intents and purposes, a Will, too. For this reason, revocable living trusts (hereinafter “living trusts”) are called will-substitutes because they are a substitute for a Will.
A living trust controls all the property that is titled in the name of the trust. For instance, if I owned my house in a living trust, then the title to my house would read “John Callinan Living Trust.” By titling my house in this way, my living trust owns my house and controls who will receive my house after I die.
Some, many, or all of a person’s assets are not titled in their living trust during their lives. When I have used living trusts, it is typically because the person owns a parcel of real property in another state, such as Florida, and has their Florida property titled into their trust during their lives. The remainder of their assets is still held outside of their trust.
For this reason, the person has a Will too. The type of Will a person has with a living trust is called a “pour over Will.” The Will says something such as, “My executor shall pass all of my property to my trust.” The trust then acts like the person’s Will, directing to whom the property shall pass and the trustee is, for all intents and purposes, the executor of their estate. And this is why we call revocable living trusts will substitutes.
The reason I have advised against the need for revocable living trusts in the past has to do with the ease of our probate process. The act of submitting a Will to probate in New Jersey takes about thirty minutes and costs about $200. This is not the case in all states. Florida and California, for instance, have difficult and costly probate processes. Probate in those states is worth avoiding.
But there is an issue that a living trust can address that may make having one worthwhile—privacy. A Will essentially becomes a public document after your death. Anyone can see your Will if it has been submitted to probate. In the past, I have minimized privacy concerns; after all, you aren’t around to worry about your privacy any longer.
In the last ten years, though, I have seen an explosion of issues where a bit of privacy may go a long way. Second marriages are one example. Husband dies. Leaves everything to his second wife. Second wife lives ten more years. She dies. She leaves everything to only her children, nothing to her stepchildren. Her Will probably would inflame issues with the stepchildren, and it would be better if her testamentary intentions remained private.
The stepchildren will know that they received nothing but knowing and seeing it in writing are different things. It may be best if certain things aren’t written down for the world to see. So, I’m going to add a second viable reason as to why people should consider a living trust. In one situation, they own real estate in another state. In the other, they have a legitimate need for privacy.