This past week the New Jersey Legislature passed and the Governor signed into law the Uniform Trust Code.  The Uniform Trust Code, or UTC, is a uniform law that was first promulgated in 2000.

There are several uniform laws governing different subject areas.  As a general proposition, a uniform law is designed to create consistency in an area of the law from state-to-state.

For instance, with respect to the laws governing trusts, the Uniform Trust Code is designed to ensure consistency between the manner in which trusts are treated in New Jersey and the manner in which trusts are treated in Wisconsin.  Uniformity in laws permits people to feel confident that a given legal issue will be handled similarly no matter where they may live.

To start at the beginning, a trust is a fiduciary relationship through which one person holds assets for the benefit of another person.  For instance, Joe Smith, who is the trustee of the trust, holds $100,000 for the benefit of Mary Smith, who is the beneficiary of the trust.  The $100,000 is “owned” by Joe, but Joe is merely holding the $100,000 for Mary.  While Joe holds legal title to the money, the money is in an account in his name, as trustee; Mary holds the beneficial interest in the $100,000, not Joe.

When a state enacts a uniform law, such as the Uniform Trust Code, the version of the code that the state enacts isn’t perfectly uniform.  In other words, the committee on uniform laws promulgates a series of uniform laws on various subject areas, such as the Uniform Trust Code.  A state may want to have most of those uniform laws as its governing law; however, the state may not like some of the uniform laws, typically believing that the state’s existing law is better than the uniform law.

When New Jersey enacted the Uniform Trust Code, it enacted most of the proposed uniform laws governing trusts, but not all of them.  In certain areas, New Jersey retained its own existing law.

I think the adoption of the Uniform Trust Code will bring a tremendous amount of clarity and consistency to the laws governing trusts in New Jersey.  As a lawyer, when I mention a trust to a client, you can almost see the client tense.  A trust seems complicated and complex.

Even clients who tell me they want a trust tend to have no idea what a trust really is.  In fact, most people who tell me they want a trust tend to have no need for a trust.

I don’t think the Uniform Trust Code will help the average person understand trusts any better, because the average person doesn’t make a habit out of engaging in legal research.  But even lawyers are confused about trusts, and I think the Uniform Trust Code will help New Jersey lawyers understand this area of the law better.

The laws governing trusts are very old.  If you have an issue with a trust, it’s hard to find a good source to answer to your question.  Now, with the Uniform Trust Code, there will be one area to which an attorney can turn to find his answer to a question concerning a trust.

For instance, Can an irrevocable trust be revoked and under what circumstances?  I know this question has been the subject of debate even amongst many of my colleagues who constantly deal with trusts.

According to the Uniform Trust Code, an irrevocable trust can be revoked if the settlor (the person who created the trust) and all of the beneficiaries of the trust agree to revoke the trust, even if the revocation of the trust frustrates the purpose for which the trust was created.  In simple English, if the guy who created the trust and the beneficiaries of the trust agree, they can revoked an irremovable trust.  A court does not have to oversee the revocation of the irrevocable trust.

Being able to answer questions such as this quickly and efficiently is what a uniform law was designed to accomplish, and I believe New Jersey’s adaptation of the New Jersey Uniform Trust Code will do just that.