Testamentary trusts are legal estate planning tools that have certain requirements that must be met in order to be established. These trusts are named in a grantor’s will and provide for the transfer of assets after death, as well as the management and distribution of those assets. Testamentary trusts must have a trustee, beneficiaries, and terms for asset distribution. It is important that individuals consider these trusts, and the advice of a trust lawyer, when they are making their estate plans.
The terms of a testamentary trust can be written in any way the grantor wishes, as long as those terms do not violate state law or public policy. This allows the grantor to be very specific with regard to what assets are to be placed in the trust, who is to receive those assets, and any other restrictions that may be imposed upon the distribution of these assets. To ensure compliance with these regulations, consulting a trust lawyer is advisable, as trustees of a testamentary trust must comply with state laws regarding the investment of trust assets, and periodic accountings must be rendered to the beneficiaries.
Another requirement of a testamentary trust is that the will must name an executor who will be responsible for bringing the trust into effect after death. It is also necessary that all of the property transferred into the trust meet the legal requirements for transfer. In this process, a trust lawyer can provide crucial guidance, ensuring that real estate is formally recorded and automobiles and insurance policies are updated with the appropriate information.
As with other types of trusts, the trustee must manage the assets in accordance with the terms of the trust. A trust lawyer can help select a trustee with professional investment and business experience for this role, especially when transferring significant amounts of wealth to beneficiaries. A trustee can be one person or a couple. If the trustees of a testamentary trust are married, there must be a clear indication in the trust document that both persons intend to serve as co-trustees.
Beneficiaries of a testamentary trust can be anyone who is named in the trust document. However, beneficiaries should be considered very carefully, and incorporating advice from a trust lawyer is often helpful in including a clause in the trust that stipulates a minimum age or other criteria for the termination of the trust. In some cases, a testamentary trust is designed to close when a beneficiary child reaches a particular age or event (such as marriage).
Tax considerations are also an important factor in determining whether a testamentary trust is a wise choice. Unlike living trusts, testamentary trusts must be probated after death and as such are subject to taxes. With the assistance of a trust lawyer, certain exemptions available for trusts may help reduce the amount of tax payable.
Individuals considering a testamentary trust should consult with an experienced New Jersey estate planning attorney. An attorney can ensure that all the pieces are in place and that the trust will work as intended. An initial consultation with a trust lawyer can be a valuable resource in determining what options are best for your unique situation.
A living trust is a tool for estate planning that allows you to avoid the lengthy, expensive probate process after your death. However, a living trust is not a universal solution for every estate and should only be utilized in the appropriate situation. Consulting a trust lawyer can guide you through the specifics of whether a living trust is suitable for your circumstances.
If you do decide to set up a living trust, you must make sure that all of your assets are properly titled in the name of the trust. In addition, you will need to appoint a trustee who is competent to manage the trust, and this person must be trustworthy, financially savvy, and fair. Engaging a trust lawyer to help in selecting the right trustee can be beneficial, as they understand the legal and practical implications of this choice.
Some people are reluctant to establish a living trust because they believe that they must give up control of their property. However, you can still hold all of the property that is titled in your name during your lifetime and you can change the terms of the trust at any time. A trustee should be compensated if they are required to manage the trust, so this is another important consideration when choosing a trustee. A trust lawyer can help you understand these nuances and make informed decisions.
You can create either a revocable or irrevocable living trust, depending on your circumstances and the type of assets that you wish to include in the trust. While revocable living trusts are less expensive and more flexible, irrevocable trusts provide more protection from creditors and taxation. A trust lawyer can provide essential guidance in determining which type of trust aligns best with your estate planning objectives.
While a living trust is more expensive to establish than a simple will, it may be able to save your estate money in the long run. Probate is the legal process that approves a will and gives it the authority to be put into motion, and this can take many months and cost considerable amounts of money in fees for attorneys and executors. In addition, if you have a will alone at the time of your death and your estate is valued at more than $675,000, you will be subject to inheritance taxes. A trust lawyer can explain how a living trust might reduce these costs and simplify the transfer of your assets.
Living trusts can avoid the costly and time-consuming probate process after your death and allow beneficiaries to receive immediate access to your estate’s assets. This can be particularly useful if your estate has significant debts or assets that are taxable. A trust lawyer can help you navigate these complex considerations, ensuring your trust is structured to maximize benefits for your beneficiaries.
A trust can also protect you in the event of incapacitation by providing instructions for managing your affairs. It can appoint someone to oversee your financial life and property until you recover, or it can provide for your permanent incapacitation and subsequent care by your successor trustee. A trust lawyer's experience is invaluable in drafting these provisions to ensure they are legally sound and align with your wishes. A revocable living trust will provide these benefits to you during your lifetime and at the time of your death, but it can’t be used to protect assets held in Uniform Transfers to Minor Accounts (UTMAs) or Uniform Gifts to Minor Accounts (UGMAs), which are accounts established for the benefit of minor children.
Many people avoid thinking about their death and the transfer of assets to loved ones because it can be very complicated. One tool that may help is a trust, which is an instrument used when it is beneficial and legally necessary for someone other than the owner of the legal property to own and manage it. Trusts can accomplish many purposes, including asset protection and avoiding probate. Consulting with a trust lawyer can provide clarity and guidance in understanding the unique characteristics of a trust and assist with creating one in New Jersey.
A trust is an instrument that holds the legal ownership of property transferred to it by a person called the trustee. The trustee has a fiduciary duty to the beneficiaries named in the trust to administer and protect the assets in accordance with the terms set forth in the trust document. There are two main types of trusts: revocable and irrevocable. A trust lawyer can help explain the differences and assist in deciding which type suits your situation. Revocable trusts allow the grantor, or original owner of the property, to continue a degree of control over the trust during his lifetime. A revocable trust can be amended or terminated by the grantor at any time.
Irrevocable trusts generally require the grantor to relinquish a degree of control over the assets placed into it, although they can still be amended or terminated by him in certain exceptional circumstances. The responsibilities of the trustee include investing the trust assets prudently for the benefit of the beneficiaries and providing periodic accountings to the beneficiaries. A trust lawyer is crucial in ensuring that a trustee complies with New Jersey laws, such as the Prudent Investor Act and the Principal and Income Act unless expressly waived by the trust document.
While a trust is often associated with the wealthy, those of more modest means can find it helpful as well. For example, a special needs trust can be established to ensure that a dependent with a disability receives care, and a trust lawyer can help navigate the complexities of such a trust. A trust can also reduce taxes by deferring capital gains tax on investments and allowing key assets like real estate to pass to beneficiaries free of inheritance tax.
Whether or not you choose to use a trust, it is essential to have an estate plan. Our firm can assist with the drafting of a revocable living trust, power of attorney, advance medical directives, and more. A trust lawyer from our team can also review your existing documents to see if they are in compliance with New Jersey law and provide tailored advice.
Putting property into a revocable trust in New Jersey does not automatically skip probate, as the property must be “funded.” For example, motor vehicles must be retitled into the name of the trust. A trust lawyer can guide you in properly retitling assets like motor vehicles by preparing a new deed for the vehicle or contacting your bank to change the name on the title and/or the account holder. Other items that can be retitled into the trust include bank accounts, personal property, and stocks. However, you should not place UTMA and UGMA accounts (custodial accounts for minor children) into your trust, as these are considered legal custody of the child and would require payment of title transfer fees and taxes if done so.
The Matus Law Group
125 Half Mile Rd #201A, Red Bank, NJ 07701
(732) 785-4453