Establishing a living trust has its benefits, but not necessarily all those typically hoped for. While some people may want to avoid probate court by having a living will in place, this may not be the best reason. In New Jersey, the costs of probate relate directly to the length of the will, specifically the number of pages, and have no connection to the value of the estate. This is something to keep in mind when doing estate planning, as is the fact that spending money to establish a revocable trust does nothing to save on death taxes.
So is a living trust ever a good idea? Yes. In New Jersey, assets such as bank accounts, stock in New Jersey corporations and New Jersey real property (when owned individually at time of death) apply to the state’s estate and inheritance tax liens.
The transfer of these may be held up until the New Jersey Transfer Inheritance Tax Branch releases the liens such that the assets may be transferred. This can take over one year from the date of death. If the assets are put into a living trust during the grantor’s lifetime, the liens are not applicable and transfers can occur immediately after the date of death. This is especially helpful in funding costs associated with estate administration, and also makes it possible to distribute assets to beneficiaries.
Additionally, a revocable trust may be beneficial if the grantor becomes incapacitated. In such a case, the trustee has access to the assets put into the trust prior to the incapacity and is thus able to manage those assets for the benefit of the grantor and grantor’s dependents.
Privacy is another benefit to a revocable trust. A will becomes public when admitted to probate. Yet a revocable will is not filed with the court, therefore the information included remains private.
Source: nj.com, “Biz Brain: Reasons to consider creating a living will,” Karin Price Mueller, Star Ledger, September 30, 2012