Knowing how a trust works when someone dies in New Jersey can make an extremely difficult time a bit easier. A trust gives beneficiaries quick access to the money they need if the person who established the trust passes away. It allows them to continue to pay their bills and to cover other necessary costs without having to wait for the probate process to end.
A revocable living trust is just one of the many estate planning tools we use to help our clients and their families gain access to assets after the death of their loved one.
Bratton Scott can help you plan for what will happen to your family’s finances when you can no longer control them. We can discuss your preferences and individual needs and create a comprehensive estate plan to address every priority and concern. Often, this may include determining whether you should have a revocable living trust to hold the assets you hope to pass down to the next generation.
Establishing a Revocable Living Trust
Establishing a revocable living trust is no more difficult than drawing up a legal document. We can walk you through the process and create a trust that we base on your own specific needs. A revocable living trust is implemented immediately, so we will need to include provisions to address what happens while you are alive, if you become incapacitated, and after your death.
During the process of creating a revocable living trust, you will likely name yourself the grantor who funds the trust, the trustee who manages it, and the beneficiary who can receive payouts. This gives you complete control of the assets you put into the trust, despite the fact they are now in the name of the trust and not your name as an individual.
We will also name a successor trustee and successor beneficiaries. The successor trustee will manage the trust if you suffer a permanent illness or injury that leaves you incapacitated or after your death.
The successor beneficiaries are your heirs who will receive payouts from the trust, either all at once or over time. You can also add stipulations about when and how the trustee disburses the money.
In the most basic of situations, a revocable living trust accomplishes the same things as a will but allows your surviving family members to avoid probate. This is possible because a New Jersey revocable living trust can hold almost any type of asset. When you have all assets in a trust that already has a trustee and a group of beneficiaries listed, there is no reason to rely on a will to tell you who receives what.
When someone with a revocable living trust dies, you do not need to wait ten days and then go to the Surrogate’s Court to gain access to the assets. The trustee gains access immediately after the grantor’s death. This allows the trustee to begin the process of paying off debts, paying taxes, and distributing assets without the permission of the court or anyone else.
In some cases, distributing assets is a one-time thing — the trustee pays them out, and then the trust is empty. In other cases, the trustee may need to continue to manage the trust until all parties have reached a certain age or until the beneficiaries spend all available funds.
For Assets Not in The Trust
Of course, many situations are not so clear-cut. In many cases, we use revocable living trusts in conjunction with a will to create a multi-pronged approach to estate planning for our clients. This allows your heirs to enjoy most of the benefits of a trust while also ensuring you plan for the distribution of all of your assets.
It is very easy to forget to put assets into a revocable living trust. We will guide you through this process as much as possible, but we still recommend having a will that pushes any remaining assets at the time of your death into the trust.
Sometimes known as a “pour-over will,” this reduces the risk of a dispute between potential heirs regarding your estate. It also allows the trustee of the revocable living will to be the single person who distributes funds. Things can become much more complicated when you have both a trustee and an executor who are paying your last bills, worrying about taxes, and paying out any remaining assets to your heirs.
The downside to a pour-over will — or any will — is that it must go through the probate process. Luckily, New Jersey probate laws make this process quick and affordable. While probate can cost thousands and require months of work in some states, New Jersey charges based on the length of the will not the value of the estate. This means a simple pour-over will should cost no more than a couple hundred dollars to probate and will only take a few minutes.
We can also create your will to be self-proving. This means the Surrogate or a clerk in their office will only need to look for your signature, the signature of two witnesses, and a notary stamp to validate your will. While your family will have to wait ten days after your death to enter the will into probate, the process itself is relatively quick and painless. After probate, the executor has the authority to transfer the funds into the trust.
Talk to a New Jersey Estate Planning Attorney About a Revocable Living Trust
Bratton Scott can help you create a comprehensive estate plan. We will work with you to understand your individual needs and preferences and design a plan that works well for your family.