If you're a resident of New Jersey and trying to decide whether you need a living trust, you might be wondering what to take into consideration. What happens to your property under New Jersey laws if you don't have a trust? When might you want a living trust? How do you make a living trust? Below is an introduction to what a living trust does and a discussion of whether it makes sense for your situation.

What Is a Living Trust?

A "living" trust (also called an "inter vivos" trust) is simply a trust you create while you're alive. The beneficiaries you name in your living trust receive the trust property when you die. You could instead use a will, but wills must go through probate—the court process that oversees the transfer of your property to your beneficiaries.

Many people create a revocable living trust as part of their estate plan. You can modify or revoke (cancel) this type of trust at any time. Typically, you'll name yourself as the "trustee" of your trust. This means that while you're alive, you retain control of the trust and its property. In your trust document, you'll also name a "successor trustee" to take over and manage the trust after you die; this person will distribute the property in the trust to your beneficiaries. (If you create a shared living trust, as is often done by married couples, then your successor trustee would assume control after both spouses have died.)

In contrast, irrevocable trusts can't be revoked or modified after they're signed. Irrevocable trusts can be useful tools for specific goals, like reducing taxes, but they require giving up ownership and control of trust property.

Do I Need a Living Trust in New Jersey?

When you set up a living trust to transfer your property to your loved ones after your death, you can potentially save them time, hassle, and money. Property left through a will (rather than a living trust) might be tied up for months or even years in probate court, and could involve court costs and lawyers' fees. By contrast, property left through a trust can be distributed to your beneficiaries almost immediately, and often without the need for an attorney.

However, New Jersey is one of the states that has fully adopted the Uniform Probate Code, a model law that streamlines the probate process. In other words, probate in New Jersey might not be quite as cumbersome as it is in other states.

New Jersey does also offer a simplified probate process for "small" estates. New Jersey defines a small estate as having a value of $50,000 or less if there is a surviving spouse, and $20,000 or less if there isn't. Additionally, there can't be a valid will. So while there is a shortcut available if your estate is small enough, you might not want to rely on it when you're planning your estate, since it's best to have a plan (via a will or living trust) that sets out your explicit wishes. (N.J. Rev. Stat. § 3B:10-3, 3B:10-4 (2024).)

You could reasonably decide that making a will rather than a living trust is sufficient because New Jersey offers a relatively streamlined probate process compared to other states. Still, there are a few other advantages of making a living trust. (See Living Trust vs. Will.)

In New Jersey, If I Make a Living Trust, Do I Still Need a Will?

Yes, you'll still need a will. This might seem confusing—isn't the point of a living trust to avoid needing a will? Yes, it is, and your will might never be used. But you should still write one, for one or both of the following reasons:

• Designating a guardian for minor children. You can't use a trust to name a guardian for your minor children. For this reason alone, if you have minor children, you should write a will that names the guardian.
• Accounting for property that you haven't transferred to your trust. It happens all the time—people create a trust and forget to formally transfer property to the trust (for example, they never get around to changing the deed on their house). Or, people buy or inherit property after they've set up their trust, and forget or don't know to take ownership as the trustee of their trust. Either way, the property won't be distributed according to the terms of the trust. You should have a will as a backup to dictate how assets that aren't in the trust should be distributed.

If you don't have a will, any property that isn't transferred by your living trust or other method (such as joint tenancy) will go to your closest relatives as determined by New Jersey state law.

Can a Living Trust Reduce Estate Tax in New Jersey?

Probably not. Most people don't need to worry about federal estate taxes because the federal estate tax is levied only on estates worth more than $13.61 million (for deaths in 2024). As of 2018, New Jersey no longer collects its own state estate tax. (It does, however, continue to impose a state inheritance tax.)

That said, if you have an estate worth more than $13.61 million—or you and your spouse have a combined estate of close to $27.22 million—you might be able to use a more complicated trust (such as an AB trust) to reduce or avoid federal estate taxes.

How Do I Make a Living Trust in New Jersey?

To make a living trust in New Jersey, you:

1. Choose whether to make an individual or shared trust.
2. Decide what property to include in the trust.
3. Choose a successor trustee.
4. Decide who will be the trust's beneficiaries—that is, who will get the trust property.
5. Create the trust document. You can get help from an attorney or use WillMaker & Trust (see below).
6. Sign the document in front of a notary public.
7. Change the title of any trust property that has a title document—such as your house or car—to reflect that you now own the property as trustee of the trust.

You can use WillMaker & Trust to make a living trust using your computer. It has a simple interview format that allows you to complete the trust at your own pace, and it gives you lots of legal and practical help along the way. Based on your responses, the program produces a living trust document customized for you and your situation. With WillMaker & Trust, you can also make a will, powers of attorney, health care directives, transfer on death deeds, and many other useful documents. Use it just for yourself or for your entire family.

For more on New Jersey estate planning issues, see New Jersey Estate Planning.