A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust.
A "living trust" (also called an "inter vivos" trust by lawyers who can't give up Latin) is simply a trust you create while you're alive, rather than one that is created at your death under the terms of your will. The beneficiaries you name in your living trust receive the trust property when you die.
In contrast to revocable trusts, irrevocable trusts cannot be revoked or modified after they are signed. Irrevocable trusts can be useful tools for specific goals, like reducing taxes, but they require giving up ownership and control of trust property.
The main advantage of making a living trust is to spare your family the expense and delay of probate court proceedings after your death. But do you really need a trust?
New Jersey uses the Uniform Probate Code, which simplifies the probate process, so making a living trust may be more trouble than it saves.
New Jersey has a simplified probate process for small estates. New Jersey defines a small estate as having a value of $20,000 or less if there is a surviving spouse or $10,000 or less if there is not. Additionally, there cannot be a valid will. (See N.J. Stat. Ann. § 3B:10-3 and N.J. Stat. Ann. § 3B:10-4.) If your estate meets these criteria when you die, the probate process will be straightforward and relatively inexpensive, so you may not need to worry about avoiding probate with a living trust.
Yes, you always need a will. A will provides a backup plan for any property that doesn't make it into your trust. For example, if you acquire new property and don't add it to your trust before you die, that property won't pass under the terms of the trust document. You can use a will to name someone to inherit property that you haven't left to a particular person or entity in your trust.
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.
Probably not. Most people do not need to worry about estate taxes because the federal estate tax is levied only on estates worth close to $12 million. New Jersey no longer collects its own estate tax, but if the death occurred before 2018, the estate may owe taxes if the estate was exceeded the threshold for New Jersey's estate tax.
If your estate is close to $12 million and is at risk for owing federal estate taxes, you may be able to use a more complicated trust (such as an AB trust) to reduce or avoid estate taxes.
To make a living trust in New Jersey, you:
You can use Quicken 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 Quicken WillMaker & Trust, you can also make a will, powers of attorney, health care directives, 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 on Nolo.com.