Q. I understand that most New Jersey people don’t need a living trust because probate proceedings in the state are easy, but can a living trust save you time or money?
A. Thank you for your question.
While inheritance avoidance is often touted as a reason a living trust In general, many people who have living trusts also have so-called “pourers,” said Shirley Whitenack, an estate planning attorney at Schenck, Price, Smith & King in Florham Park.
“This is because people often have assets that they haven’t invested in a living trust like tangible personal property like furniture and household items, a car and / or a small bank account, ”she said.
Also, it might be necessary to open a property because the state has unclaimed funds, a tax refund, or insurance premium repayment, she said.
“Will pouring over will generally provide that the estate” flows “into the living trust after the death of the person who created the living trust,” she said.
Living trusts take advantage of privacy and removing challenges to the property, Whitenack said. Such trusts can also be used to segregate assets acquired prior to marriage and to manage the assets of a person with reduced or insufficient capacity.
“While financial institutions can freeze up to half of their assets in an estate pending tax exemption, tax exemptions are not required to transfer legal ownership of trust assets after the death of the person who established the trust, and therefore financial institutions cannot Because of this, up to half of a trust’s assets are frozen, ”she said.
However, creating a living trust can also have disadvantages.
“The cost of creating a revocable living trust and will is generally higher than the cost of only prepare a will “ She said. “In addition, there can be costs associated with transferring assets such as real estate to a living trust.”
The legal costs involved in managing an estate can be higher than the legal costs involved in managing a trust after the trust maker dies, Whitenack said
Plus the time it takes colonize a property It may take longer than the time to distribute trust assets as it can take several weeks to review a will and get a tax exemption, she said.
“However, if the individual has relatively few assets that are subject to probate review, the cost of starting a living trust can be higher than managing an estate,” she said.
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Karin Price Mueller writes that Bamboozled Column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly e-newsletter.