Too often a Revocable Living Trust fails because the clients do not understand the importance of transferring assets into the Trust. In most cases, this results in the unnecessary expense of a probate proceeding that could have been avoided.
The New Jersey Revocable Living Trust is an entity designed to avoid probate and reduce estate administration expense. A Revocable Living Trust can be terminated or amended at any time during the Grantor’s lifetime. This Trust allows the Grantor to appoint himself/herself as Trustee and exercise complete control over the trust’s assets In the eyes of the IRS, a Revocable Living Trust is transparent, which allows the Grantor, (as Trustee) to buy, sell, trade, mortgage, liquidate, gift or otherwise treat trust property as their personal property.
The Revocable Living Trust sets forth the terms and conditions of the Trust which appoints the Grantor as Trustee, and designates a contingent Trustee to act in the event of incapacitation or death.
When the Grantor transfers an asset into the Trust, this is referred to as “funding the trust”. Bank accounts, securities, appreciating motor vehicles, retirement accounts, among other things can be transferred into the Trust. The Grantor, as Trustee of the living trust, then manages the assets for his or her personal benefit, and also, for the ultimate benefit of the beneficiaries; a trust beneficiary receives nothing until after the Grantor’s death. Upon the Grantor’s death, the successor Trustee becomes acting Trustee and passes the trust property to the beneficiaries without the need of probate.