Revocable Trust Midland Park NJ
Once your Revocable Living Trust is created, title to many of your assets should be transferred to it. You should transfer your bank accounts, certificates of deposit, investments, among others into the Revocable Living Trust. When this process is complete, you, as an individual no longer own the transferred property, your Revocable Living Trust will be the legal owner, but you, as trustee, retain complete control of your trust and the assets in it.
Can I change my Revocable Living Trust?
Your Revocable Living Trust can be modified whenever you wish. You may alter, amend, or
even revoke your Living Trust.
Why does a Revocable Living Trust avoid Death Probate while a Will does not?
A Will is a legal document which takes effect only upon your death. A Will is designed to dispose of your assets upon your death. Probate and administration are the legal process of proving that your Will is valid, paying your creditors, and transferring property to your heirs. A Will must go through some type of public probate proceeding even if the probate procedure is simplified because the estate is small.
A Revocable Living Trust allows you to “self-probate” your assets during your lifetime; the funding or retitling aspect of the Revocable Living Trust process allows you to transfer assets into the Revocable Living Trust and consequently, this function is complete and not necessary for your Executor to do. Therefore, you have reduced the probate process, and expense.
What is “Probate”?
Probate and the administration of an estate are comprised of six basic tasks:
1. Submitting the Will to the probate court and determining its validity.
2. Notifying the decedent’s heirs and beneficiaries.
3. Inventorying the decedent’s assets.
4. Paying creditors.
5. Making sure any State Inheritance Tax and Estate Tax, if any has been paid.
6. Distributing assets to the beneficiaries or heirs.
The probate process often can be expensive and time-consuming. Studies indicate that the average cost of probate is anywhere between 3 and 10 percent of the value of the gross estate.
The average length of probate is between ten (10) months and two (2) years, although even the probate for a smaller estate sometimes takes longer. The probate process is also a matter of public record. Therefore, if you die owning assets, your Will must be probated in order to convey legal title of your assets to beneficiaries.
How does a Revocable Trust Benefit My Estate Plan?
If you become disabled your Living Trust will eliminate the need for a court-appointed guardian to take control of your assets. Also, with a Revocable Living Trust, your assets will go directly to your beneficiaries upon death.
A Living Trust creates no adverse lifetime income tax consequences. Because your Living Trust is revocable, the income generated by the assets in your trust is taxed to you as an individual. A Living Trust is not part of the probate process and therefore is also not governed by the rules surrounding a Will.
Can I sell assets owned by my Living Trust without complications?
You sell assets in the same way you currently do.
If I have stocks and bonds, how difficult is it to transfer these individual securities into my Revocable Living Trust?
The procedures for transferring your stocks and bonds into your Revocable Living Trust will vary for many securities. Generally, when you have individual securities, you send the original certificates along with a letter of instruction to the transfer agent of the business entity for that security, or instruct your broker/account executive of your intentions to transfer the security to your Revocable Trust.
Do I need a Will if I have a Revocable Living Trust?
For the most part, a Revocable Living Trust will enable your trustee to immediately direct assets to your beneficiaries upon your death. However, a Will must be prepared along with your Living Trust. The purpose of the Will is to instruct the “personal representative” to “pour-over” into your Living Trust those assets which many not have been transferred to your trust during your lifetime.
Steven W. Tarta, Esq. brings more than 45 years of professional experience to his practice, with a sophisticated focus on Estate Tax Planning, Living Trusts and Elder Law.