Estate Planning - Wills and Trusts

Living trusts, also called revocable trusts or revocable living trusts, are sometimes touted as an absolute essential.

One reason people like a living trust is to keep final wishes private, said Mary Scrupski, an estate planning attorney with Greenberg, Dauber, Epstein & Tucker in Newark.

‘‘A will is a public document,’’ Scrupski said. ‘‘A living trust does not become a public document unless someone files a court action involving the trust.’’

While the person who set up the living trust is still alive, there are advantages for those who will help manage that person’s affairs if they’re unable to.

‘‘The successor trustee named in the trust document can take over management of the assets relatively quickly and easily,’’ she said. ‘‘Sometimes it is difficult to get a third party to honor a power of attorney. The funded trust can take the place of a power of attorney at least with respect to the assets that are in the trust.’’

Scrupski said in most cases, a separate power of attorney is needed in addition to the funded trust because the agent under a power of attorney has more authority than just managing assets.

‘‘In fact, most people who have a funded living trust still need a will because there may be assets that are never transferred to the trust during lifetime,’’ Scrupski said.

Here in New Jersey, an individual with a living trust usually also has what is known as a ‘‘pour-over will,’’ which permits any assets not placed in the living trust during their life to "pour over" to the living trust at death, said Ruth Buchwalter, an estate planning attorney with Day Pitney in Parsippany.

One advantage, she said is that assets can often be managed more quickly at death.

‘‘With a funded living trust there is no need to wait 10 days to have a will probated,’’ Buchwalter said. ‘‘More importantly, with the current practice of the New Jersey Division of Taxation, the trustee of the funded living trust can withdraw all of the trust assets in an account without waiting to receive an Inheritance Tax/Estate Tax Waiver.’’

With a will, the executor may only withdraw half of the account’s assets (with certain limited exceptions) without first receiving the waiver, Buchwalter said.

Another advantage is that if someone owns real estate in another state, and the home is owned by the living trust (a separate deed is required), then the grantor’s estate will not need a separate probate proceeding. This saves time, money, and aggravation, she said.

A final note: The amount of estate and inheritance taxes due will be the same regardless of whether a will or a living trust is used.

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