Is a revocable living trust for me?
A revocable living trust is a trust you create during your life, titling all or selected assets to it which will be managed by a trustee. It is revocable because you can terminate the trust at any time during your life. You can serve as the trustee during your life if you wish. At death, the trust will distribute or continue to manage the assets within the trust in accordance with your wishes. There are some distinct advantages to a living trust. They include:
- All trust assets will be distributed or managed as you wish at your death and will not be reviewed by the Probate Court, thus saving probate court costs. If you own property in another state other than your state domicile, your estate will avoid being subject to more than one probate court.
- In your living trust you can appoint a successor trustee to manage trust assets in the event that you can no longer do so. At death, the trustee can continue to manage trust assets for any living beneficiaries for their lives or for a term of years.
- A living trust will preserve your family’s privacy in contrast to the Probate Court, which has public access.
A living trust is not a device that will save you estate or inheritance taxes, but it can assist you in reducing your estate settlement costs. You can still name and benefit your charitable interests in your living trust. You would use the same kind of bequest language that you would use in a will.
What is a testamentary trust?
As opposed to a living trust which is created during someone's life, a testamentary trust is created in a will and goes into effect only upon the death of a decedent. The purpose of such a trust is to provide assets and income for someone after your death.
Will I have to pay estate or inheritance taxes?
Under current law federal estate taxes do not kick in until your estate has reached a value of $2 million or more. If your estate exceeds this value the federal estate tax rate begins at 45%. In 2009 the exemption from federal estate taxes goes up to $3.5 million and in 2010 the federal estate tax is repealed. In 2011 the estate tax exemption goes back to the 2002 levels unless Congress makes additional changes between now and then. It is very likely that Congress will pass some new law that will take us beyond 2011.
Depending on which state you live in, your estate may be subject to state estate taxes and/or inheritance taxes. It is also important to consider how you attempt to pass IRA or other similar retirement fund assets to children, since these distributions will also be subject to income taxes. For many estates, careful planning is essential to minimize the impact of taxes on the estate. A good attorney, knowledgable is estate planning, should be able to assist you with this. Finally, any assets you wish to pass on to us for our charitable purposes will avoid all taxation. In some cases, it’s a choice: give some of the value of your estate to the government or to charity. It is your choice if you will do the proper planning.
Riviere Cresci & Singer LLC
222 Schanck Road
Suite 201
Freehold, NJ 07728
Phone 732.64.NJLAW (732.646.5529)
Fax 732.358.0238
Cell 732.995.4168
The following locations are by appointment only:
260 Madison Ave
New York, NY
116 Village Blvd
Princeton, NJ
2500 Plaza 5
Jersey City, NJ
197 RTE 18 South
East Brunswick, NJ