Revocable trusts play key roles in many New Jersey estate plans. They allow the grantor to direct the distribution of assets in accordance with the trust’s instructions without incurring the expenses associated with probate. Indeed, in most cases the trust operates outside of probate, so assets may be transferred more efficiently and with less hassle to heirs.
In a case where a person dies with a will, the will must in most cases go through probate. The process can be time-consuming and expensive. Revocable trusts are treated as a separate entity distinct from the grantor, so the assets it holds are not subject to probate. More importantly for some, the probate process usually results in a public record of property transferred to heirs. Property held in a revocable trust, though, transfers based on the terms of the trust instrument, so there is no public record.
Revocable trusts are also relatively easy to establish in many cases. The grantor designates beneficiaries and a trustee. The trustee has the responsibility to manage the trust assets. The beneficiaries are those parties who benefit from the trust assets. In a typical revocable trust, the grantor will act as trustee until his or her death, at which point assets are transferred to beneficiaries by the successor trustee.
Revocable trusts may be vulnerable to creditors in ways that irrevocable trusts are not. The assets in a revocable trust are usually subject to estate taxes as well, even though the instrument is not probated. Individuals who have questions about the operation of a revocable trust may want to consult an attorney for advice. An attorney with experience in trusts may be able to draft a document tailored to the client’s individual circumstances.