23 May Do I really need a will or trust?

Q. We have one son who is the beneficiary of all of our possessions. Any banking accounts are P.O.D. All of our insurance policies and IRAs have our son as the beneficiary. As far as our home is concerned, I understand federal law allows for the transfer of the mortgage to our son with the same interest and payment we now have. The question is: Why would we need a will or trust if all of our money matters are taken care of in this way? I don’t want to go through probate.
— Planning ahead

A. To make sure all your affairs are arranged as you think they are, consider sitting down with an estate planning attorney because we don’t want to give you advice that’s inconsistent with the rest of your plan.

Although there is a mortgage on the real property, we assume there is also equity in the home.

Unless your real property is held jointly with your son with rights of survivorship, the house will go into the estate of the last to die of you and your spouse, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

“If they do not have wills, the son will have to apply to the county surrogate to be appointed administrator of the estate of the last to die and the surrogate will require the son to post a bond,” she said. “The reader and spouse can have wills prepared that dispense with the bond requirement.”

Probate in New Jersey is relatively inexpensive, Whitenack said, and in many cases, it’s less expensive than the cost of a bond.

The federal law you mentioned is the Garn-St. Germain Depository Institutions Regulation Act.

Enacted in 1982, it permits lenders to enforce due-on-sale clauses in mortgage documents so the balance still owed on the mortgage is due and payable when title to real property is transferred, Whitenack said.

“Certain transfers, however, are exempted,” she said. “In particular, the act bars the lender from enforcing a due-on-sale clause when the transfer is to a relative resulting from the death of a borrower or a transfer where the borrower’s child becomes an owner of the property.”

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This story was first published in May 2017.