11 Jan Will a living trust help with probate and inheritance taxes?
Q. I was told that unlike wills, a trust doesn’t require probate and is not taxable. My main asset is a house that I want to pass on to my son. Would a living trust help?
A. We’re glad you’re trying to plan ahead to make sure your wishes are followed.
A living trust is a trust that is created during a person’s lifetime.
New Jersey’s Uniform Trust Code, N.J.S.A. 3B:31-1, et seq., governs the creation and validity of trusts, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.
She said assets in a trust are not subject to the probate process.
But, she said, the probate process in New Jersey is simple and therefore, most people in New Jersey do not have a need for a living trust.
“Assets in a trust may be subject to income tax and may be includable in the grantor’s estate for purposes of determining whether estate or inheritance taxes are owed,” she said.
Because there are different types of living trusts that have different tax consequences, you should meet with an estate planning attorney to determine whether a living trust is appropriate for your specific situation.
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This story was originally published on Jan. 11, 2021.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.