Ask people why they work hard and save their money, and often you'll hear that it's not only because they want to raise their own standard of living; they want to leave something behind for their children, too. Understandably, they don't want a big chunk of that money to be used up for probate lawyers' fees.

That's where living trusts come in. They don't save you a penny while you're alive, but after death they can eliminate the need for probate -- and probate fees. More of the property you leave goes to the people you want to inherit it.  The probate process in New Jersey is relatively straight-forward however many clients desire living trusts and we provide them where appropriate.

The two most common types of living trusts are:

This article discusses basic, probate-avoidance living trusts. For information on AB trusts, see Tax-Saving AB Trusts.

Unless you expect your estate (or your spouse's) to owe  federal estate tax upon death, a basic living trust to avoid probate may be all the trust you need. (Only about 2% of estates -- the largest ones -- owe estate tax.) It allows property to avoid probate and to quickly and efficiently pass to the beneficiaries you name, without the hassles and expense of probate court proceedings.

A married couple can use one basic living trust to handle both co-owned property and the separate property of either spouse.

To create a basic living trust, you make a document called a Declaration of Trust, which is similar to a will. You name yourself as trustee -- the person in charge of the trust property. Then you transfer ownership of some or all of your property to yourself in your capacity as trustee. For example, you might sign a deed transferring your house from yourself to yourself "as Trustee of the Jane Doe Revocable Living Trust dated September 30, 2004."

Because you are the trustee, you don't give up any control over the property you put in trust. If you and your spouse create a trust together, each of you will be a co-trustee.

In the Declaration of Trust document, you name the people or organizations you want to inherit trust property after your death. You can change those choices if you wish; you can also revoke the trust at any time.

When you die, the person you named in the trust document to take over -- called the successor trustee -- transfers ownership of trust property to the people you want to get it. In most cases, the successor trustee can handle the whole thing in a few weeks with some simple paperwork. No probate court proceedings are required.