NJ – Creating a living trust can be an effective estate planning strategy, but it’s not without its challenges. Christine Matus, a New Jersey living trust attorney of The Matus Law Group (https://matuslaw.com/advantages-disadvantages-creating-living-trust), shares insight into the potential benefits and drawbacks of this tool, emphasizing the importance of evaluating individual goals and circumstances before moving forward.
A living trust allows individuals to maintain control over their assets during their lifetime while simplifying the transfer of those assets after death. According to New Jersey living trust attorney Christine Matus, one of the most appealing advantages is the ability to avoid probate court. “Assets properly transferred into a living trust do not go through probate, allowing for a faster and more efficient transfer to beneficiaries,” she explains. This can help families avoid the sometimes lengthy and public process handled by the Superior Court Chancery Division or local surrogate’s offices, such as the one in Freehold for Monmouth County residents.
New Jersey living trust attorney Christine Matus also highlights the privacy benefits of using a living trust. Unlike a will, which becomes part of the public record during probate, a living trust keeps financial and estate matters confidential. “Using a living trust ensures that these details remain confidential, offering a greater level of privacy for estate matters,” Matus says. This is often a priority for individuals with complicated family dynamics or significant assets who want to maintain discretion.
Despite these advantages, Christine Matus cautions that living trusts come with certain disadvantages that must be weighed carefully. One of the most common misconceptions, she notes, is that a revocable living trust offers asset protection. In reality, it does not. The grantor retains full control over the assets, and therefore, creditors can still pursue claims against them. Matus states, “Only an irrevocable trust may provide asset protection, but it requires giving up control of the assets permanently.” For clients concerned about protecting assets from potential legal judgments or creditors, other estate planning tools may need to be considered.
Another issue is the management required to maintain a living trust. For it to function as intended, assets must be properly transferred into the trust, something that is often overlooked. According to Matus, “Failing to transfer all relevant assets into the trust… can lead to certain assets going through probate, negating one of the primary advantages.” In New Jersey, transferring real estate into a trust requires preparing a new deed and recording it with the county clerk, such as in Monmouth County’s Freehold office.
Moreover, the trust must be updated over time to reflect life changes. Acquiring new property, changes in family structure, or updates in the law may require adjustments. “Keeping the trust up to date ensures that assets are distributed according to current wishes and avoids potential legal disputes,” Matus explains. Without regular updates, even a well-drafted trust can fall short of fulfilling its intended purpose.
There are also financial and administrative burdens associated with setting up and maintaining a living trust. Creating the trust often requires more time and money compared to drafting a will. In addition to legal fees, transferring real estate into a trust includes recording fees and additional documentation, such as a new deed. Matus points out that the process can be particularly time-consuming for individuals with properties in multiple counties or states.
New Jersey homeowners should also consider that real estate placed into a trust does not enjoy special tax treatment under a revocable arrangement. While the state eliminated its estate tax in 2018, federal estate taxes may still apply to large estates, and the New Jersey inheritance tax remains in effect for certain beneficiaries. According to Matus, these tax implications must be taken into account during estate planning, especially when leaving assets to non-immediate family members.
Although living trusts offer several benefits, including avoiding probate and enhancing privacy, they are not suitable for everyone. Christine Matus encourages individuals to assess their specific needs and long-term goals before deciding. Mistakes in funding the trust or failing to keep it updated can undermine its effectiveness. Additionally, not all assets are easily transferred into a trust. Retirement accounts, for example, typically cannot be retitled but can name the trust as a beneficiary.
Those considering whether to place their home in a trust should also be aware of the extra effort involved. Transferring a home to a trust requires a new deed and proper titling. Incorrect paperwork or misunderstandings of legal requirements can result in the property being subject to probate, despite the existence of a trust.
Working with an attorney familiar with New Jersey estate planning law is an important step in ensuring the trust is properly created, funded, and maintained. Christine Matus offers guidance on whether a revocable living trust aligns with a client’s personal and financial goals and helps manage the challenges that can arise in the process.
Anyone thinking about using a living trust as part of their estate plan should consider both its conveniences and its limitations. The decision should be based on accurate information and aligned with their family’s needs. Christine Matus and her team at The Matus Law Group are available to assist New Jersey residents who want to explore whether this legal tool is the right fit.
About The Matus Law Group:
The Matus Law Group is a New Jersey-based law firm providing legal services in estate planning, special needs planning, and elder law. Led by attorney Christine Matus, the firm is dedicated to helping individuals and families plan for the future with care and clarity. Through a personalized approach, The Matus Law Group supports clients in creating estate plans that reflect their values and protect their loved ones.
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