A few times a year we get a phone call from someone telling us that they need a trust. After talking with this person, we often learn that they heard from a talking head that they need to avoid probate and they need a trust to do that. When we start asking questions, we find out that a trust is often too complicated for what they want to accomplish (and will cost about twice what they think it will cost).
A living trust is a legal way of holding, managing, and distributing property. That’s a lot of fancy legal jargon for saying it’s a way of owning things. You can hold anything in a trust – bank account, your house, your car, your coin collection. The list is endless. The cool thing about a trust is that you can then decide how to give away everything that you own. Maybe that doesn’t sound so cool, but it’s a pretty neat trick, and it makes life much more comfortable for your loved ones after you die. (Check out this article to learn more about living trusts.)
In 2016, the Christie administration announced that there would be a tax trade-off: New Jersey would repeal the estate tax, increase the gross income tax exclusion on retirees, reduce the state sales tax from 7% to 6.875, and then to 6.625%, and oh yeah… Increase the gasoline tax by 23 cents per gallon. So, with the repeal of the New Jersey estate tax, do New Jerseyans need to continue using trusts to avoid paying an estate tax?