Opinions about revocable living trusts vary, even among legal professionals. Many attorneys will focus upon the multiple potential benefits a well-written trust can unlock. Opponents may highlight the damage that a poorly written trust can do. In reality, the key to having a revocable living trust that is successful is to work with the right Hoboken estate planning attorney and ensure that the trust agreement you receive is a well-written document custom-tailored to meet your needs and achieve your objectives.
No one wants to think about their loved ones fighting in court over their estate after they die, but it does happen. The most important thing when it comes to these court challenges is not to fret about the challenge itself (which you can’t control) but to focus on ensuring that you have a plan that, even in the face of legal action, will achieve your goals (which you can control.)
A recent court case from Central Jersey shows an example of a well-done estate plan. In 1996, R. and M.A., a husband and wife, established their family living trust. The trust agreement document made it very clear that the trust existed for the benefit of the couple during their lifetimes and then for the benefit of their two children, B. and D.… but only after both parents had died.
Of course, one of the most important things you have to do after you create a living trust is to “fund” it, which means to place assets under the ownership of the trust. If you don’t do this step, your living trust is much like having a really, really nice (and perhaps expensive) safe deposit box with nothing inside it.
Trusts can be very helpful to those with property in multiple states
This couple, however, did fund their trust, including placing their marital home in Manalapan (and two additional out-of-state properties) under the ownership of the trust. (As a quick aside, a living trust can be a huge help to people like this couple, as it can help your family avoid having to go through probate not just once but multiple times. R. and M.A. owned real estate in three different states. Without a living trust, their family potentially could have been facing probate in New Jersey, Maryland and South Carolina.)
In 2014, the father died. In December 2017, the son, B., who lived at the Manalapan property, deeded that property to a cousin, K. One month later, B. died. His mother and his sister survived him. D. later contested that property transfer to K.
The paramount importance of a ‘testator’s intent’
So, was the deed valid? No. As the appeals court explained, the guiding principle in cases like these is always to ascertain “the testator’s intent” and enforce it, not to go “searching for reasons for” thwarting it. That means that, if it is reasonably clear what the creator(s) of the estate planning document wanted to happen, courts should ensure that that does, in fact, happen.
This couple’s trust accomplished its objectives because it was well-worded and clear. It made it plain that the son was not an initial trustee of the trust, and he did not become a trustee after his father’s death. The trust was very specific that the son would receive the Manalapan property only if he outlived both of his parents.
M.A. was still alive when B. executed the deed, making M.A. the trust’s only trustee at that time. That meant the deed was invalid, as B. had no authority to do anything with the Manalapan home.
The importance of contingency planning in your will or trust
The trust also did something else that is a hallmark of a well-written trust. It contemplated various contingency scenarios and clearly stated what would happen in each situation. The document specifically dictated that if either of the children died before one or both of their parents did, and that the deceased child had no children of his/her own, then his/her share went to his/her surviving sibling.
While R. and M.A. probably did not expect to outlive their children (as most parents hope they do not) when they created the trust in 1996, the trust wisely planned for that contingency and plainly instructed that, because B. died childless before his mother died, D. ultimately would receive everything.
Almost everyone needs an estate plan, whether that includes a will or a will and a living trust. The key, though, is not just to get an estate plan but to make sure you get a well-drafted estate plan. A well-written plan can be invaluable and potentially can save you or your family massive amounts of headaches, time and money. Count on knowledgeable Hoboken estate planning attorney Frank Marciano to provide you and your family with the legal advice and well-written estate plans you need. To set up a consultation and find out how we can help, contact the office online or call 201.656.1000.