Comprehensive Trust Services In New Jersey For Estate And Business Planning

Trusts are a fundamental tool for estate and business planning. They provide control over financial assets and are also important for asset protection.

What is a testamentary trust?

A testamentary (versus living) trust can be part of your will. Unlike a living trust which takes effect upon execution, a testamentary trust only becomes effective at your death. Such trusts are frequently designed to extend the time for controlling assets given to minor children or grandchildren beyond the age of majority (18 in most states). They can also be used to protect the disabled and elderly. Sometimes, testamentary trusts can be used as part of a tax savings plan.

What is a living trust?

A living trust, legally known as an inter vivos trust, is effective during your lifetime. Typically, your trustee manages your assets for your benefit during your lifetime and directs the distribution of assets upon your death. Testamentary trusts are frequently used to provide continuing management of your assets in case you become incapacitated. There may also be substantial tax savings.

Who should be named as a trustee?

A trustee has tremendous responsibility and obligations to follow the terms of the trust in accordance with directions of the probate court and state laws. If a family member or some close trusted individual has the capacity and business acumen to act as trustee, that is frequently your best choice. If not, you will be compelled to name a bank or institution as trustee. This can be expensive.

Why is a revocable living trust better than a power of attorney?

It has been a long-held belief among experienced estate planning practitioners that a fully-funded revocable living trust is a superior method, as compared to a power of attorney, by which to handle the long-term administration of a person’s assets after that person becomes incompetent and/or “disabled.” Reasons often cited for using a trust are:

• Banks and financial institutions will generally recognize the authority of a trustee under a trust more readily than an attorney-in-fact under a power of attorney.
• Attorneys under a power of attorney operate under the law of agency, whereas trustees operate under fiduciary or trust law, and banks (in particular) and other financial institutions are more comfortable and familiar with the latter.
• Many banks and financial institutions will not recognize a power of attorney that is not drafted in accordance with (if not on) their own preferred POA forms. Supposedly, Bank of America is notorious in this regard. Some jurisdictions have laws that purport to require financial institutions to recognize POAs valid in that jurisdictions, but I am not certain how effective those laws are.
• “Springing” powers of attorney present a special set of problems in getting financial institutions to recognize the authority of the attorney in fact, because the institutions demand sufficient proof that the POA has actually “sprung” (i.e., that the principal has become incompetent), which generally slows things down at a time of crisis.

If the threat of a long-term disability and its effect on the management of one’s assets is the “disease,” then the POA is a “band-aid,” while a fully funded RLT is the “cure!”

Income Taxation Of Trusts

Income Taxation of Trusts, Form 1041, can be far more complex than individual income tax.

Pet Trusts And Care

What happens to your pet after you are gone? Who will take care of your pet?

Setting up a pet trust enables your most valued furrever family member to be taken care of. Your furrever friend can get access to medical care, a home and love because of your actions during estate planning. A pet owner who would go to the trouble to make a Trust to take care of her pets really loves those pets, is a responsible person and considers her pets to be family.

The only way to guarantee the care of your pets after your death is to do the proper planning. Typical estate documents used to help protect your pets (as well as your human loved ones!) are:

• Will
• Pet Care Loving Trust
• Pet Care Power of Attorney
• Instructions to the Pet Guardian

The purpose of the Pet Trust and Plan is to assure that your pet will have wonderful and loving new guardians who will responsibly use the trust money to pay for things that the pet needs such as:

• food;
• supplies (beds, blankets, toys, etc.);
• veterinary care;
• kennel, hotel and/or paid petsitters while the new guardians are on vacation;
• dog walkers, if necessary on a regular basis;
• a fenced in yard (or electric fence) for a dog

Also, it is very important that you name the person or people who will get custody of the pets. You want a first and second choice of new guardian. The new guardians would need legal permission to make all decisions regarding the pet-some vets may require this in writing. This planning will prevent the big fear of any loving pet owner is that if no one will take the pets and give them a good home, the pets will be taken to a shelter and possibly euthanized or fail to thrive.

As an example, when one set of clients were last in Costa Rica, they observed:

“An old German Shepard was brought to an animal shelter. His owner was a sick, elderly lady confined to a wheel chair. Her sister wanted to get rid of the dog so left him at the shelter. The sick owner called crying and said she wanted her dog back but couldn’t walk and had no transportation to the shelter. The poor old dog was in the process of pining to death for its owner. He wouldn’t eat, drink or move. The shelter was supportive of the dog and his owner. There is a happy ending to this story as one of the receptionist WALKED the dog back to his owner’s home where, as far as I know, they are both still happily together.”

A good Pet Loving Trust and plan can protect you and your pet

Call Us For Personalized Trust Planning

Ready to secure your financial future and protect your assets? Our experienced team is here to help you navigate the complexities of trusts and estate planning. We proudly serve clients in New Jersey, nationwide and internationally. Find out more by calling Ronald J. Cappuccio J.D., LL.M. (Tax), at 856-665-2121 or sending us an email.