Many New Jersey residents use trusts as part of their estate planning. The family home is usually the largest asset many people own, and is often the first item to go into the trust. This and other assets need to be properly placed into the trust in order to be sure that an individual's estate plan is carried out in accordance with his or her wishes.
The majority of New Jersey residents do not know how to properly fund a trust simply because it is not something they have been trained to do. If an individual decides to transfer his or her home into the trust without professional assistance, it could result in unintended consequences. The home may have to go through probate instead of passing directly to the beneficiary.
In some cases, the beneficiary may not even receive the home as intended. Reducing or eliminating taxes is often a goal of those using trusts. However, if a home is not put into the trust correctly, someone else could end up owning the home and paying additional taxes on it as well. Further, if the home has to go through probate, this will increase the time and expenses in handling the issues.
Improperly transferring a home into a trust is just one example of what can go wrong without enlisting the help of someone who knows how to fund a trust. It is not enough to simply execute the documents that make up an estate plan. Even if a trust is not used, these documents need to be periodically reviewed and updated to ensure they still meet individual needs.
Source: thetimesherald.com, "Self-funding your trust can be dangerous", Matt Wallace, Feb. 7, 2015