A revocable living trust is a tool that clients can use to avoid the probate process after they pass a way. Any revocable trust that is created must be properly funded or else the trust will fail due to a lack of sufficient assets necessary to cover the expenses. This column discusses the rules and regulations dealing with living trusts that are created in the State of New Jersey. In the eyes of the Internal Revenue Service (IRS) a revocable living trust is transparent. If the grantor of the trust is also the trustee then they can “buy, sell, trade, mortgage, liquidate, gift or otherwise treat trust property as personal property while having no impact on personal income taxes.” When the grantor transfers personal assets into the trust that is called “funding the trust.”
See Trusts Must Be Funded Properly, Cape May County Herald, October 4, 2015.
