For high-net-worth families and their advisors, estate planning is far more than the mere execution of a Will. In New Jersey, where probate is often perceived as streamlined, many individuals still ask: when is a revocable living trust truly the better option than a Will? This article will explore that question, breaking down:
- Situations where a Revocable Living Trust is better than a Will in NJ;
- Situations where a Will and a Revocable Living Trust offer similar outcomes; and finally
- When a Will may be preferable to a Revocable Living Trust.
Before we get into the heart of this post though, I would like to take moment to address a very common question: Why do some people say you should always have a trust and others don’t? The general answer to this is that in some jurisdictions, probate is so difficult or expensive that it is always worthwhile to have a trust to avoid probate. Probate is not expensive in New Jersey, and it can often be simple. Accordingly, the facts and circumstances of your matter will dictate whether a revocable trust is better than a Will in NJ.
I. When a Trust Is Better Than a Will in NJ
1. Avoiding Ancillary Probate for Out-of-State Property
While New Jersey probate is relatively efficient, probate in some other jurisdictions is not. Real estate or tangible assets located in another state would require a separate probate proceeding unless those assets are titled in a trust (or are otherwise titled in a manner that avoids probate). By placing out-of-state property in a revocable trust, clients can avoid the time and cost of multiple probate processes.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals with vacation homes or investment properties in other states.
2. Avoiding NJ Inheritance Tax Freezes for Non-Class A Beneficiaries
In New Jersey, assets passing via probate to Class C or D beneficiaries (such as siblings, nieces, or unrelated individuals) are often subject to automatic freezes of 50% or more until the state issues an NJ inheritance tax waiver. A revocable trust avoids this administrative freeze (to the extent that the asset is owned inside the trust prior to death), allowing trustees to access and distribute assets efficiently while still complying with tax obligations. Even a small bequest to a niece, nephew, friend, or step-grandchild can cause the NJ estate administration process to go from simple to highly complex.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who wish to leave a bequest to someone other than a spouse, descendant, ascendant, or charity. (Although we would also weigh whether or not you are able to accomplish your goals via other means such as life insurance, lifetime gifting, or setting up an irrevocable trust.)
It is important to note that the revocable trust does NOT avoid the NJ inheritance tax, merely the requirement to obtain a tax waiver. Click here to learn more about the NJ Inheritance Tax.
3. Faster Post-Death Administration
Many people are aware that a revocable living trust paired with properly titled assets can avoid probate. However, it is not always easy to understand the benefit to avoiding probate. Simply stated, it usually means that there are reduced costs upon death and there is a faster post-death administration of your assets.
Executors under a Will must wait to receive Letters Testamentary before taking action. While New Jersey is not a state with long probate delays, the waiting period can still create issues—particularly when accounts need to be accessed immediately to pay expenses, manage volatile investments, or deal with real property. A trust allows the successor trustee to act immediately without court delay.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who absolutely know that there should never be any sort of delay in the administration of their affairs after death.
4. Better Management of Long Term Trusts
Both a Will and a Revocable Living Trust can create trusts for others after you pass away. However, there is a massive benefit to setting up a subtrust under a revocable trust (after you pass) rather than creating a testimentary trust. (A testimentary trust is simply a trust that you create for someone else under a Will.) If you create a testimentary trust in New Jersey, then the New Jersey court system will always have jurisdiction over that trust, and practically any change that your heirs may wish to make would be governed by the NJ courts. Whereas, if you create a subtrust under a revocable trust, then the trust documents can provide rules for what changes can be made without going to court.
For example, let’s assume that you wish to create a traditional asset protection dynasty trust structure for your heirs (to protect them from divorce and creditors). You may create a trust in which your children can become co-trustee of their own trust at age 30, and sole trustee of their own trust at age 35. You may also allow the trust to be moved from one jurisdiction to another. Again, you can have these terms under a Will or a Revocable Trust. However, if this were a revocable trust, we wouldn’t need court permission to change the trustee when your child becomes of age and we wouldn’t need court permission to move the trust to Florida or South Dakota (to minimize state income taxes).
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who wish to set up long term trust structures for their loved ones after they pass away.
Click here for a Full Guide to Different Types of Trusts for Children.
5. Providing for Complex Distribution Formulas
While both a Will and a Revocable Living Trust can provide for complex distribution formulas, I personally believe that a Trust is far more efficient at it. Imagine a scenario in which you have $1M of Life Insurance Insurance, $1M of IRA money, $1M in ROTH funds, a $1M house, and $1M in stocks/bonds/brokerage assets. Let’s also assume that you wish to leave everything equally to 5 beneficiaries (Child A, Child B, Supplemental Needs Trust for Child C, Niece D, and Charity E). We don’t know how much each of these asset classes will be worth upon death, so it would be a risky strategy to name each person as beneficiary of one of the 5 assets. Moreover, you may need a central bucket of money to pay expenses and taxes.
If you filter all of these assets through your estate, so that a Will directs where they will go, it will be incredibly tax inefficient (because estates don’t handle retirement funds well – causing a 5 year withdrawal period rather than a longer withdrawal that others could be eligible for). Additionally, it will expose the life insurance to creditors.
However, if you filter everything through a trust, the trust can ensure that the bequest to your niece is first funded with life insurance (to minimize the NJ inheritance tax), that the charity is first funded with IRA money (to avoid the others having to pay income tax), and that the Supplemental Needs Trust is first funded with ROTH money (because disabled beneficiaries get a lifetime stretch of that asset class versus a 10 year rule for most other beneficiaries). The formula can do all of this while ensuring that your other two children are treated fairly as well in terms of taxes and asset protection. A Will simply can’t do this as nicely.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who wish to have a customized distribution scheme that can account for the tax favorability of each asset class and each beneficiary class.
6. Simplified Funding and Distribution
Clients with multiple accounts, interests in entities, or complex titling structures benefit from consolidating assets into a revocable trust. At death, all assets already titled in the trust avoid retitling and can be managed or distributed per the trust terms without triggering probate. This creates a centralized structure particularly useful to make administration as easy as possible for your loved ones.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who wish to own many types of accounts or assets in different locations or different financial institutions.
7. Better Management with Respect to Complex Family Dynamics
We have many clients who are now part of a blended family. Imagine a situation in which a couple has been living together for 10 years, but each has children from a previous relationship. The couples want to provide for each other, but also for their descendants. There are many ways to make this happen, but one popular way is by using a “Yours”, “Mine”, and “Ours” type approach. So for example, Spouse 1 and Spouse 2 can each have their own respective assets go to their children upon death (via a Will, trust, or beneficiary designation), but then they can also have a joint trust. The benefit to this joint trust is that it provides for the surviving spouse, but it can also lock in a distribution scheme so that when the surviving spouse dies, the funds get split between both sides, and doesn’t just go to the survivor’s side. (This avoids what I dub the “Survivor take all problem”.) Simply put, a Will can’t handle joint assets.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who wish to better manage joint assets when there is a blended family or other complex family dynamic.
8. Protection Against Lost or Contested Wills
While New Jersey is one of the few states that allows a copy of a Will to be probated, the process is far simpler and less costly compared to when you have the original. Moreover, if the original is lost, courts may refuse to admit a copy unless specific conditions are met. A revocable trust generally operates via a signed copy and does not require submission to the Surrogate’s Court, which avoids these risks.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who may not be the best at maintaining their own records or believe that they may move.
9. Avoiding Disclosure of Terms to the Public
Unlike a Will, which becomes a public record once probated, a revocable trust remains private. This is particularly valuable when the estate plan contains sensitive distributions, asset details, or bespoke provisions. Privacy matters not only for family harmony but for asset protection and business continuity. (As you can see from this Mercer County, NJ Surrogate’s Website – Wills can be accessed very easily and for a minimal cost.)
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who wish to maintain as much privacy as possible.
10. Incapacity Planning and Immediate Control
A revocable trust allows the grantor to name a successor trustee or co-trustee who can seamlessly step in upon incapacity without the need for court intervention. While a durable power of attorney can also accomplish this to a degree, many financial institutions are more comfortable with the authority of a successor trustee named in a trust than with a POA.
This can be especially useful for complex asset classes such as closely held businesses, LLCs, or sophisticated brokerage accounts. It can also be very important when there is a complex family dynamic.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who worry that they will be the victim of financial elder abuse as they age or wish to ensure that others are able to step up easily to help manage their finances. I strongly recommend a trust in situations where clients advise me that they are worried that a caregiver or even family member may wish to take advantage of them.
11. Institutional Trustee or Professional Management
Sophisticated clients may prefer a regulated trust company or professional trustee to act after death or incapacity. Trusts provide a natural framework for fiduciary management—especially when naming someone outside the family who would not qualify as an executor under NJ court rules or would prefer not to deal with the probate court at all. Also, be aware that many trust companies can’t or won’t act as an Executor or an agent under a Financial Power of Attorney.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who know that tye plan on hiring a professional trustee or corporate trustee after they pass or become incapacitated.
12. If You are Planning to Move in the Future
Even if none of the situations above are true now, consider if you might move to another state in the future. If you do move, and that state is a jurisdiction in which probate is difficult, it may be better to set up a trust now rather than after you move. The biggest reason to consider setting up a trust ahead of time is the simple reason that once the trust is set up, it can then buy property in the new jurisdiction whenever you are ready. Otherwise, you may need to spend additional fees transferring the property in to your trust later.
Note however that you may still need to have the trust reviewed and updated before you move. Therefore, if you know that you may move to a particular jurisdiction, consider working with an attorney licensed in multiple jurisdictions so that the trust can be designed with this in mind. For example, when working with clients who live in New Jersey, New York, or Pennsylvania, but are thinking to buy a place in Florida, we add in the Florida homestead language from the start.
Accordingly, we believe that a revocable living trust is better than a Will in NJ for individuals who think that they may move to another state in the future.
II. Where Trusts and Wills Offer Similar Outcomes
1. Minimizing Taxes
Both a Will and a revocable trust can be used to establish credit shelter trusts, QTIP trusts, charitable lead or remainder trusts, and other tax-planning vehicles. The dispositive plan, not the instrument itself, drives tax outcomes. As mentioned above though, a trust can better at handling retirement funds, which can lead to a better tax outcome with respect to income tax planning.
2. Special Needs Planning
Either structure can incorporate a fully compliant special needs trust to ensure disabled beneficiaries retain eligibility for means-tested benefits. That being said, because a Third Party Supplemental Needs Trust is a long term trust, flexibility for the long term is important. It should also be noted that while we believe that a revocable living trust is better than a Will in NJ for individuals who wish to create a Third Party Supplemental Needs Trust, you may also wish to consider a stand-alone Third Party Supplemental Needs Trust, as this will allow other family members to contribute to it more easily if they wish to do so.
Additionally, please make sure that you understand the difference between first party special needs trusts and third party supplemental needs trusts in NJ.
3. Spendthrift and Creditor Protection Trusts for Beneficiaries
Both instruments can create lifetime trusts for descendants or other beneficiaries that include spendthrift provisions, discretionary standards, and creditor protections.
4. Conditional or Staggered Gifts
Whether structured via a Will or a trust, modern estate plans can condition distributions on age, education, sobriety, or other milestones.
5. Charitable Giving
While revocable trusts make charitable planning more tax efficient (again – see comments above about how a trust can better handle retirement funds), both Wills and trusts can establish post-mortem charitable trusts or allocate gifts to donor-advised funds or private foundations. Click here to learn more about Philanthropic Planning.
III. When a Will May Be Better Than a Revocable Trust in New Jersey
1. Lower Upfront Cost
A basic Will costs less to draft. For clients with simple estates, minimal account structures, and no tax or incapacity concerns, this may be a suitable and cost-effective choice.
2. Simplicity for Traditional Families
For individuals with modest estates, no non-Class A beneficiaries, and no out-of-state property, probate in NJ is not overly burdensome. A Will may be more intuitive and easier to maintain.
3. No Need for Asset Retitling
A trust must be properly funded to be effective. Clients who are unlikely to complete this step may inadvertently cause more confusion. A Will, by contrast, operates on all probate-eligible assets automatically.
IV. Other Thoughts Regarding Wills and Trusts in New Jersey
1. A Revocable Trust Should Always Be Accompanied by a Pourover Will
Even if you have a revocable trust, you still should have a Pourover Will. A Pourover Will is a simple Will which states that if you didn’t have an opportunity to retitle an asset properly into your trust, then anything still in your name at the time of your death should be sent to your trust and administered according to the terms of your trust. It is a failsafe. Accordingly, even if a trust is better than a Will in NJ for your situation, you should still make sure that you have a Pourover Will that correctly points to your revocable trust.
2. This Post is Focused on Traditional Estate Planning – Not Medicaid Planning
Often when people ask about a trust, it is unclear if they wish to do traditional estate planning or Medicaid planning. This post does not address Medicaid Planning issues.
Conclusion: Thoughtful Planning Requires More Than a Form
Ultimately, deciding whether to use a Will or revocable trust in New Jersey is less about what the law allows and more about what your wishes are and the complexity of your life and finances. For individuals with complexity—multi-state assets, sensitive family dynamics, large estates, or privacy concerns—a revocable trust often offers flexibility, control, and efficiency.
At The Pollock Firm LLC, our attorneys work with clients and their advisors to design customized plans that reflect both the law and the client’s reality. Whether a revocable trust is better than a Will in NJ depends on the situation—but understanding when and why it can be better is the first step.
Contact us today to schedule a consultation to see if a Revocable Trust is better than a Will in NJ based upon your personal circumstances.
