How To Avoid Probate In New Jersey

The probate process in New Jersey is generally much simpler than in our neighbor state of New York, where the process usually takes a long time. However, for various reasons, many people still prefer to plan ahead to keep assets out of probate.

Here are the main ways to avoid probate in New Jersey:

1. Revocable Living Trust
   This is a very common technique for probate avoidance. It is preferred by many because the grantor (the person who makes the transfer) can serve as trustee during lifetime, and can continue to control the trust assets while alive. Upon the passing of the grantor, the successor trustee distributes assets directly to the named beneficiaries without probate. It bypasses the court system and provides immediate access to a decedent’s assets.
2. Beneficiary Designations
   Some of the assets held in a person’s sole name are non-probate “contract” assets, which pass outside the Last Will and Testament because their disposition is controlled by beneficiary designations. A contract asset with designated beneficiaries will pass to the beneficiaries directly upon death, and bypass probate. Life insurance policies, retirement accounts, annuities, and payable-on-death accounts are all considered contract assets. It is important that beneficiary designations are updated periodically so that a person’s contract assets pass to the right beneficiaries.
3. Joint Ownership with Right of Survivorship
   Some assets, such as real estate and bank accounts, can be owned as joint ownership with right of survivorship. The surviving joint owner inherits full ownership of the property when the other owner passes away. However, one must be careful when adding someone as a co-owner because there may be income and estate tax implication, plus potential liability and control issues.
4. Lifetime Gifting
   Lifetime gifting avoids probate by simply transferring assets to family and friends during lifetime. Depending on the aggregated lifetime gifting amount, there may be no federal estate tax implications due to the recent bill passed by President Trump. However, there may continue to be income tax implications. In making a gift, the grantor will lose control over the transferred assets. The gift recipients can use the funds in any way that they choose, and would be under no obligation to return these monies. In addition, those assets would be vulnerable in case the gift recipients were to suffer financial loss through bankruptcy, lawsuit, or divorce.

It is extremely important to note that any of the method discuss above does not protect your assets for Medicaid asset protection planning and long-term care planning purposes. There are other risks involved in using these methods to avoid probate. We recommend that anyone who is interested in avoiding probate speak to an experienced trust and estate attorney to form a comprehensive plan before taking any actions.

For additional information regarding will contests and probate, please visit https://vanarellilaw.com/will-contests-probate-litigation-elder-abuse-actions/, or click here to contact us today.