Legal Question in Wills and Trusts in New Jersey
Family Living trust account vs ITF account.
A Family Living Trust has been set up [in New Jersey] and all monies have been put in CDs in the family living trust account at the bank.
My one bank finds it difficult to open trust accounts and everything has to be approved by their legal dept... making it very difficult to do any business with them. I know the advantages of having this type of living trust when it comes to tax savings.
My Question: If you have a regular [itf] in trust for account [not in the trust], for example, Mary in trust for John]...Do you get the same tax advantages, at the time of death, as you would have if it was in a Family Living Trust Account?
2 Answers from Attorneys
Re: Family Living trust account vs ITF account.
ITF accounts only avoid probate, and pass to the named beneficiary. There are no tax advantages. I do not know the terms of the living trust you created. Unless the assets are irrevocably set aside for the ultimate beneficiary, or follow a tax pattern (e.g., allow for the lifetime exclusion, marital deduction, etc.) all that happens is probate avoidance. If the bank involved is located in Millburn, let me know more details, as I deal with their legal department regularly, and I might be able to move them along.
Re: Family Living trust account vs ITF account.
Both the trust and the ITF bank accounts avoid probate. Specific tax advantages of each depends on several factors (e.g., the parties, how the trust/account is funded, etc.).
Feel free to contact my office for a comprehensive assessment of your tax and estate planning needs.
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