Dealing With A Revocable Trust With A Multi-State Presence

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Administration Attorney

A 91 year old Pennsylvania resident owns N.J. real estate with a Fair Market Value of $500,000. The real estate is owned in the name of her Revocable Living Trust created and funded while she was a Florida resident. Her children do not live in New Jersey. The beneficiaries of the trust are all biological children and grandchildren. The question raised is whether ownership by revocable trust of N.J. real estate creates any adverse tax consequences when she passes.

A further fact is that the PA resident intends to remain in Pennsylvania until her death. Does revoking the trust now make things simpler for estate/trust administration purposes in the future for her family members?

New Jersey does not tax nonresident estates for estate tax purposes even when the property is located in N.J. The New Jersey inheritance tax doesn’t apply to transfers to children regardless of the amount; and Pennsylvania can’t tax real estate outside Pennsylvania.

Probating a Will is not particularly difficult, expensive or burdensome in New Jersey, Pennsylvania or Florida (some colleagues claim Florida can be expensive). Moreover, Florida doesn’t issue letters of trusteeship for trusts, so in Florida you don’t have to go to court for subsequent trustee changes.

New Jersey doesn’t require ancillary probate. However, at this point the property is already in the trust, so it would probably be simpler to leave it in the trust to avoid having to transfer the property again. Because the trust is quite old (1988) it’s worth reviewing it to see if the dispositive terms and the choice of fiduciaries still makes sense. In particular, more people are concerned about asset protection now than in 1988. Clients generally provide for their children in trust rather than outright. That keeps their children’s inheritances out of their estates for estate tax purposes (though fewer people are concerned about that now that the Federal estate tax exclusion is $11,490,000 and portability is permanent. It also better protects their children’s inheritances from creditors, spouses, and Medicaid.

To discuss your NJ Estate Administration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.