New Jersey Revocable Living Trust: Setup and Funding

A revocable living trust is one of the core tools covered in New Jersey estate planning: wills, trusts, and probate. This article walks through what a living trust must contain to be valid in New Jersey, how to move property into it, and how it works with a will. It also covers what a revocable trust does not accomplish, and how the person who creates it can amend or revoke it.

What a revocable living trust is in New Jersey

A living trust is created while the settlor is alive, in contrast to a testamentary trust, which a will creates at death. “Revocable” means the settlor keeps the power to change or end it. In a common setup, one person serves as settlor (the creator), trustee (the manager), and primary beneficiary during life, with a named successor trustee and remainder beneficiaries who take over at death.

New Jersey trusts are governed by the New Jersey Uniform Trust Code, which took effect in 2016. Under N.J.S.A. 3B:31-19, a trust exists only if the settlor has capacity, the settlor intends to create the trust, there is a definite beneficiary, the trustee has actual duties to perform, and the same person is not the sole trustee and sole beneficiary. While the trust stays revocable, N.J.S.A. 3B:31-44 provides that the trustee’s duties are owed to the settlor rather than to the future beneficiaries, which is why the settlor can direct the assets freely during life.

How to create the trust

Creating a New Jersey living trust centers on a written trust instrument. N.J.S.A. 3B:31-18 recognizes a trust created by a written instrument that transfers property to a trustee, or by a written declaration that the owner holds identifiable property as trustee. New Jersey does not recognize an oral living trust of the kind a few states allow.

1. Choose the trustee and successor trustee

   Most settlors name themselves as the initial trustee to keep day-to-day control. The instrument also names a successor trustee to step in at death or incapacity. The successor can be an individual, such as an adult child, or an institution like a bank or trust company.

2. Identify the beneficiaries and their shares

   The trust names who receives the assets and in what shares, and can direct that a beneficiary’s share stay in trust until a set age. A definite beneficiary is one of the validity requirements under N.J.S.A. 3B:31-19.

3. Draft and sign the written instrument

   The trust terms are set out in a written document identifying the settlor, the trustee, the beneficiaries, and the trustee’s powers. New Jersey practice is to sign the instrument before a notary. A trust that will hold real estate is generally notarized so the related deed can be recorded.

4. Fund the trust

   A signed instrument controls only the property actually transferred into it. Funding, which means retitling assets into the trustee’s name, is the step that gives the trust effect.

Funding the trust

Funding is the part people most often leave unfinished, and an unfunded trust accomplishes nothing. To fund the trust, you change the legal owner of each asset from your own name to the name of the trustee. For a bank or brokerage account, that means retitling the account in the name of the trust. For New Jersey real estate, you sign and record a new deed transferring the property to the trustee, filed with the county clerk or registrar of deeds where the property sits.

How a living trust works with your will and probate

A living trust does not replace a will. Most people who use a trust also sign a “pour-over” will, which directs any asset left in the individual’s own name at death into the trust. Assets that are never transferred into the trust, and that carry no other beneficiary designation, still pass through New Jersey’s probate process in the county surrogate’s court. For a modest estate, some of those assets can instead pass using the small estate affidavit in New Jersey rather than full administration. Property held in a properly funded trust, by contrast, passes under the trust terms without probate, which is one of the main ways to avoid probate in New Jersey. ## What a revocable living trust does not do A revocable trust is often oversold. Because the settlor keeps complete control, the law treats the assets as still belonging to the settlor for several purposes. – It does not protect assets from creditors. Under N.J.S.A. 3B:31-39, the property of a revocable trust is subject to the settlor’s creditors during life, and remains reachable after death when the probate estate cannot cover valid claims. – It does not cut income tax. While the settlor is alive, the trust is a grantor trust: its income is reported on the settlor’s own return under the IRS grantor trust rules, and the trust uses the settlor’s Social Security number rather than a separate tax identification number. – It does not avoid estate or inheritance tax. Trust assets remain part of the settlor’s gross estate for federal purposes; as of 2026, a federal estate tax return is required only when the gross estate exceeds $15 million, per the IRS estate tax thresholds. New Jersey ended its own estate tax for deaths on or after January 1, 2018, but the New Jersey inheritance tax can still apply to what non-exempt beneficiaries receive, whether or not the assets pass through a trust, as the New Jersey Division of Taxation explains. ## Changing or revoking the trust The main advantage of a revocable trust is flexibility. N.J.S.A. 3B:31-43 presumes a New Jersey trust is revocable unless the instrument expressly says otherwise, and it lets the settlor revoke or amend the trust by following any method the trust specifies, by a later will or codicil that refers to the trust, or by another writing that shows clear and convincing intent. On revocation, the trustee returns the property to the settlor. An agent acting under a power of attorney can revoke or amend the trust only when both the trust and the power of attorney expressly grant that authority, so a durable power of attorney is a related document many people sign alongside a trust.