Each state sets its own rules for the distribution of a person's assets upon death. In addition, each state also sets the rules by which people can override those rules by writing their own instructions, called wills, for the disposition of their assets when they die. New Jersey's laws and rules note the requirements that must be met to make a will legal, as well as the responsibilities of the person designated to carry out the instructions in a well. The same laws and regulations govern trusts, financial arrangements that permit third parties to hold and administer assets on behalf of a beneficiary.
A person making a will in New Jersey must be at least 18 years of age and of sound mind. This person, called the testator, can name beneficiaries to receive his estate (all of his property) after his death. New Jersey requires wills to be in writing and typed. Holographic, or handwritten, wills may be recognized in very limited circumstances at the court’s discretion. The testator must sign his will in the presence of at least two witnesses. Those witnesses must also sign the will. The will remains in place and will be probated after the testator’s death unless he revokes it. Revocation occurs when the testator signs a new will or physically destroys a will by marking, burning or tearing.
The person named as the executor in a will is responsible for submitting the will for probate and maintaining the testator’s property after his death before it is distributed to the beneficiaries. The executor must first locate and take possession of all the assets listed in the will. She must take an account of all the property and keep records of any outstanding debts and expenses paid from the testator’s assets. The executor must then notify the beneficiaries of their inheritance and distribute property in accordance with the will. An executor must act with care, protecting the property until distribution. She has a duty of loyalty to the beneficiary and cannot wastefully spend or invest the assets or attempt to further her own interests above those of the beneficiary.
In New Jersey, the person who makes a trust, called the grantor, must have legal capacity, which means she must be at least 18 years of age and mentally competent. The grantor can put almost any property in trust, including real estate, bank accounts and stocks or bonds. The property is called “trust corpus” or the body of the trust. A trustee is appointed to maintain the trust and a grantor can name himself as trustee to retain control of the trust until his death. The last party to a trust is the beneficiary. A grantor can name anyone as a beneficiary, including charitable organizations, relatives and close friends. When the grantor dies, the trustee will distribute the property to the named beneficiary or beneficiaries.
The trustee has a duty to maintain the property in the trust. If he is responsible for making investments, he must act in the beneficiary’s best interests, and cannot take risks with the property in trust. If a beneficiary is entitled to partial distribution from the trust prior to the grantor’s death, the trustee must make those payments as directed in the trust. The trustee must also submit an annual accounting to the beneficiary which sets forth any income added to or distributed from the trust. A trustee cannot delegate any of these duties to someone else, but he is permitted to seek assistance from an accountant, an attorney, a financial adviser or other professional when necessary.