1. I have a Wills Based Plan, not a Revocable Living Trust-based Plan. In what circumstances can a will suffice (is there a certain asset size/value that dictates and favors having trusts)?

When your plan is a Wills-based plan, it may have testamentary trusts embedded inside of the will. There are no trusts created during your lifetime-the trusts to be created will be created at your passing for the benefit of your next of kin. Because the centerpiece of your plan is a Will, that document will need to go through probate when you pass away. If you went with a Revocable Living Trust Plan, that plan would not have to go through probate so long as you transfer your assets into the revocable living trust prior to your passing. It is meant to streamline the process for your errors, but you will do more work during your lifetime. You can find more detailed explanation of the options here: https://youtu.be/pfOTx1ZjvI8

2. Why have testamentary trusts/subtrusts? What is the advantage if any to do so, as opposed to having only a trust for my son and he determines how those assets pass down to his children?

If you had indicated that you wanted to have the grandchildren provided for at the passing of the second spouse, so we have drafted the plan accordingly. If you move forward with a trust for your son, and he determines how to pass those assets down his children-you are delegating that responsibility to him. So long as you are comfortable with that, this is acceptable. In fact, if there is confidence that he will not use all the assets, then you can do it that way.

Does the Trust Protector have to be a non-Trustee or non-beneficiary.

That is correct.

3. How much does a trustee get paid in New Jersey?

Trustees, Guardians and Conservators (NJSA 3B:18-23 through 3B:18-27 ):

Income:

6% of income earned by the trust or assets under guardianship/conservatorship each year.
Principal/Corpus (each year):
$5.00 per thousand dollars of corpus on the first $400,000; and
$3.00 per thousand dollars of corpus in excess of $400,000.
There is an annual minimum of $100, and banks or corporate trustees are entitled to “what is reasonable” (usually based on their fee schedules.
If there are Co-Trustees or Co-Guardians, an additional 1/5 commission is granted for the additional fiduciaries.

4. If retirement plans are payable to an accumulation trust as beneficiary – will they receive any retirement income?

If you name the trust as a beneficiary of your retirement plan, then yes. Typically this is done as an asset protection vehicle for the retirement income. That is to say, distributions would go from the IRA institution to the trust. This prevents the assets being lost through a divorce, lawsuits, creditor claim, etc. It also ensures that children who are young do not have the income access at two young of an age.

5. What are the mechanics of accumulation trust? Does it make distributions directly to the beneficiary (i.e the spouse until he/she is alive)? What happens to retirement account assets once the spouse has passed? Is the child or grandchildren eligible to receive retirement account distributions once the spouse has passed?

Most commonly, the spouse will be the primary beneficiary. The trust will be the contingent beneficiary. The spouse will be able to take RMDs during their lifetime. After passing, the trust will then become the beneficiary. The required minimum distributions will then be paid to the trust – which are then available to the beneficiary of the trust (the child or the grandchild).

6. What is section 1014 of the IRS – step up in cost basis?

It refers to the cost basis of an asset that you own. If you buy something for $100, and then sell it for $500-you have $400 gain on which you have to pay taxes. But if you die owning it, your kids will now have a new cost basis of the fair market value at the time of your death-or $500. In that case if they sell it for $510, they only have to pay taxes on the $10 gain since the time you died. This is called a step up in cost basis. Your revocable trust will preserve this.

7. How are foreign assets handled by the proposed trust?

Although there is typically nothing in your estate plan which indicates that it is only for US assets, our recommendation for any assets abroad is that you have a simple document compliant with the law in which you own assets so the foreign courts are not stuck trying to understand a US will. This answer may change depending on whether or not the country in question with the assets has a treaty with the US.

8. How do we keep our estate & assets private after we pass away?

When someone passes away, their Will needs to be submitted to probate. The best way to avoid probate is by having the bulk of your assets owned by trust during your lifetime. However, a Will is always required because there may be assets that are left in your individual name, either intentionally or unintentionally.

The next best way to preserve privacy may be to have your assets poured into your trust after you pass. The Will continues to be a public record document, but the only known information to the public would be who the executors are, and that the assets were poured into the trust. The Trust remains private. Other ways to avoid probate or to use transfer on death/payable on death designations as well as beneficiary designations. After your documents are signed and we conduct an asset alignment meeting I will guide you on each of your assets individually.

9. Can an Executor be forced to serve?

No executor can be forced to serve. If the executor chooses not to serve, they can renounce and the next one in line names in the Will will serve. If the executor chooses to serve & then delegate their role to an attorney, accountant, or any other professional they can do so.

They may be paying the professional fees out of the estate. However, once formally renounced, it would be difficult to regain that title.

10. Can a Trustee chose to not accept their role?

Yes, they have the power to not accept the trusteeship. At that point, it would just go to the next person in order, and if there is no one else named, there are provisions within the trust to have an independent trustee named.