New Jersey Living Trust
The New Jersey rules that shape the document: the N.J.S.A. 3B:31-53(a) statutory trustee commission default, the absence of any real-property homestead exemption, and the flat one-third elective share that reaches revocable trust assets.
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Introduction
Under New Jersey's Uniform Trust Code, N.J.S.A. 3B:31-53(a), a trustee's compensation defaults to a statutory percentage commission, 6% of income plus a tiered share of corpus, rather than the "reasonable compensation" standard most Uniform Trust Code states use; that default applies unless your trust instrument sets a different rate. A living trust moves whatever you actually retitle into it to the trustee, avoiding New Jersey probate for those assets, but anything you never fund into the trust still passes through probate no matter what the trust document says. New Jersey also has no homestead exemption statute of the Florida or Texas type, so retitling a house into this trust raises none of the homestead-abandonment questions that matter elsewhere. And because this is a revocable trust, N.J.S.A. 3B:31-39(a)(1) keeps its property reachable by the settlor's own creditors during life, and N.J.S.A. 3B:8-3 pulls its assets into a surviving spouse's flat one-third elective share under 3B:8-1.
Key Things to Know
- 1
New Jersey's sharpest departure from most Uniform Trust Code states: absent a contrary provision in the trust instrument, a trustee's compensation defaults to a statutory percentage commission schedule under N.J.S.A. 3B:31-53(a), which expressly incorporates N.J.S.A. 3B:18-2, 3B:18-13, and 3B:18-14, rather than the generic "reasonable compensation" standard used elsewhere. The default is 6% of income received plus, on corpus, 5% of the first $200,000, 3.5% of the next amount up to $1,000,000, and 2% above that, with an added 1% of corpus per additional fiduciary; these are fixed statutory figures, not indexed for inflation, but confirm the current statute before relying on them. A court reduces these commissions only if a beneficiary affirmatively shows the trustee's services were materially deficient.
- 2
New Jersey has no homestead exemption statute of the kind Florida, Texas, or other states use to shield a residence's equity from creditors or restrict its devise. The state's only general debtor exemption, N.J.S.A. 2A:17-19, reaches just $1,000 of personal property, a fixed statutory figure not indexed for inflation, and says nothing about real estate. Funding a New Jersey house into this trust does not raise the homestead-abandonment or devise-restriction issues that arise in states with a real-property homestead exemption.
- 3
New Jersey requires this trust to be created by a written instrument, a written declaration, or a written exercise of a power of appointment (N.J.S.A. 3B:31-18); there is no oral-trust option anywhere in the chapter. Once in writing, no notarization and no witnesses are required for the trust itself to be valid, though a funding deed still needs a notary acknowledgment to be recordable.
- 4
New Jersey's elective share, N.J.S.A. 3B:8-1, is a flat one-third of the augmented estate that does not scale with the length of the marriage, contrary to a common assumption. N.J.S.A. 3B:8-3 pulls this trust's assets into that augmented estate because the settlor retains income, use, or the power to revoke or invade principal, so a New Jersey living trust cannot be used to disinherit a surviving spouse.
- 5
New Jersey has no self-settled asset protection trust statute. A revocable living trust gives no creditor protection at all while the settlor is alive: N.J.S.A. 3B:31-39(a)(1) subjects its property to the settlor's own creditors the same as property owned outright. Even converting to an irrevocable trust for the settlor's own benefit does not shield it; 3B:31-39(a)(2) lets a creditor reach the maximum amount distributable to the settlor.
- 6
New Jersey abolished the common-law Rule Against Perpetuities outright (N.J.S.A. 46:2F-9) and replaced it with a narrower 21-year suspension-of-alienation test. N.J.S.A. 46:2F-10(c) turns that test off entirely whenever the trustee has a power to sell trust property, which is true of essentially every professionally drafted trust, so in practice a New Jersey trust faces no real perpetuities ceiling.
- 7
New Jersey repealed its separate Estate Tax for deaths on or after January 1, 2018, but its graduated Inheritance Tax, 11% to 16% under Title 54, Chapter 34, remains in force for beneficiaries outside Class A (spouse, child, grandchild, parent, stepchild). Because the Inheritance Tax reaches property "transferred by a decedent" regardless of how it passes, funding this trust avoids New Jersey probate but does not avoid the Inheritance Tax.
Key decisions before you file
Before you file a Living Trust in New Jersey, a few decisions shape the document: which option to choose and what each one means. The Living Trust guide walks through them.
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New Jersey Requirements for Living Trust
New Jersey Statutory Trustee Commission Default
Absent a contrary provision in the trust instrument, N.J.S.A. 3B:31-53(a) defaults trustee compensation to a statutory percentage commission: 6% of income received (3B:18-13) and, on corpus (3B:18-14), 5% of the first $200,000, 3.5% of the next amount up to $1,000,000, and 2% above that, rather than a reasonable-compensation standard. These figures are fixed by statute, not indexed for inflation.
New Jersey Has No Real-Property Homestead Exemption
New Jersey has no homestead exemption statute protecting a residence from creditors or restricting its devise; the only general debtor exemption, N.J.S.A. 2A:17-19, covers just $1,000 of personal property, a fixed figure not indexed for inflation. Funding a house into this trust raises none of the homestead-abandonment issues that arise in states with a real-property homestead exemption.
New Jersey Written-Instrument Requirement
N.J.S.A. 3B:31-18 requires this trust to be created by a written instrument, written declaration, or written exercise of a power of appointment, with no oral-trust option. No notarization or witnesses are required for the trust instrument itself to be valid.
New Jersey Flat One-Third Elective Share Reaches Trust Assets
N.J.S.A. 3B:8-1 sets a flat one-third elective share of the augmented estate that does not scale with marriage length, and N.J.S.A. 3B:8-3 pulls this trust's assets into that augmented estate because the settlor retains income, use, or a power to revoke.
New Jersey Realty Transfer Fee Exemption for Self-Benefit Funding Deeds
N.J.A.C. 18:16-5.11(a) exempts from the Realty Transfer Fee a deed conveying real property to the trustee for the settlor's own exclusive use and benefit; a deed into a trust benefiting anyone else is fully taxable under 18:16-5.11(b).
New Jersey No Self-Settled Asset Protection Trust
N.J.S.A. 3B:31-39(a)(1)-(2) keeps a revocable trust's assets reachable by the settlor's own creditors during life and lets a creditor reach the maximum amount distributable to the settlor even from an irrevocable trust; New Jersey has enacted no domestic asset protection trust statute.