NJ Adopts the Uniform Trust Code (UTC)
On July 17, 2016, New Jersey adopted the Uniform Trust Code (UTC), and this newly enacted law may have an impact on your estate planning options.
What is the Uniform Trust Code?
The Uniform Trust Code is a series of provisions meant to create a common scheme of trust laws throughout the country. By creating uniform laws, the UTC helps ease legal tensions between states and provides a common set of rules to govern trusts. The UTC provides states with guidance on how to create a valid trust, how trusts are modified or terminated, and rules regarding the behavior of trustees. Although not all states have adopted this model law, New Jersey joins more than 30 other states that already follow the UTC.
What Does the Uniform Trust Code Change?
One of the most significant changes the Uniform Trust Code makes is that it allows for an irrevocable trust to be modified without requiring a court proceeding. The UTC also allows for “secret” trusts and directed trusts. A “secret” or quiet trust is a trust where the beneficiary does not need to be notified of the trust. A directed trust allows for non-trustees to make decisions regarding the trust. Directed trusts are particularly useful in situations where trust assets cannot be easily liquidated.
These are only a few of the features included in the Uniform Trust Code, and New Jersey did not adopt 100% of the UTC. For example, the state chose to keep its own rules governing the removal of trustees.
Should I Update My Estate Plan?
A change in the law is a good reason, but not the only reason to update your estate plan. You should review your estate plan with a licensed attorney any time you are considering changing the beneficiaries, trustees, executors, or agents of your estate, or whenever you experience a significant life event such as marriage, divorce, the birth of a child, or retirement. For help setting up or updating your estate plan, contact Tagliente & Shah today!