By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Trust Law Attorney
The guardian statutes in New Jersey provide a specific procedure for a surviving parent to set up a trust on behalf of their minor child who inherits property from their deceased father, mother, grandparent, or for that matter, any person. Codified at N.J.S.A. §3B:12-54.1, a parent or guardian may apply to the Superior Court, Chancery Division, Probate Part to get permission to set up a trust for the benefit of the child or children when they will be receiving assets from an intestate estate (parent who dies without a Last Will) and they are under 18 years of age. As a biological parent, this is a parent’s right.
The statute specifies the terms that may be set forth in the trust. While the statute uses the word may, it is likely the court will order that certain language be made “mandatory” in the trust. The mandatory provisions are:
- The trust assets and the income shall be used for the exclusive benefit of the beneficiary, including but not limited to the beneficiary’s health, support, maintenance and education, including college and post-graduate work, in the discretion of the trustees;
- The beneficiary shall have the right to request distributions of trust principal as follows: one-third of the principal after attaining the age of 25 years, one-half of the then balance after attaining the age of 30 years, and all of the then balance after attaining the age of 35 years; or at such other ages as the court, in its discretion, shall determine;
- Should the beneficiary die prior to the termination of the trust, the remaining trust principal and accrued income shall be distributed to the beneficiary’s estate;
- Two individual trustees, or one corporate trustee, or a combination thereof, shall serve at all times, with or without bond, as the court shall determine in its discretion; and
The last part of the statute is interesting because a single parent is going to have to find another person to help him or her run the trust, and if the spouse has no other living relatives, counsel will have to ask the court to appoint the surviving parent solely as the trustee.
The statute finally provides a list of factors a court should consider before making its decision. They include:
- The amount of money involved
- The availability of other resources for current maintenance and support
- The stability of the entity offering an investment covered by the application
- Income tax consequences
- Any special needs or vulnerabilities of the minor
- The financial and psychological consequences of putting all or a substantial part of the minor’s estate out of reach for a long period of time.
To discuss your NJ Trust, Estate Probate matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing consultations if you are unable to come to our office.