So-called “secret trusts” – also called “silent” or “quiet” trusts — are controversial in other jurisdictions.  The NJ UTC provides a compromise as to this concept, although the statute does not expressly provide for this kind of trust like statutes in other states do, such as Delaware.  12 Del. C. §§ 3303, 3339. In particular, […]

Under the NJ UTC, special needs trusts will not change in any extreme way.  However, some direction with regard to rights of creditors and the repayment of government benefits has been provided. Special needs trusts, also known as OBRA ‘93 Trusts, as defined in Subsection A of Section 3 of P.L. 2000, c.96 (C.3B:11-37), is […]

This concept is not as grounded in New Jersey law as it is in other jurisdictions.  Essentially, a directed trustee can be told to make certain investment decisions or distributions, or to take other actions in the administration of the trust.  A trust can allow a trustee to follow the direction of a third party.  […]

D. The Duty to Disclose Section 813 of the model UTC is among the most controversial provisions.  It is adopted in N.J.S.A. § 3B: 31-67.  Both the model and New Jersey versions deal with the trustee’s duties of disclosure.  The basic concept is not controversial; the level of disclosure is.  See generally Kevin D. Millard, […]

C. Remedies and Damages for Breach of Trust Remedies/Damages for Breach of Trust: Restatement and NJ Common Law Under the Second Restatement, “[t]he beneficiary of a trust can maintain a suit (a) to compel the trustee to perform his duties as trustee; (b) to enjoin the trustee from committing a breach of trust; (c) to […]

B. Trustee Defenses to Claims of Breach of Trust Trustee Defenses: New Jersey UTC Limitation of actions Perhaps the most important change in the law regarding trustee liability and defenses is the adoption by the NJ UTC of a limitation of action provision.  N.J.S.A. § 3B: 31-74.  That statute adopts specific time limits under New Jersey […]

This section addresses the standards under the NJ UTC, New Jersey common law, and the Restatement of Trusts.  Given the breadth of this area, the assessment will fall into four areas:  (A) the basic duties of the trustee for which claims may arise; (B) defenses to those claims, including limitations of actions; (C) damages and […]

Article 6 of the NJ UTC (N.J.S.A. § 3B:31-46 through § 3B:31-53) provides default rules concerning the office of the trustee, many of which were already established in the existing statutes, court rules, and case law. The process of qualifying as trustee, including procedures to accept or decline the office of trustee, are set forth […]

Revocable Trusts Article 5 of the NJ UTC contains miscellaneous provisions related to revocable trusts.  Certain of these concepts (e.g., modification, termination) are covered in more detail in other areas of this article. As delineated above, for instance, this article describes the capacity of the settlor required with respect to revocable trusts and establishes that […]

Creditor’s Claims and Spendthrift and Discretionary Trusts Article 4 of the NJ UTC deals with creditor’s claims and spendthrift and discretionary trusts.  See N.J.S.A. §§ 3B:31-35 to -41. Spendthrift provisions To the extent a beneficiary’s interest is not protected by a spendthrift provision, N.J.S.A. § 3B:31-35 permits a creditor or assignee of a beneficiary to […]