Having an extensive estate plan for when you pass away is very important. It allows you to be in control of what happens to a lifelong collection of cherished assets when your life is over. Estate plans give you the opportunity to pass along these assets to people of your choosing. An option for individuals to manage their assets through an estate plan is by creating a trust. A person who creates a trust is known as the “trustor” and the person who benefits from it is known as the “beneficiary.” There is a third party involved who manages the trust, known as the “trustee.” A trust allows the trustee to take care of the assets on behalf of the beneficiary. In New Jersey, there are several ways a trust can be created.
Benefits of a Trust
When an individual creates a trust, they are passing down their belongings to loved ones after they die. By doing so, they can control their wealth and possessions by ensuring they end up in the hands of the right people and there is no worry about what may happen to them. Creating a trust is different from other estate options. Trusts avoid probate, which allows a beneficiary to have access to the trustor’s assets much faster than they would through a will. A trust can also save a beneficiary from certain legal fees and taxes that may usually be fixed on assets.
Irrevocable vs. Revocable Trusts
There are two main types of trusts. Deciding which trust to set up may change depending on the circumstances of the trustor creating it. A trustor may set up a specific trust depending on what they are looking to leave behind in addition to how much control they want to have over the trust when it is created. The two main types of trusts are:
- Revocable Trust: May be updated or terminated at any time without permission from the beneficiary.
- Irrevocable Trust: Requires the trustor to give up their rights to the trust. This means they cannot make any changes to the trust without the beneficiary’s permission.
Other Types of Trusts
There are several other options for trusts that a person may create depending on their own personal situation. Different trusts have different purposes, allowing them to suit several trustor’s needs. Because of this, it is important to have legal counsel guide you through setting up the trust that is right for you. Choosing a type of trust can depend on who the beneficiaries are in addition to what they are being left (money, a charity, etc). Other common trusts may include:
- Asset protection trusts
- Life insurance trusts
- Testamentary trusts
- Charitable remainder trusts
- Charitable leads trusts
- Inter vivos trusts
- Supplemental needs trusts
- Special Needs Trusts
- Generation-skipping trusts
- Qualified personal residence trusts
Contact our Firm
If you wish to create an estate plan and are seeking a legal representative to guide you through the process, Â contact the Law Offices of Cynthia L. Hanley, P.C. today.
If you require compassionate and knowledgeable legal guidance for a matter of divorce, family or estate law, please contact the experienced attorneys at the Law Offices of Cynthia L. Hanley today. Our firm proudly serves clients in Mansfield, Massachusetts and throughout Bristol County.
