While it can be overwhelming, creating an extensive estate plan is one of the most important things an individual can do for themselves while they are alive. Having an estate plan allows an individual to be in control of their lifelong collection of assets and belongings after they pass away. When creating an estate plan, one may wish to set up a trust as a way to manage their estate. A person who creates a trust is known as the “trustor,” while the person who benefits from the trust 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
Creating a trust is different from a will. It is set up differently and treated differently as well. Trust can avoid probate, which makes it possible for a beneficiary to have access to the trustor’s assets much faster. Setting up a trust also saves the beneficiary from certain legal fees and taxes. With a trust, the trustor is able to control their wealth by ensuring their estate ends up exactly where they wanted it to.
Irrevocable vs. Revocable Trusts
In the state of New Jersey, there are two main types of trusts. Deciding which trust an individual may want to set up depends on their personal situation. The type of trust a trustor may wish to set up may be contingent upon what they are looking to leave behind as well as how much control they wish to have over the trust once it is made. 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 change the trust without the permission of the beneficiary.
Other Types of Trusts
There are numerous options as to what type of trust a person can create for their estate plan. Every trust has a different purpose to suit a situation the trustor may be looking for. It is important to have legal counsel guide you through this process to ensure you are setting up the trust that is right for you. The type of created may depend on who the trustor is leaving the estate to in addition to what it is they are leaving them (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, contact Velasco Law Office today.
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 20 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.