What is a Trust?

The primary goal of any trust is to ensure all beneficiaries of a will maximize their inheritance upon their loved one’s passing. When someone establishes a trust, they are essentially creating a contract between a third party and their estate. This third party, known as a trustee, will then manage the trust’s administration. If you are in the process of writing your will, you may wish to learn about the different types of trusts available to you, as they are all tailored to accommodate specific financial situations. Here are some of the questions you may have regarding the trust-making process:

What is a revocable trust?

A revocable trust can be modified or terminated by the grantor at any time, as long as he or she is mentally capable of handling his or her own life affairs without the beneficiary’s permission. An irrevocable trust, on the other hand, requires the grantor to revoke all of his or her rights to the ownership of the trust, which will thereby prevent the trust from modification or termination without the beneficiary’s permission. 

What are the different types of trusts available in New Jersey?

New Jersey citizens have access to various types of trusts, all of which serve different purposes. However, it is generally a good idea for you to hire an experienced attorney who can help you decide which trusts are best suited for your specific financial situation. Some of the most common trusts available in New Jersey are as follows:

  • Special Needs Trust: These trusts are for when you have a loved one with special needs. This can help you have peace of mind, knowing that your loved one will be financially stable following your passing. Additionally, you may provide your loved one with any government-related benefits they require through a special needs trust, which very often is a huge sigh of relief to both your loved one and your family.
  • Charitable Trust: Charitable trusts are for those who seek to distribute assets to a charitable organization upon their passing. While these organizations are the beneficiaries of such trusts, they may also help implement income or estate tax planning methods for the grantor as well.
  • Testamentary Trust: Generally, these trusts are created as a part of the grantor’s will, and only become effective after the grantor has passed away.
  • Irrevocable Life Insurance Trust: This type of trust is for those who wish to remove their life insurance from their estate to help pay estate costs and liberate beneficiaries of the tax consequences of their life insurance policy.

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