New Jersey residents who are thinking about their estate plan might wonder whether an trust would be a good vehicle for passing assets on to loved ones. A trust may give them greater control over the distribution. For example, certain conditions can control the timing of a receipt of funds by a beneficiary. One of the first things people might consider is whether they would prefer to use a revocable or irrevocable trust.
The main difference is that an irrevocable trust cannot be changed while a revocable trust can be. However, there are two kinds of irrevocable trusts. One kind is created and funded while the grantor is still alive. A testamentary trust is not created and funded until the grantor dies. It is set up via a will, and since it does not officially exist while the grantor is alive, the grantor can change or cancel the trust by making a change to the will.
Since an irrevocable trust technically removes assets from a person’s estate, there may be a number of advantages to creating one. Funds in an irrevocable trust are protected from creditors. They also will not be counted if a person needs to qualify for Medicare benefits.
A person might want to work with an attorney to create a trust. It is important that wills and trusts are done correctly or they might be vulnerable to challenges or may not accomplish what a person hopes to do. Furthermore, an attorney might be able to make suggestions regarding the estate plan that a person might not have considered. For example, people might also need a durable power of attorney to handle their finances if they are incapacitated.