Residents of New Jersey who are considering their final expenses and estate planning may encounter difficult questions, particularly when they have several children or other relatives and are uncertain of the best way to distribute their assets. One way to deal with these concerns is to open a trust, which allows someone to make decisions about their heirs' inheritance and ensure that their wishes are respected.
Someone who establishes a trust is called a grantor. This person must name a trustee who will hold the assets for the beneficiary. The grantor can decide how and when the money will be distributed to the beneficiary, or they can leave these decisions up to the trustee. Depending on an individual's circumstances, they may wish to appoint another family member as trustee, or they may find it more prudent to appoint someone outside of the family.
One circumstance that could make a trust a logical choice is when a parent has concerns about an adult child's ability to handle money. A trust can also be established for a minor child and could be used to provide money for college or for any specific purposes decided upon by the grantor.
There are two categories of trusts: revocable and irrevocable. A revocable trust can be changed or even terminated. As its name implies, an irrevocable trust cannot be modified or terminated once it has been established. Unlike wills, trusts go into effect immediately upon being established. Trusts also do not go through probate, a court process that wills are sometimes subject to. This can save time and costs for beneficiaries.