It’s impossible to know what types of legal and financial protections you may need in the future, but you can create an estate plan that will allow you to meet the needs of your beneficiaries and loved ones. One way you can do this is by establishing a trust. This is an estate planning tool that sets aside and protects assets for a specific use in the future.
There are many different types of trusts. The right choice for your estate plan depends primarily on your goals for the future and what you want for your beneficiaries after you pass away. Understanding the drawbacks and benefits associated with various types of trusts can help you make choices that will make sense and provide security for years to come.
What type is best?
There are many options available to you in terms of a trust. As the trustor, you can choose an option that allows you to decide how much control you want over assets in the trust and how you want the beneficiaries to receive these assets. You may find it beneficial to consider some of the following options:
- A revocable trust is one you can change over the course of your lifetime, while an irrevocable trust is not alterable once created.
- There are special needs trusts that allow you to set aside assets for a beneficiary who may not be able to care for him or herself.
- There are discretionary and nondiscretionary trusts, which affect how much control a trustee has over distributing or withholding assets from a beneficiary.
When creating a trust, an important consideration is how this decision will impact taxes. Trusts can keep certain assets from going through the probate process and provide privacy, and it’s important to understand how your estate planning choices will affect you now and well into the future.
Protecting your future
Creating an estate plan that makes sense long-term is crucial. There are tax laws and other complex legal matters to consider when creating documents and outlining your wishes. Whether you need to establish a trust, update your will or take other steps that may be beneficial, you may find it useful to work with an experienced New Jersey estate planning attorney. It is appropriate and prudent to have knowledgeable guidance as you plan for your future.