A common estate planning mistake occurs when individuals own or acquire property outside of a trust. This can lead to unintended tax consequences and exposing property to probate or creditors.
Placing property in a revocable trust provides benefits such as allowing assets to avoid the probate process. In addition, by placing property in a revocable trust, it will allow family members or loved ones to have control over the assets in the event that the creator of the trust becomes incapacitated. Otherwise, a court may need to appoint a guardian.
It is imperative that any newly acquired property be placed in an existing trust or a new trust be created. While there are many different types of trusts, some may offer different benefits to protect property. Certain trusts prevent creditors from being able to collect on any debts that may be owed upon the death of the creator. A revocable trust provides the option to change, modify, add, or revoke in accordance with the terms of the trust. For example, a creator may want to change the beneficiary or modify beneficiaries in the event that their child has children. This will allow the creator to change the beneficiary of assets to reflect all of their grandchildren.
For many individuals setting up a trust is important to protect their assets and avoid state and federal tax consequences. However, it may not be the right estate planning method for every situation. It is important to speak with an experienced estate planning attorney to establish a comprehensive estate plan that will reflect your individual goals. In addition, it is important to remember that when you establish a trust, it is imperative to maintain and fund it. Furthermore, it is important to remain up to date on changing laws and consistently update all estate planning documents to reflect life events. The failure to update beneficiaries may result in costly litigation, unintended beneficiaries, and a delayed distribution of assets.
When creating a trust, it is important that individuals consult an experienced attorney who can oversee the process. The New Jersey trust & estates lawyers at Hunziker, Jones, & Sweeney P.A. have experience representing clients in various matters, including establishing revocable trusts. The attorneys at the firm are trusted by their clients to handle each legal matter with diligence and compassion. For more information or to schedule a consultation, contact our New Jersey trusts & estates law firm at (973) 256-0456.