Estate planning is a complex process. Estate planning often includes a Last Will and Testament and may also include utilizing a trust as well as advance directives such as a power of attorney, health care proxy, living will, and HIPPA release form, among others. While these concepts may be foreign, these estate-planning tools assist with creating a comprehensive estate plan. One of the most important tools in every estate plan is a trust. A trust is created to protect property and assets. In order for a trust to be valid it must:
- Have a grantor. A grantor is a person that creates and funds the trust.
- Have a trustee. A trustee is a person responsible for protecting the assets within the trust for the benefit of named beneficiaries. A grantor with a revocable trust may be named as trustee with a successor trustee in the event of death.
- Have named beneficiaries. Beneficiaries are the individuals or entities who will receive the benefit of any assets within the trust.
- Be funded. A trust must be funded by transferring property or other assets into the name of the trust, which is then managed by the trustee.
- Have terms. A trust must be completed with instructions on how the trust operates as well as the trustee’s powers.
Types of Trusts
There are two different categories of trusts:
- Living. This type of trust remains active throughout the life of the grantor.
- Testamentary. A testamentary trust does not take effect until after a grantor’s death and is created in accordance with a Last Will and Testament.
Living trusts fall into two categories:
- Revocable. A revocable trust may be revoked at any time throughout the life of a grantor and also allows the grantor to retain control over the trust assets by naming his or herself as the trustee.
- Irrevocable. An irrevocable trust cannot be revoked or changed.
There are also other types of trusts designed to achieve a special estate-planning goals, such as special needs or tax concerns, among other things. It is important to speak with an experienced estate planning and elder law attorney to guide you through the process in order to meet your specific needs. The experienced elder law and estate planning attorneys at the Law Offices of Hunziker, Jones, & Sweeney help seniors and their families handle all aspects of estate planning, including the creation and modification of trusts. For more information or to schedule a consultation, contact our New Jersey Estate planning lawyers at (973) 256-0456.