The main purpose of every trust is to preserve assets that will eventually pass or transfer to beneficiaries. In order for the trust to be valid, the terms must clearly recognize that the assets will be transferred to beneficiaries. In addition, trusts are also used to:
- Eliminate probate. Probate is the process where assets are passed to a beneficiary through a Last Will and Testament. Probate can be costly and time-consuming and provides others with an opportunity to contest the Will.
- Maintains privacy. Trust settlements to beneficiaries are private, whereas court proceedings involving a Last Will and Testament are not.
- Pass property or other assets to minors, those with disabilities, and charities.
- Assist those that are incapable of managing large sums of money.
- Asset protection. This may ensure Medicaid eligibility for chronic care and community Medicaid, which will help preserve assets.
- Reduce estate taxes. There is both federal and state estate tax, which may be reduced by utilizing a trust.
Eliminate probate in other states. If a person owns property in another state, he or she may fund the trust with the out-of-state property.
Impact Of Creating A Trust
Creating and funding a trust can dramatically impact an estate plan. While many people believe that having only advanced directives and a Last Will and Testament create an adequate estate plan, this is not always the case, especially for those with greater assets. For instance, a minor beneficiary cannot directly inherit money and a person with special needs may not be able to inherit money without impacting his or her government benefits. Creating a trust will assist in resolving situations like this.
To find out whether an estate plan would benefit from creating a trust, speak with an experienced Estate Planning and Elder Law attorney. 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 New Jersey estate planning, including the creation of trusts. For more information or to schedule a consultation, contact our New Jersey Estate planning and Medicaid planning lawyers at (973) 256-0456.