While there are several different types of trusts available to New Jersey residents, there are only two that fit the needs of most people. These are revocable and irrevocable trusts. What's the difference? Which should one choose when going through the estate planning process?
A revocable trust is one that can be changed as often as one sees fit. The assets placed in the trust still belong to the creator of the trust, not the trust itself, until death or incapacitation strikes. As this is the case, assets may still be subject to death taxes.
An irrevocable trust, on the other hand, cannot be changed after it is created. Assets that are placed in the trust now belong to the trust, not the person. While this may seem harsh, there are significant tax benefits to going this route. Death taxes may not apply to assets placed in this type of trust, which could be good news for beneficiaries.
Clearly, there are big differences between the two trust types. Choosing if a trust is appropriate for one's situation and which type of trust can be challenging. Thankfully, this is not something that New Jersey residents have to do all alone. An experienced estate planning attorney can provide detailed information about each type of trust and how it would benefit or be a hindrance to one's goals. With this information in hand, it will then be possible for one to move forward and create a trust document, with the assistance of legal counsel, that truly fits his or her needs.
Source: dummies.com, "What is a Revocable Trust versus Irrevocable Trust," N. Brian Caverly and Jordan S. Simon, accessed Nov. 8, 2017