It might be easy to put off estate planning because it sounds complicated. Knowing the difference between trusts may help you understand what you want and also show you the benefit of getting trusts established sooner rather than later.
There are multiple types of trusts to people living in New Jersey, but the two big ones are revocable and irrevocable trusts.
These trusts still belong to you and that comes with certain advantages. According to The Balance, a revocable trust helps you avoid probate and keep things private. With the proper estate planning, these trusts may help you live better in your golden years since you still have access to the assets in the trust to help with private long-term care.
On the downside, revocable trusts do not offer much in the way of tax protection compared to irrevocable trusts.
These trusts are more stringent since any asset you put into it no longer belongs to you — it belongs to the trust. But transferring your assets into it may help reduce tax liability and, depending on the agreement, allow you to determine exactly how you want your assets divided after your death.
However, with how inflexible it is, any changes to it require the consent of all adult beneficiaries. Another caveat is, thanks to the tax protections, courts may require confirmation that a trust existed for several years before your death or other proof that the creation of this trust is not a form of tax evasion.
Your situation is unique and that may mean one of these trusts is better than the other. Having either trust over the long term may provide peace of mind to you and your beneficiaries depending on your estate plan.