Many New Jersey residents may not believe that a trust is for them. This may be because there are certain myths surrounding the use of this estate planning tool. These myths are that only the rich need a trust, they are too complicated and a living person does not need a trust.
Not only wealthy people can reap the benefits provided by a trust. There are times when it makes sense for an individual to create a trust for his or her heirs in order to protect them. First, it may limit the exposure of the assets in the trust to estate and inheritance taxes, creditors and even spouses. Second, it can keep an heir from spending all of his or her inheritance at one time. This could leave more of the assets available for a beneficiary's use in the future.
The creator of the trust can use some of these same protections as well. It can be an effective money management tool and can take care of an individual's financial affairs in the event that he or she becomes incapacitated. Any upfront costs attributed to the creation of a trust could be offset during a person's lifetime.
Trusts can cover a variety of situations and are a valuable part of estate planning. New Jersey law specifies certain requirements in order for a trust to be considered valid. Therefore, it may be a good idea to seek out the advice and assistance of someone familiar with those laws to create the trust. Done properly, a trust can provide an individual and his or her family with peace of mind.
Source: dailyfinance.com, "3 Myths About Trusts That You Can't Afford to Believe", Dan Caplinger, Sept. 20, 2014