Trusts often bring up images of wealthy people who are limiting their tax exposure and/or providing for their children. However, regardless of a New Jersey resident's net worth, trusts can be an invaluable estate planning tool for many reasons. Depending on individual estate planning goals, there is most likely a trust to help achieve them.
One of the benefits of a trust is the ability to control the circumstances under which a beneficiary receives his or her share of the trust's assets. Limitations can be placed on when distributions occur. They can be based on age, marital status or some other factor important to the trust's creator. However, the provisions cannot be contrary to law or public policy.
Some trusts provide protection from creditors, litigation or other potential eventualities for the beneficiaries. Reducing estate taxes is also another popular reason many people use trusts since it leaves more of the value of the assets to the beneficiaries. Not every trust will accomplish this goal, however, and a careful review of the types of trusts is warranted prior to one being drafted and executed.
Determining how to construct an estate plan and whether a trust would be beneficial requires the consideration of numerous factors. In some cases, figuring out estate planning goals could be the most difficult part of the process. A New Jersey estate planning attorney with extensive experience in this field will help construct a reliable plan based on those goals. Once complete, the plan can provide the individual and his or her family members with peace of mind that important assets have been protected.
Source: NASDAQ, "5 Things You Didn't Know -- but Should! -- About Trusts", Nov. 17, 2014