If you are estate planning in our state, you know that there are various options and choices to make. One of the most important considerations is how to help your beneficiaries with probate or avoid it entirely, and how to manage your assets.
One of the choices New Jersey residents have is to create a trust. The most powerful type of trust is known as an irrevocable trust.
What are irrevocable trusts?
As with other types of trusts, irrevocable trusts allow a grantor (the creator of the trust) to move assets into a trust for the benefit of beneficiaries (the recipients of estate assets and profits). A grantor maintains some degree over control over a trust if it is revocable, but irrevocable trusts are very difficult to amend without consent from the beneficiaries.
Irrevocable trusts pros and cons
Irrevocable trusts offer many potential benefits for the grantor and beneficiaries. For the grantor, the assets are shielded from certain taxes and lawsuits.
The lawsuit shield can be particularly important if you have a career with a high possibility of litigation, like business owners, doctors, lawyers, etc.
Irrevocable trusts are also protected from creditors, and they may help you qualify for state and federal benefits, like Medicare. Beneficiaries may also receive tax benefits too.
Due to the complicated nature and tax considerations of these trusts, they require more consideration than simpler trusts. And, they can be expensive to create.
When you create an irrevocable trust, you lose most of your access to the assets, so you must weigh your options. Often, it can be beneficial to discuss these trusts with an expert.
What if I need assistance?
Irrevocable trusts are only one type of trust, and while they do offer advantages, you have options, and your comprehensive estate plan will be unique to your needs and goals. Working with an attorney knowledgeable about New Jersey estate laws and probate proceedings can tailor a customized estate plan that can optimize benefits for you and your beneficiaries.