What is a Trust and Do I Need One?

For many people, trusts are an important part of the estate planning process in New Jersey. A trust is essentially a legal tool, or a legal arrangement, through which a person’s assets are held for beneficiaries, and ultimately transferred to beneficiaries according to the wishes of the party who established the trust. The person who makes the trust is typically known as a “grantor” in New Jersey, although this person might also be known as the “trustor.” Once a trust is established, the assets in it become managed by a party known as a “trustee.” Depending on the type of trust and the reason for creating it, the grantor may be able to also serve as the trustee.
There are various types of trusts that can be established in New Jersey, and they have different purposes and benefits. The best way to determine whether you should establish a trust, and if so which type, is by speaking with a New Jersey estate planning lawyer. In the meantime, the following information can provide you with a general idea of the kinds of trusts available in New Jersey. The following descriptions explain some of the umbrella terms for trusts that all trusts will fall into. To learn more about specific types of trusts within the categories below, you should seek advice from a trusts and estate planning attorney.
Revocable Versus Irrevocable Trusts
All trusts in New Jersey will either be “revocable” trusts or “irrevocable” trusts. Revocable trusts are ones that can be changed, amended, or revoked during the grantor’s lifetime. Irrevocable trusts cannot be changed or revoked. Accordingly, once an irrevocable trust is established, the terms of and assets held within the trust are set.
It might seem preferable to make a revocable trust in all circumstances, but there are some types of trusts that must be established as irrevocable trusts in order for them to achieve their purpose.
Living Trusts Versus Testamentary Trusts
The term “living trust” refers to any type of trust that is established during the lifetime of the party making the trust, and it is sometimes called an “inter vivos” trust. As such, you may have a revocable living trust or an irrevocable living trust.
Differently, a “testamentary trust” is a legal tool through which assets are distributed after a person dies. Most of the types of trusts established in estate planning are living trusts. Whether a trust can be a revocable living trust or must be an irrevocable living trust will depend on the specific type of trust.
Contact a Summit Estate Planning Lawyer
Do you have questions about establishing a trust, or more general questions about trusts and estate planning? One of the experienced New Jersey estate planning attorneys at Dempsey, Dempsey & Sheehan can speak with you today and can arrange for a detailed discussion about your circumstances and your estate planning needs. We are here to assist you with trusts and all other aspects of estate planning. Do not hesitate to reach out to our firm to learn more about how we served clients in Summit and across New Jersey.
Source:
nj.gov/treasury/taxation/pdf/pubs/tgi-ee/git12.pdf