When you create an irrevocable trust, you take your trust property out of your estate and put it in the hands of your trustee – the person you have appointed to administer your trust. As the grantor – the creator of the trust – this means you will not be able to make changes to, or revoke, the trust once you have signed the documents. Although it may seem daunting to give up control of your assets, many people opt for irrevocable trusts because of the benefits attached to them. An experienced attorney can help you consider the advantages according to your estate and beneficiaries’ needs, as well as walk you through the process of creating one.
Reasons to Create A Trust That Is Irrevocable
Transferring your assets into an irrevocable trust requires a great deal of thought. Here are some of the considerations to consider:
- Avoiding probate. A trust is privately held by trustee, unlike a will, which is subject to court supervision. This means that upon the death of the grantor, the trustee can proceed with distributing trust property to the beneficiaries without having to go through the court-supervised process of probate. This allows trustees to save money and time that would have otherwise been spent in court, making for a more efficient trust administration process.
- Asset Protection. Taking your assets out of your estate can protect them from creditor claims.
- Preserving your right to medical benefits. With fewer assets in your estate (as they are transferred to irrevocable trust), you have a higher chance of qualifying for certain need-based financial support. For example, if you have a mental or physical disability, your lack of financial assets may help you in qualifying for Medicaid. If you should ever need to long-term skilled nursing home care, the assets transferred to an irrevocable, if done properly, will not be available to pay for nursing home care, as would be the case if you had only a revocable trust.
An Irrevocable Trust That Matches Your Goals
When deciding on creating an irrevocable trust is the first step, there are also specific forms of irrevocable trusts you can opt for that serve unique needs. Some common variations of trusts include:
- Testamentary trusts
Created to accompany a will, providing specific instructions of how the assets should be distributed. For example, a parent may specify that his or her child will only inherit property at a certain age, rather than automatically upon his or her death.
- Special needs trusts
Created for the benefit of a loved one who suffers from mental or physical disabilities, and is in need of long-term and costly care. Special needs trusts provide unique advantages that a simple monetary gift cannot.
- Credit shelter trusts. Credit shelter trusts may be especially useful for married couples. For example, when one spouse passes away, his or her assets might get counted toward that of the surviving spouse, unnecessarily qualifying him or her for more estate taxes. With a credit shelter trust, the surviving spouse can benefit from the funds without being taxed for those assets. However, although these types of trusts were popular in the early 21st century and up to a few years ago, the significant increase of the Federal estate tax exemption and the elimination of the New Jersey estate tax have in large part been replaced by disclaimer trusts.
Our lawyers at Rudolph and Bloodgood, LLC, are committed to getting to know you so that we can help you come up with a plan that can best serve your financial needs. We will help you calculate the value of your asset and consider the major needs of your beneficiaries to ensure that your estate plan is handled with care and detailed attention.
Tell Us About Your Unique Goals
If you would like to learn more about how creating an Irrevocable Trust can meet your goals, schedule a consultation with us, contact us online or call 973-208-2900. Our office in Riverdale is handicap-accessible and has adequate off-street parking. We are available during regular business hours and are convenient to NJ Route 23 and Route I-287.
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