When someone writes a will, they may consider establishing certain trusts. Though they vary in specificity, the essential purpose of any trust is to ensure all beneficiaries will maximize their inheritance. Essentially, a trust is a contract between the estate and a third party that is in charge of a trust’s administration, known as a trustee. If you are a trustee or are creating a trust, you may seek some clarification regarding the various types of trusts that exist, or even about the trust-making process itself. Here are some of the questions you may have:
What is an irrevocable trust?
Many people wonder what the difference is between a revocable and an irrevocable trust. Basically, an irrevocable trust requires the grantor to revoke all of his or her rights to the ownership of the trust, thereby preventing the trust from termination or modification without the beneficiary’s permission. A revocable trust, however, can be modified or terminated by the grantor at any time, so long as its creator is mentally capable of handling his or her own life affairs without the beneficiary’s permission.
What are the different types of trusts?
Some of the most common trusts people choose to include in their will, depending on their financial situation, are as follows:
- Charitable Trust: In a charitable trust, the beneficiary is a charitable organization. If you wish to distribute assets to a charitable organization upon your passing, you may select this trust. Generally, charitable trusts will help implement income or estate tax planning methods for the grantor.
- Irrevocable Life Insurance Trust: Individuals who seek to remove their life insurance from their estate to help liberate beneficiaries of the tax consequences of their life insurance policy and pay estate costs may choose an irrevocable life insurance trust.
- Testamentary Trust: This is generally created as part of the grantor’s will, only becoming effective after the grantor has passed away.
- Special Needs Trust: If your loved one has a disability and you wish to ensure he or she is well-taken care of after your death, a special needs trust may work for you. Through a special needs trust, you can provide your loved one with the financial support and potential government-related benefits they need to continuously support their standard of life.
Contact our experienced New Jersey firm
Writing a will and ensuring each of its components are soundly taken care of is not easy. Hiring an experienced attorney can help ensure your final wishes are carried out accordingly.
The Partners at Townsend Tomaio & Newmark lead the firm practicing Family and Divorce Law exclusively. All Partners have been honored by their inclusion in the New Jersey Monthly Super Lawyers List for several years. They lead the boutique firm in handling custody, support, alimony, divorce, and domestic violence cases across Northern, New Jersey.