How To Choose The Right Trust For Your Estate
If you realize that you need more than a basic will, it can still be difficult to pinpoint what exactly you do need. There are many types of trusts, and it is important to understand how each one functions before forming your estate plan.
Serving across New Jersey, the estate planning attorneys at Campbell & Pruchnik, LLC, can review your needs, advise you on your options and help you establish a suitable trust. Let our experience guide you forward.
Your Trust Should Align With Your Needs And Goals
Trusts serve specific purposes, so there are numerous trust options such as:
- Special needs trusts: If you have a child, a sibling, a parent or another loved one who has a disability, a special needs trust can allow you to provide for them long into the future.
- Charitable trusts: When you are passionate about a social cause, a religious organization, a nonprofit or another type of charity, you may wish to donate assets to that group once you no longer need worldly belongings. A few different types of charitable trusts can allow you to preserve assets for donation.
- Spendthrift trusts: If you want to leave your beneficiaries a significant inheritance, but you want to protect the value against poor personal finance management, you might consider a spendthrift trust. You can create specific terms and limitations for this trust that address any concerns you have about how the beneficiary could receive or use their inheritance.
When forming a trust, you would select a third party to act as the trustee, who must dutifully oversee the assets within the trust. Trustees may function in different ways depending on the trust, but it is always important to select a reliable trustee.
What Is The Difference Between Revocable And Irrevocable Trusts?
The terms “revocable” and “irrevocable” describe the nature of the trust. You can modify or end a revocable trust (also known as a “living trust”) during your lifetime, whereas you cannot change an irrevocable trust once you have established it.
This distinction is critical to understand before forming any trust because it can impact your ability to change your mind in the future. With an irrevocable trust, you relinquish your personal ownership to any assets that you place within the trust. Because the assets belong to the trust, you can gain unique legal and financial benefits — at the cost of having less control over those assets.