People in Parsippany have many choices when it comes to estate planning. They can choose who they want to make health care and financial decisions on their behalf should they become incapacitated. They can dictate what end-of-life medical care they want. Finally, they can dictate what they want done with their property after they pass away. With regards to this last point, many people choose to execute a trust that determines how their assets are distributed to their chosen beneficiaries.
When a person executes a trust, they can choose for that trust to be irrevocable or revocable. An irrevocable trust, once formed, cannot be changed even if the owner of the trust later wishes to do so. However, with a revocable trust the grantor can alter it or even revoke it if he or she wishes to do so during his or her lifetime. Once the grantor passes away, a revocable trust becomes irrevocable.
One advantage of a revocable trust is that it avoids probate, as long as the trust assets are titled in the trust’s name. In addition, as the grantor ages or declines in health, the manager of the trust can step in and take control of the trust assets. Also, if a revocable trust is in place, but the beneficiary is still a minor, guardianship will not be necessary. In addition, in a revocable trust, trust assets can be distributed on a set schedule, rather than all at once.
However, it is important to keep in mind that a revocable trust must be monitored regularly to make sure that its objectives are being fulfilled. The grantor of a revocable trust will not experience any advantages tax-wise with regards to the trust. Also, to keep the trust out of probate, in addition to a revocable trust there must be a will in place that dictates who will be the beneficiary of any assets not included in the trust. Also, assets placed in a revocable trust can still be accessed by the grantor’s creditors.
As this shows, a person in New Jersey who is considering executing a revocable trust should make sure they understand the advantages and disadvantages of doing so before they proceed. Revocable trusts can be very useful, but they are not for everyone. Still, a revocable trust can be made a part of an effective estate plan that aims to ensure that the grantor’s wishes with regards to their property will be met.
Source: Investopedia, “Revocable Trust,” accessed May 7, 2018