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Irrevocable trusts basics

On Behalf of | Feb 24, 2023 | Estate Planning

If you embark on the journey of estate planning, you quickly see that you have a lot of choices for building your unique estate plan. After all, you have a unique Mahwah, New Jersey, portfolio, family, home and many other considerations. Some of the more common estate planning tools or documents are called wills and trusts.

The basics

Within both wills and trusts, there are various types. However, broadly, wills define how to handle your assets after you pass. Trusts create fiduciary relationships between a trustee and your beneficiary (or beneficiaries).

Irrevocable trust basics

Today, we will dive specifically into a subset of trusts called irrevocable trusts. These arrangements create a relationship between a grantor (typically, you), a trustee (a manager of the trust) and a beneficiary (the person who receives the specified assets of the trust). Irrevocable trusts are titled that way because once set, the grantor or person who wants to make the trust, effectively moves assets out of their name and into the trust. However, why on Earth would someone want to move their assets?

Advantages and disadvantages of irrevocable trusts

Often, someone makes the decision to move their assets into an irrevocable trust because this allows the beneficiary the advantage of bypassing many estate taxes. Additionally, many persons in professions where they have a higher chance of lawsuits, like medical professionals and business owners, opt for irrevocable trusts. Once the assets are moved from their name or their company, they are shielded from lawsuits and creditors.

The Mahwah, New Jersey, irrevocable trusts are usually more complicated to create because they create these legal shields. As a result, irrevocable trusts are difficult to change without consent from the beneficiary or asking the trustee to petition a court. However, even then, changes are not guaranteed.

Final thoughts

If you are considering your North Jersey estate plan, you have many tools and means of protecting your loved ones, interests and assets. Consulting with an attorney who can offer you personalized recommendations is often a good idea because they will also be familiar with New Jersey probate procedures and will and trust proceedings. Simply writing a document does not make your wishes enforceable, and you deserve the respect of managing your affairs how you see best.