What is a Trust?
Trusts
A trust is created when one person or group’s assets are transferred to another person or group. The most common reason for trusts to be created is for the purpose of transferring property and money from one party to another. There are many different causes and reasons for someone to decide to create a trust. One reason is to help decrease their estate taxes and to protect their assets from being targeted by creditors. Trusts also allow one to preserve their savings and property so that they can pass it on to future generations, or charitable interests. By creating a trust, you transfer property, assets, securities, bank accounts and real estate to someone you “trust” while you are still living and it will carry over after death.
Trusts are extremely complicated legal documents. If you are interested in creating a trust, the best thing you can do is meet with a qualified estate planning attorney in the New Jersey area. These attorneys are well versed in the estate laws specific to New Jersey, which is critical in making sure your trust operates as intended.
Trusts are different from a Last Will and Testament. The orders in a Will do not go into effect until after the person who created it has passed. With a Revocable Living Trust, the terms are placed into effect upon the trust’s creation. With a Will, the creator can run into issues if they suffer from a mental disability. Since Wills only go into effect after death, the creator is not able to make a disability plan within the Will. With a Revocable Living Trust, a disability plan can be put into the terms of the trust. Another difference is that Trusts only deal with properties specifically covered in its terms, while a Will can delegate any of the properties owned by the creator of the Will. But the biggest difference is that a Will has to go through probate and a Revocable Living Trust does not.
Probate is the legal process that deals with the administration of Wills. Probate law makes your Last Will and Testament public and forces your loved ones to navigate a tricky legal system during a difficult and emotional time. A Revocable Living Trust, on the other hand, is private and allows your business to be handled without the public getting involved, and without anyone being able to see who received what.
Many individuals set up a trust as an estate planning tool. With an established trust the funds will not have to go through probate upon the individual’s death but they are immediately transferred to the beneficiary upon death.
Trusts are extremely complicated legal documents. If you are interested in creating a trust, the best thing you can do is meet with a qualified estate planning attorney in the New Jersey area. These attorneys are well versed in the estate laws specific to New Jersey, which is critical in making sure your trust operates as intended.
Trusts are different from a Last Will and Testament. The orders in a Will do not go into effect until after the person who created it has passed. With a Revocable Living Trust, the terms are placed into effect upon the trust’s creation. With a Will, the creator can run into issues if they suffer from a mental disability. Since Wills only go into effect after death, the creator is not able to make a disability plan within the Will. With a Revocable Living Trust, a disability plan can be put into the terms of the trust. Another difference is that Trusts only deal with properties specifically covered in its terms, while a Will can delegate any of the properties owned by the creator of the Will. But the biggest difference is that a Will has to go through probate and a Revocable Living Trust does not.
Probate is the legal process that deals with the administration of Wills. Probate law makes your Last Will and Testament public and forces your loved ones to navigate a tricky legal system during a difficult and emotional time. A Revocable Living Trust, on the other hand, is private and allows your business to be handled without the public getting involved, and without anyone being able to see who received what.
Many individuals set up a trust as an estate planning tool. With an established trust the funds will not have to go through probate upon the individual’s death but they are immediately transferred to the beneficiary upon death.
Trust Law Glossary
Trust law is very complex so it is helpful to have background knowledge on some of the key terms.
Beneficiary: The beneficiary is the person who is receiving (benefiting) from the trust. In other words, it is the person who receives properties or money when the terms of the trust are completed or reached. The grantor in some cases doubles as the beneficiary, but often the beneficiary is a third party.
Grantor: Also known as the settlor, this is the person who is creating the trust. The grantor creates the trust so they can transfer properties or money through the trust to their beneficiary.
Trustee: A trustee is someone who the beneficiary appoints to manage a trust and to carry out the terms of the trust. The trustee needs to make decisions for the trust cannot profit from any proceeds of the trust. Generally, when a trustee is dealing with a trust they should be using a high moral code that allows them to make decisions that are in the trusts’, and its beneficiaries, best interests.
Pour over will: A pour over will is used when you have a trust, but not all of your property and assets has been placed into it. A pour over will states that all of your remaining property and assets should be placed into your trust upon your death.
Beneficiary: The beneficiary is the person who is receiving (benefiting) from the trust. In other words, it is the person who receives properties or money when the terms of the trust are completed or reached. The grantor in some cases doubles as the beneficiary, but often the beneficiary is a third party.
Grantor: Also known as the settlor, this is the person who is creating the trust. The grantor creates the trust so they can transfer properties or money through the trust to their beneficiary.
Trustee: A trustee is someone who the beneficiary appoints to manage a trust and to carry out the terms of the trust. The trustee needs to make decisions for the trust cannot profit from any proceeds of the trust. Generally, when a trustee is dealing with a trust they should be using a high moral code that allows them to make decisions that are in the trusts’, and its beneficiaries, best interests.
Pour over will: A pour over will is used when you have a trust, but not all of your property and assets has been placed into it. A pour over will states that all of your remaining property and assets should be placed into your trust upon your death.