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Explaining trusts and their value to New Jersey residents

What is a trust? Many New Jersey residents may be unable to explain this estate planning device. While they are more familiar with wills and other testamentary documents, people tend to recognize the term "trust" as something some people use to protect their money but not something they would know how to execute.

The website of the United States' government, USA.gov, provides a useful article on trusts that explains many of the nuances that separate trusts from other estate planning methods. A trust is effectively a way to legally set aside and protect money and other property for another person. A trust can be used to benefit a living person at a later point in the beneficiary's life or it may be used to collect the property of a decedent that will pass, through the trust, to beneficiaries without probate.

When a person sets up a trust during his or her lifetime, that trust is called a living trust. Similarly, a trust that is created through the will of someone who has died is often called an after-death trust. A trust can be revocable or irrevocable, meaning that it can or cannot be terminated by its creator, respectively.

The effective use of trusts in estate planning can help individuals and their families save money through minimizing estate taxes and other financial burdens that are imposed when someone passes away. They are a good way for people to provide for their kids, grandkids and other dependant relations and protect assets until such a time that those dependants are ready to manage the value of the trusts on their own. Trusts can be privately managed and therefore are appealing to some individuals who wish to keep the terms of their estate plans under wraps.

Estate planning can be a multi-faceted process that involves different testamentary tools. Wills are a great place for many people to start, but those who are looking for other options may consider executing trust documents. Lawyers in the estate planning field can further explain the trust process to their clients and the rules New Jersey law imposes on their execution.

Source: USA.gov, "Understanding Trusts," accessed on July 29, 2014

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