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What are important points about irrevocable living trusts?

The number of options for New Jersey residents considering a trust can lead to rampant confusion. When the decision is made to use a living trust, there are still alternatives available such as whether to make it a revocable or irrevocable living trust. It is not necessary to be wealthy to have a living trust of any kind. But the type of trust that the person picks will have a significant influence on the future. The individual situation is the key to deciding which trust is preferable.

A revocable trust means that the person who creates it will still have control over it and will often be the trustee. That is not the case with the irrevocable living trust. An irrevocable trust, obviously, irrevocably removes control of the trust from the person's hands. Despite that, the person will still have control of the trust's requirements and its assets are subject to that person's control. Beneficiaries can be changed even with an irrevocable trust.

With an irrevocable trust, the following keys are important to remember: it cannot be modified or changed; there are tax benefits with capital gains, but it does not avoid taxes completely; the property will no longer belong to the testator when it is put into an irrevocable trust; property in the irrevocable trust will be shielded from creditors, liens and a spouse from whom the person is getting a divorce; the grantor of the trust will be able to get Medicaid when moving to a nursing home; the grantor cannot be the trustee; and it will not be subject to the estate tax since the person no longer legally owns the property.

With these keys listed, it becomes easier for a person to determine if the irrevocable living trust is a better option. Naturally, there are other issues that will come to the forefront. Having legal assistance from an attorney who is experienced with helping clients decide which trusts suit their needs can be beneficial to coming to a decision and choosing the best type of trust.

Source: estate.findlaw.com, "Irrevocable Living Trust," accessed on Nov. 22, 2017

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