Estate planning with a trust allows you to protect your assets, provide for loved ones, and keep control over how your wishes are carried out. A trust can also help your family avoid the delays and costs of probate while offering privacy and potential tax savings. At Bozanian McGregor, LLC, we work with families in Paramus and throughout New Jersey to create tailored trust solutions that reflect each client’s goals and circumstances.
What Is a Trust?
A trust is a legal arrangement in which you (the grantor) transfer property to a trustee, who manages it for the benefit of chosen beneficiaries. Trusts can be flexible tools, helping you avoid probate, reduce taxes, and protect assets from creditors. The right trust for you depends on your family’s needs and your long-term planning goals.
Types of Trusts Commonly Used in New Jersey
Revocable Living Trust
A revocable living trust enables you to retain control of your assets during your lifetime. You can change or revoke it at any time. After your death, assets in the trust pass directly to your beneficiaries, avoiding probate and maintaining privacy.
Benefits:
- Flexibility while you’re alive
- Probate avoidance
- Confidentiality of estate details
Irrevocable Trust
Once you place assets in an irrevocable trust, you cannot easily change or remove them. Because you give up ownership, those assets are usually not counted toward your taxable estate.
Benefits:
- Potential estate tax reduction
- Asset protection from creditors and lawsuits
- Ability to provide long-term financial structure for beneficiaries
Irrevocable Life Insurance Trust (ILIT)
An irrevocable life insurance trust (ILIT) is created to own and control a life insurance policy. Once the policy is placed in the trust, it is no longer considered part of your taxable estate.
Benefits:
- Removes life insurance proceeds from the taxable estate
- Ensures beneficiaries receive funds directly and efficiently
- Provides control over how and when insurance payouts are distributed
Testamentary Trust
This type of trust is created through your will and becomes active only after your death. It is often used to manage money for minor children or family members with limited financial experience.
Benefits:
- Allows you to control asset distribution after death
- Can provide ongoing financial management for dependents
- Offers flexibility in tax planning
Special Needs Trust
A special needs trust provides for a beneficiary with a disability without disqualifying them from government benefits such as Medicaid or SSI.
Benefits:
- Preserves eligibility for public assistance
- Provides resources for quality-of-life expenses
- Protects the beneficiary’s future needs
Charitable Trust
A charitable trust allows you to support causes that matter to you while receiving potential income or estate tax benefits. These trusts can be structured in different ways, such as providing income to your family for a time, with the remainder going to charity.
Benefits:
- Supports charitable giving
- May reduce taxes
- Creates a lasting legacy
Spendthrift Trust
A spendthrift trust protects beneficiaries who may struggle with debt or spending habits. The trustee controls distributions, limiting creditors’ access.
Benefits:
- Shields trust property from creditors
- Encourages responsible use of funds
- Provides steady, managed support
Steps in Creating a Trust
Setting up a trust in New Jersey typically involves:
- Identifying your goals – whether to protect assets, reduce taxes, or provide for loved ones.
- Choosing the right type of trust – based on your financial picture and family situation.
- Selecting a trustee – someone reliable to manage the trust.
- Drafting the trust document – working with an attorney to ensure it complies with New Jersey law.
- Funding the trust – transferring assets such as real estate, bank accounts, or investments into the trust.
Frequently Asked Questions About Trusts
Do I still need a will if I have a trust?
Yes. A will can address property not transferred into your trust and appoint guardians for minor children.
Will a trust eliminate all taxes?
Not always. Some trusts can reduce estate or income taxes, but careful planning is required to maximize benefits.
Is a trust only for wealthy families?
No. Many families use trusts to simplify the transfer of property, protect dependents, and avoid probate delays, regardless of the size of their estate.
Choosing the Right Trust
Deciding which trust best fits your estate planning needs depends on your financial situation, your beneficiaries, and your goals. For example, a revocable living trust may be the right choice if your primary concern is avoiding probate, while an irrevocable trust may be better suited for tax planning and asset protection.
At Bozanian McGregor, LLC, we take the time to understand your circumstances before recommending and drafting trust documents. Our attorneys have extensive experience helping New Jersey families secure their futures with customized trust strategies.
Contact Our Experienced Paramus Trusts Attorneys
Every family is different, and so is every estate plan. Trusts are powerful tools, but they must be carefully structured to work as intended. If you are considering adding a trust to your estate plan, we will guide you through the options, explain how they work, and ensure your wishes are carried out.
Contact Bozanian McGregor, LLC today to discuss your estate planning goals and learn how a trust can protect your legacy.