Do you want to secure all of your assets? Consider setting up an irrevocable trust in New Jersey. There are many types of trusts, but an irrevocable trust offers multiple tax-related benefits. Wouldn’t you rather give your money to your children, instead of the government? SCC Legal understands and can help with this. We have been serving NJ families for more than forty years and offer living trusts services. An estate planning lawyer from our team can help you establish an irrevocable trust that benefits you and future generations. In this article, we offer a more detailed discussion about different types of irrevocable trusts, their benefits, and how they can affect your Medicaid status.
What is an Irrevocable Trust In New Jersey?
Most discussions around living trusts refer to revocable living trusts where the person creating the trust retains control of the trust property, can serve as a trustee, and change the trust’s terms. Irrevocable trusts are the total opposite, but deserve serious consideration as they offer tax advantages and can shield your assets from creditors. However, you will have to consider all current and future scenarios before establishing an irrevocable trust, as it cannot be modified once you create it. The trust will also be managed by a third party.
What Are The Different Kinds Of Irrevocable Trusts In New Jersey?
There are many different kinds of irrevocable trusts in New Jersey. It is vital to remember that the third-party trustee, whether a financial professional or business, takes full responsibility for managing the trust you select, and your input is limited. You can choose from the following types of irrevocable trusts: Special Needs, Charitable Remainder, Qualified Personal Residence, Irrevocable Life Insurance, Bypass, and Spendthrift.
The Bypass Trust passes assets to your heirs free from estate tax, while a Spendthrift Trust offers your heirs protection from creditors until they reach a certain age or designated life event.
The Benefits Of Setting Up An Irrevocable Trust In New Jersey
It is clear that the benefits of setting up an irrevocable trust must be substantial to balance out the lack of control. Here are a few reasons to consider an irrevocable trust.
Personal Liability Protection. Once assets are transferred to a trust, you are no longer the owner, and they are not part of your taxable estate, which offers protection against personal liability claims.
Asset Protection. The trust assets are protected from creditors and judgments, while its effect on divorce proceedings depends on several factors.
Limited Taxation. Real estate and business holdings within an irrevocable trust are passed to the beneficiaries free of capital gains taxes, and it is possible to avoid inheritance tax.
How Does an Irrevocable Trust Work With Medicaid?
Medicaid is complicated, and there are strict rules around determining eligibility for long-term care under Medicaid. Assets placed in an irrevocable trust at least five years ahead of the actual need are excluded from “countable resources.” SCC Legal lawyers can create an irrevocable trust that ensures your loved one receives the long-term care they deserve under Medicaid. We can also assist with the long-term care application.
For more information on estate planning and elder law, or if you want to discuss setting up an irrevocable trust in New Jersey, please contact our team at SCC Legal today or visit us at: https://www.scclegal.com/