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Is a trust right for you?

Individuals who have a net worth of more than $100,000 and want a higher degree of control over their assets when they die may benefit from a trust. In most states, including New Jersey, a trust allows one to distribute assets to family members without having to go through a probate court, which can deplete a sizeable chunk of the estate.

Trusts also allow individuals to maximize their estate tax exemptions and decrease gift taxes on assets left to heirs. One can also name a successor trustee, who is able to control all aspects of the trust in the event that one becomes unable to do so.

A trust is usually made up of a will, living will and health care proxy. One should be sure that any assets one wishes to be covered by the trust are re-titled accordingly. If they are not, a probate court will choose who they should be passed to when you die, regardless of your personal preference.

There are several types of trusts, each providing a distinct benefit. These include the generation-skipping trust, credit shelter trust, irrevocable life insurance trust, qualified personal residence trust and the qualified terminable interest property trust. All these options mean that the trustee can dictate the specific ways in which his or her assets will be distributed. For instance, one could decide to bequeath all of one's income to a spouse, transferring it to one's children when the spouse passes away.

If you are uncertain what type of trust is most appropriate for your situation, working with an attorney can help ensure you have the proper legal documents to meet your needs.

Source: CNN Money, "Does a trust make sense?"

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