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Trusts: a special tool for particular circumstances

Statistically speaking, 55 percent of all Americans haven't bothered to make a will. This is a figure that stymies those of us in estate planning law in New Jersey.

Not every will is created equal. Some may be complex. Most will be simple. An attorney can help determine what might work best in a given case. Ultimately, all people should use estate planning to ensure that the things they assign value to get distributed according to their wishes.

A will is one way to do this. Another tool is a trust. But, perhaps you're wondering if a trust is right for you. Or maybe you are put off by fear of the legalese if it all. Here are some straightforward questions that may help make the call about a trust.

1. Do you own a home or other land? If you do, a trust might be good to consider. Whether it covers a primary residence, a vacation home or investment property, a trust can help heirs avoid the headache of going through probate at your death or the death of your spouse or partner. Don't look to solve the issue by simply adding an adult child to a deed as a joint owner. Such a step can open the door to family squabbles, leave the property subject to seizure in a lawsuit, or give the Internal Revenue Service a target for taxes.

2. Do you have a large estate or high net worth? We're talking in the realm of $5 million or more. A trust may be useful in shielding it from federal estate taxes. But that could change with the next tax overhaul, so working with an attorney is important. While current law allows for an estate tax exemption for estates up to about $5.1 million, the ceiling is due to drop to $1 million in 2013. There's also a chance that a provision in the law that preserves some estate tax exemption status for a surviving spouse will be stripped out. A trust may help in that case, too.

3. Do you have a special need to meet? A trust serves that purpose. Maybe a special needs child needs lifetime care. Maybe you have grandchildren you want to help, or a favorite charity. A trust lets you meet the need.

Source: Forbes.com, "A Common Sense Approach to Estate Planning," Nancy Anderson, Jan. 19, 2012

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