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Advantages of using trusts for New Jersey estates, part one

It used to be that when people talked about estate planning, wills were the preferred tool of choice. Now, an increasing number of people choose trusts instead of wills. Many high net worth individuals prefer trusts because they can be a more effective method of succession planning. However, many individuals in New Jersey - even those without excessive wealth - are discovering the advantages of trusts.

One of the things that appeals most to individuals is the amount of flexibility and fluidity trusts offer. In most situations, when a person writes a will, their assets are clearly detailed on a piece of paper, and the person decides ahead of time how his or her assets will be divided. With a trust, the assets are managed by a trustee. The trustee manages the assets and determines how they should be divided among the beneficiaries. If it is the best interests of the beneficiaries, this also gives the trustee the flexibility to make changes to the wealth distribution.

Many people also use trusts as a way to control their wealth, even when they are no longer alive. Using a trust enables people to place more restrictions on how the money or assets will be used. You can dictate what portion of the money should be used for education, set some aside for a down-payment on a house and prevent individuals from spending too much of the money at any given time.

Trusts also offer protection for individuals who have large assets, such as family businesses. An effective succession plan can be created in a trust, but trusts offer further protection as well. Trusts can be a good tool to protect assets from estate taxes and death taxes. Read more in the next post to learn more about the asset protection and privacy trusts provide.

Source: The Economic Times, "Why HNIs choose a trust over a will," Sakina Babwani, 14 February 2011

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