Trust Attorney Serving Ridgewood, NJ & the Surrounding Area
Living trusts are trusts that start to function while you are alive. They come in many forms, including revocable living trusts and irrevocable living trusts. A revocable living trust allows you to make changes to the trust and (as the name implies) revoke it. It is an effective instrument to avoid probate. However, New Jersey has a very simple probate process. There are other kinds of living trusts — irrevocable trusts — that are more beneficial for tax purposes and that help take care of people with disabilities by protecting their assets from catastrophic medical expenses.
At Michael A. Manna & Associates, our Ridgewood living trust lawyers understand the many creative uses of living trusts and other estate planning options available to our clients. We will help you form an estate plan that protects your assets and minimizes tax liability.
Minimizing Taxes Through Irrevocable Living Trusts
Many assets you own are considered taxable assets of your estate. For example, upon your death, your life insurance death benefit will be taxed as though it was cash. An irrevocable trust can be set up so that the trust is the owner and the beneficiary of the life insurance policy and not a person. In so doing, the life insurance will not be subject to income tax or estate taxes in your estate or that of your loved one.
Irrevocable Living Trusts and Medicaid
The federal Medicaid program is only available to low-income, low net-worth Americans. This program is designed to pay for nursing home, medical and prescription costs, which can be staggering. In order to legally qualify for this program, you can give your assets away to loved ones or to a trust and, after five years, avoid any penalties for having done so.
The irrevocable trust would own your assets and remain in existence until your death. While you would not be legally entitled to a penny from the trust, the trustee (your children or another trusted individual) could use the trust money to augment your Medicaid benefits and pay your living expenses. There is a five-year penalty for setting up a revocable living trust. Therefore, this option is most effective for forward-looking individuals.
Contact Our Bergen County Revocable Living Trust Lawyers
For more information about how a revocable or an irrevocable living trust can benefit you, speak with us. Contact our Ridgewood living trust attorneys online or call 201-345-3018 to schedule a free initial consultation to discuss your situation. We represent clients throughout New Jersey and New York.