Many laypeople who hear the term “estate planning” immediately equate this practice with the preparation of a last will. Passing along your assets to your loved ones via the utilization of a last will is certainly an option, but some people prefer to use a trust of some sort or perhaps a combination of trusts once they consult with an estate planning attorney and understand all their options.
Trusts are attractive on a number of different levels. They can provide estate tax efficiency in some cases; protect assets from creditors, claimants and former spouses; and enable the efficient diversion of assets to charitable organizations. Trusts can be designed to encourage positive actions on the part of the beneficiary or act as a disincentive toward self-destructive behavior. You can also create a trust that is intended to last for the lifetime of the recipient, preventing direct access to the principal and making it impossible for this person to squander the money quickly.
When you use a trust or multiple trusts to transfer assets to your loved ones there is one sticking point in that most people are going to acquire assets after they have created the trust. You may somehow overlook these assets and never place them into the trust unintentionally, or in other cases you may have logistic reasons for maintaining personal possession of certain types of property. For example, it is much easier to register and insure your vehicles if they are your personal property and not property of a trust.
If you pass away with certain property left unaccounted for it would eventually pass along to an heir or heirs via the New Jersey state laws of intestate succession. Clearly if you wanted to go this route you would never have created the trust. The way to transfer these assets into the trust after you pass away is through the creation of a pour-over will. This document states that you would like all the outstanding property to “pour over” into the trust, accomplishing a smooth transfer of these remainder assets.
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