What are the common type of trusts people establish in New Jersey?

Revocable Living Trusts: These are trusts where the grantor (the person who creates the trust) retains the ability to modify or revoke the trust during their lifetime. Revocable trusts are often used to avoid probate and manage assets during the grantor's lifetime and after death.

Irrevocable Trusts: Unlike revocable trusts, once an irrevocable trust is created, the grantor cannot change or terminate the trust without the consent of the beneficiaries. These are often used for tax planning purposes, asset protection, and to provide for minors or special needs beneficiaries.

Testamentary Trusts: These trusts are created as part of a will and only come into effect after the death of the grantor. They can be useful for managing assets for beneficiaries over a period of time rather than distributing assets outright upon death.

Special Needs Trusts: Designed to benefit individuals with disabilities, these trusts help manage assets without disqualifying beneficiaries from receiving governmental assistance such as Medicaid or Supplemental Security Income.

Charitable Trusts: These can be set up to provide a benefit to a charitable organization while also offering tax benefits to the grantor. They can be either during the grantor’s lifetime or after death.

Life Insurance Trusts: An irrevocable life insurance trust (ILIT) is created to own a life insurance policy. This can help manage estate taxes and provide liquidity for estate expenses and taxes while keeping the insurance proceeds out of the taxable estate. Spendthrift Trusts: This type of trust protects the beneficiary’s inheritance from creditors by prohibiting the beneficiary from selling or pledging away interests in the trust.

Spendthrift Trusts: This type of trust protects the beneficiary’s inheritance from creditors by prohibiting the beneficiary from selling or pledging away interests in the trust.

Medicaid Asset Protection Trusts (MAPT): This trust is designed to protect a person's assets from being counted for Medicaid eligibility purposes. In New Jersey, as in other states, Medicaid requires applicants to have limited assets to qualify for long-term care benefits. By placing assets into a MAPT, an individual can potentially qualify for Medicaid while preserving assets for their heirs. It's important to note that assets transferred into a MAPT are subject to a look-back period for Medicaid eligibility, which is currently 60 months. This means that any assets transferred within five years of applying for Medicaid can still be considered available and may affect eligibility.