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Estate Planning FAQ 5

What should be done if someone is unable of managing property Monmouth County?

Beneficiaries may be young, lacking financial maturity and judgment or may otherwise be unable to manage their affairs. Leaving substantial sums outright to those without the discipline or skill necessary to handle assets should give pause. A Trust Agreement established during life or made as part of a Will is probably the best way to provide for beneficiaries and yet to protect them against themselves. The essential ingredients of a Trust are the person who created it, sometimes called a Grantor or a Settlor, the property placed into it, the person or entity that administers the property, called the Trustee, and the persons or persons who get to use the property, or the beneficiaries. Beneficiaries are further broken down sometimes into current or income beneficiaries and future or remainder beneficiaries, such as when a Trust continues for the life of the current or income beneficiaries and upon their deaths pass to the future or remainder beneficiaries. Sometimes the purpose of a Trust is to save on taxes. However, the type of trust referred to here is designed to administer property for the benefit of someone who might otherwise not manage the trust fund carefully and prudently. A Trust Agreement offers great flexibility. The Trustee may be required to distribute all income to the current or lifetime beneficiary or the Trustee may be given wide discretion about when and how much to distribute. The Trustee may also be given latitude to dip into Trust principal if needed for the current beneficiary, for example for health, support or medical care or for other need. The Trust Agreement can provide that principal be distributed to the beneficiary upon attaining a certain age or ages, say ages 25, 30 and 35, or be held for the lifetime of the beneficiary and pass to the remainder beneficiaries in next generation. Not all beneficiaries need be treated alike – for example, a responsible child can receive an inheritance at a given age while funds can be held in trust for the lifetime of a child with questionable money skills, or who is unable to handle finances.

A particularly complicated subject involves trusts for persons with disabilities. In some cases the individual may be unable to manage money. In other cases, even if the person can handle his or her finances it may not be a good idea to leave him or her assets because that could cause the individual to be disqualified from government benefits. The solution for parents or grandparents who want to provide for their child or grandchild in such a case is the special needs trust. Funds are set aside with a trustee, most likely a family member, for the disabled person. The trustee must be given complete discretion about whether and when and how much of trust income and principal is to be distributed for the beneficiary. Since the beneficiary has no right to demand distributions from the trust the assets in it are not countable for purposes of government benefit programs. With this type of trust the selection of the trustee is even more important than normal because of the unlimited discretion as to whether to distribute anything for the beneficiary.

Call (732)-972-1600 today to speak to one of our skilled Estate Planning Attorneys. Located in Manalapan (Monmouth County, NJ), Cranford (Union County, NJ) and Midtown Manhattan (New York, NY); Drescher & Cheslow represents clients throughout the State of New Jersey & New York including but not limited to Mercer, Middlesex, Monmouth, Essex, Somerset, Morris, Hudson and Ocean counties.

Ten Frequently Asked Estate Planning Questions
First: What happens if someone dies without a Will?
Second: What is probate and how much time and money does it cost?
Third: What are the different ways property can be owned and what problems can these different forms of ownership create?
Fourth: Must a parent treat all children equally?
Fifth: How should property be left for someone unable to manage it?
Sixth: Who should be named Executor or Trustee?
Seventh: What about taxes?
Eighth: What about lifetime gifts?
Ninth: How can clients safeguard their affairs in the face of physical or mental infirmity?
Tenth: How are health care decisions to be made if a person becomes unable to express his or her wishes?


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