Bronx Trust Administration

When planning for our financial and personal futures and the futures of our loved ones, creating a trust, may not immediately come to mind. While most people understand how wills work, many people do not understand trusts and how a trust may help them reach their estate planning goals. A trust is a legal arrangement in which property is held by the trust for the benefit of beneficiaries named in the trust agreement, and managed by a trustee whom you designate. When you create a trust you transfer legal title of your property to it. In the trust agreement you can then specify how the trust is to be managed and under what circumstances the trustee may distribute assets to your beneficiaries. An experienced Bronx trust administration lawyer can explain to your how trusts work and also answer other challenging questions regarding estate planning.

A trust is a legal document that "entrusts" property to a trustee to manage for a person or persons (beneficiaries of the trust) whom the maker of the trust wants to benefit. The maker of the trust is known as the “grantor.” The trust agreement includes detailed instructions on how the trustee is to carry out the duty of managing or distributing the property on behalf of the beneficiaries.

Trusts are commonly part of estate plans as they offer many benefits and can help reach a variety of planning goals including:

• To avoid probate
• To minimize or eliminate estate taxes
• To create life insurance trusts
• To avoid capital gains taxes on the sale of property
• To protect assets from creditors
• To receive a charitable gifting income tax deduction
• To manage assets on behalf of a minor or someone who can't handle his or her own affairs

There are many types of trusts. An experienced Bronx trust administration lawyer can advise you on the appropriate trust for you based on your specific needs. Types of trusts include marital or "A" trust, bypass or "B" trust, testamentary trust, irrevocable life insurance trust (ILIT), charitable lead trust, charitable remainder trust, generation-skipping trust, qualified terminable interest property (QTIP) trust, grantor retained annuity trust (GRAT), and a special needs trust. A major distinction between them is whether they are revocable or irrevocable.

Also known as a living trust, a revocable trust can help assets pass to beneficiaries outside of probate. A living trust also allows you as the grantor to retain control of the assets during your lifetime. Because it is revocable, you can terminate it at any time as long as you are mentally competent, should your circumstances or intentions change. You can also change it at any time. For example, you can add beneficiaries. A revocable trust becomes irrevocable upon the death of the grantor.

With a revocable trust, you can name yourself trustee (or co-trustee) and retain control over trust assets your lifetime, but make provisions for a successor trustee to manage them in the event of your incapacity or death.

One of the most attractive features about a revocable trust is that it is not subject to probate. This means that any asset that you transfer to your living trust during your lifetime can be distributed to your beneficiaries fairly quickly after your death, whereas assets that you leave in your will must go through probate. In New York probate takes at least 9 months.

With an irrevocable trust you as the grantor lose control over the assets. You cannot name yourself as the trustee and you cannot change the terms of the trust or terminate it. An irrevocable trust is generally preferred over a revocable trust if one of the goals for creating the trust is to reduce the amount of your estate subject to estate taxes by effectively removing the trust assets from your estate. An irrevocable trust also offers protection from creditors, the property that you transferred to the irrevocable trust is out of the reach of creditors. Similarly, because any assets that you transfer to an irrevocable trust are no longer your assets, they can protect beneficiaries from losing needs-based government benefits such as Social Security or Medicaid. As an experienced Bronx trust administration lawyer will explain, this is particularly critical for beneficiaries with special needs who rely on government benefits.

Another way to categorize trusts is living trusts vs. testamentary trusts. A living trust is a trust that is created by the grantor during his (or her) lifetime, while a testamentary trust is created after the grantor passes away through his will. In fact, the trust does not come into existence until the will is probated and the estate settled. A testamentary trust is sometimes referred to as a will trust.

The trustee acts as the legal owner of trust assets. The job of the trustee is to manage investments, keep records, manage assets and prepare court accountings, paying bills and make distributions of income and principal. The details as to the specific tasks that a trustee must perform depend on the nature of the trust as defined in the trust agreement.

If the trust is a revocable living trust, the grantor can name him or herself as the trustee. If the grantor does name himself as the trustee, he should also name another person to serve as successor trustee. The successor trustee would become the trustee upon the death of the death of the grantor-trustee, or if the grantor-trustee becomes incapacitated. Otherwise, the trustee must be another person or it can be a company. In the case of an irrevocable trust, the trustee must be someone other than the grantor.

Care should be taken in deciding who to name as trustee. Ultimately, the decision about who to name as trustee revolves around how best to protect the needs of your beneficiaries. To make a wise choice, it is critical to understand the trustee’s fiduciary responsibilities. Speaking with a skilled trust administration attorney in the Bronx who is can help you determine who is best the person to manage your trust. Whoever you select, make sure the person or corporation has the skill, will, and resources to serve your beneficiaries—both now and in the future.

Whether the trustee is the primary trustee or successor trustee, upon assuming the role he (or she) must make sure that he understands the terms of the trust agreement. Some of the key trust administration duties of the trustee include:

• Safeguarding the assets of the trust. The trustee must identify the assets that are part of the trust, and make sure that they are safe and under his (or her) control.
• Investing the trust assets. Depending on the type of assets held by the trust, the trustee is required to invest trust assets in such a way as to make sure the assets are preserved and productive for current and future beneficiaries.
• Administering the trust. The trustee is required to administer the trust according to the terms of the trust agreement. This would include distributing trust assets to the beneficiaries, according to the trust agreement. In some cases distributions are made at one time. For example, a trust might provide for a single distribution to the beneficiary once the beneficiary attained a certain age, or the trust may provide for distributions to or for the benefit of the beneficiary over the course of the beneficiary’s lifetime.
• Recording keeping and reporting. The trustee is required to prepare any records, statements, and tax returns as needed. The trustee must also communicate regularly with beneficiaries, including issuing statements of accounts and tax reports.

If you have concerns about how to set up a trust, how to administer a trust, or how a trust that you already have is being administered, contact the experienced trust administration attorneys serving the Bronx at the Law Offices of Stephen Bilkis & Associates. If a trust is not set up properly or is not managed properly, the finances of you and your beneficiaries will likely be negatively impacted. We have years of experience representing trustee, beneficiaries, and other interested parties in matters related to the establishment and management of trusts. We will advise you on the best course of action for your specific trust administration concern. Contact us at 800-696-9529 to schedule a free, no obligation consultation regarding your case. We represent clients in the following locations: Bronx, Staten Island, Queens, Brooklyn, Manhattan, Nassau County, Suffolk County, Long Island, and Westchester County.