Bronx Will and Trust

A last will and testament is one of the essential estate planning instruments. With a will you can give instructions as to who should receive your property upon your death. You are free to be very specific as to who gets what property and who gets nothing. While you can leave your loved ones outright gifts in your will, or you can also leave them gifts that are placed in a trust. Using a combination of a will and a trust gives you even more flexibility as to the manner in which your beneficiaries receive your property. For example, if you have a nephew who has a disability and is unable to manage his own affairs, you can state in your will that the money that you leave your nephew is to go into a trust. You would nominate someone trustworthy and dependable to be the trustee. It will be the trustee's job to manage the assets in the trust for the benefit of your disabled nephew. A trust, however, is not only for people who are disabled. A trust can be set up in a number of different ways to reach different goals. To learn more about both wills and trusts and how they work together, contact an experienced Bronx Will and Trust Lawyer who will be able to guide you through the estate planning process.

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About wills

A will is an estate planning document with a primary purpose of describing what should happen to your property upon your death. However, it has other purposes. For example, in a will you can also leave you preference as who should raise your minor children upon your death should the other parent also not be available.

There are several different types of wills. A pour over will is designed to be used in conjunction with a specific type of trust called a living trust. A living trust is a trust that you set up and fund while you are still living. However, should there be any assets in your estate at your death that you did not transfer into your trust, a pour over last will and testament will specify that such property is to be transferred to your trust upon your death. However, before being transferred to your trust, your will must go through probate.

A holographic will is a will that is completely handwritten by the testator. It is not witnessed as required by New York law. Typically a holographic will would not be valid, as New York law requires that wills must be signed by at least 2 witnesses. In fact, many other jurisdictions across the country do not permit holographic wills. However, a holographic will would be probated in New York if the person who made the will was at the time a member of the armed forces serving during a time of armed conflict, someone accompanying the armed services, or if the person who made the will was a mariner at sea.

A nuncupative will is an oral will; it is not written but spoken Like a holographic will, nuncupative wills are not generally accepted by all jurisdictions. In New York a nuncupative last will and testament will be probated only if it is witnessed by two people and at the time the will was made the testator was a member of the armed forces during a time of armed conflict, someone who accompanied the armed forces, or if the testator was a mariner at sea.

A joint will is a single will made by two testators who choose to leave most of their property to each other. A joint will is usually made by spouses. When the first spouse passes away the surviving spouse would get practically everything. The joint will would also indicate what would happen to the remainder of the estate once the second testator passes away. A joint will cannot be revoked without the consent of both testators. It cannot be changed after the death of the first testator. Some couples chose to make a joint will to prevent the survivor from remarrying and leaving the estate property to the new spouse.

A codicil is an amendment to a will. If you need to make relatively minor changes, instead of creating an entirely new will you can simply create a supplementary document. A codicil must be executed in the same manner as a will.

About trusts

A trust is an estate planning instrument that provides another way of disposing of your property. Trusts can be created and funded while you are living or through your will. When a trust is created by a will it is referred to as a testamentary trust. A trust is a legal entity that holds property for the benefit of designated beneficiaries and is managed by a trustee for the benefit of those beneficiaries. To create a trust in a will you must specifically state in the will your intention to do so. You must also indicate who will be the trustee, who the beneficiaries are, which assets are to go into the trust, and details about how the trust is to be managed.

Unlike trusts created during your lifetime, testamentary trusts do not become effective until you pass away and your will goes through probate. Will trusts allow you to distribute property to beneficiaries in a way that a will cannot. For example, using a will trust you can leave property to minor children and set conditions for when and in what manner the child will have access to the trust property. If you want to leave money to an adult relative who has a history of poor money management, through your will you can create a spendthrift trust. Instead of the relative getting a lump sum of cash which may be used up right away, the relative's money will transferred to a trust and managed by a responsible trustee. This way the relative's assets will be preserved for long-term use.

A testamentary trust and probate

Because a testamentary trust is established through a will, such a trust can only be funded after your will goes through the probate process. At that point your executor will transfer assets from your estate to the trust according to the terms of the will. The trustee will then begin to manage the trust. Some of the initial tasks that the trustee will have to do are identify and contact the trust beneficiaries, inventory and appraise, trust assets, and set up a record-keeping system. Once the trust is set up there are several aspects to trust administration that the trustee must bear in mind.

  • Fiduciary Responsibility. A trustee is a fiduciary with respect to the trust and the beneficiaries. As a fiduciary the trustee must be very careful in managing the trust funds. The trustee must not deal with trust assets in a self-interested manner. For example, it would be violation of a trustee fiduciary's duty if the trustee sold a trust asset to a friend for less than market value. If a court finds that the trustee has violated his or fiduciary duty, then the court has the power to suspend or remove the trustee. The court could even hold the trustee personally responsible for any losses the trust suffered due to the trustee's breach of fiduciary duty.
  • The Trust's Terms. The trustee must understand the terms of a trust and manage the trust accordingly. Otherwise, the trustee is open to a charge of violating his or her fiduciary duty and subject to discipline such as suspension or removal.
  • Investment Standards. The trustee must be a prudent investor. This means that the trustee must do what is best for the trust fund and beneficiaries. The trustee must do so even if he or she would use a different strategy for managing his or her own investments. The type of investments that would be prudent depends on several factors including both the short term and long term goals and needs of the trust beneficiaries, as well as the size of the trust principle. If a trustee does not have experience managing investments it may be good idea for the trustee to hire an experienced investment manager.
  • Distributions. The terms of the trust agreement will set forth the conductions under which the trustee is permitted to make distributions. In addition to the stated trust terms, the trustee must also consider the beneficiary's current needs, future needs, other sources of income, and the needs of other current and future beneficiaries. The trustee must resist the temptation to always give in to requests from beneficiaries. Often the most important job of a trustee is to be able to say "no" and set limits on the use of the trust assets.
  • Accounting. The trustee is required to keep records of all income to, distributions from, and expenditures by the trust and at least annually provide an accounting to the beneficiaries of the trust.
  • Taxes. Depending on the type of trust, the trustee might be responsible for filing tax returns for the trust and paying any taxes. The trustee must keep good records and should consult with an accountant or other expert to make sure that the trust stays in compliance with tax requirements and stays financially healthy.
  • Fees. Trustees are paid out of the trust assets. There is no set formula for what a trustee may charge as a fee. In New York the standard is that the fee must be reasonable. Lawyers, banks and other corporate trustees usually set their fees based on the size of the trust fund. Others charge an hourly fee based on the time spent managing the trust. If the trustee is a family member, he or she may be willing to serve without being paid a fee. Trustees are also entitled to be reimbursed for out-of-pocket expenses. Any professionals that a trustee must hire such as an investment manager, accountant or attorney would be paid out of trust fund.
Consequences of not having a will or trust

If you die without making a will or creating a trust, then your estate will be distributed according to New York intestacy laws. New York intestacy laws require that your property go to certain relatives in a specified order of priority. If, for example, you are survived by a spouse, but have no surviving children, your spouse will get all of your assets. If you are survived by both children and a spouse, your spouse will get the first $50,000 of your estate and the remaining amount will be divided between your spouse and your children, with your spouse receiving 50% and the children sharing equally the other 50%. Your children will get all of your property if you do not have a surviving spouse. There are also provisions for parents, grandparents, siblings, and other blood relatives to inherit. NY EPTL § 4-1.1. Other than a spouse, generally, only blood relatives are considered heirs under intestacy laws.

New York also has specific rules covering who is considered a child for purposes of being entitled to intestate property. A biological child born after your death is entitled to an intestate share. If you father a child outside of marriage and paternity is established under New York law, that child is also entitled to an intestate share. Adopted children are entitled to an intestate share, but foster children and stepchildren who have not been legally adopted are not entitled to an intestate share. If one of your biological children was adopted by another family, that child would not be entitled to inherit through intestacy.

If you would like to leave a foster child, stepchild, friend, non-blood relative, employee or charitable organization cash or property, it is critical that you make a will or transfer property to a trust. Under the New York law friends, organizations, and even certain blood relatives will not otherwise be able to inherit.

The particulars of your financial situation as well as your family dynamic may change multiple times over the years. You may purchase property, get significant pay raises, or inherit money. On the other hand your finances may take a turn for the worse. In addition, you may get married, get divorced, have children, and have grandchildren. Love ones may pass away. Each of these changes in your life may necessitate a change in your will and other estate planning documents. It is wise to review each document on a regular basis to make sure they still reflect your wishes.

In order to reach your estate planning goals you may need a both a will, a trust and other estate planning instruments. In order to determine what documents you need in your estate plan it is important to work with someone who has experience. The staff at Stephen Bilkis and Associates has years of experience designing comprehensive estate plans, including wills, trusts, and other estate planning tools. We will discuss your personal situation with you and advise you on the best course of action for your specific estate planning concerns. Contact us at 1-800-NY-NY-LAW (1-800-696-9529) to schedule a free, no obligation consultation regarding your estate plan.

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