and Your Family
Bronx Will Trustee
Your last will and testament is an important legal document that can have lasting effects on the futures of those you care about most. With a will you leave important details as to who will receive your assets once your pass away. You can leave your beneficiaries property that will be transferred directly to them after probate. You can also create a testamentary trust, also referred to as a will trust, through your will that would require a beneficiary's bequest to be transferred to that trust. The property will later be distributed to that beneficiary according to the terms of the trust. When you create a trust you will name someone to serve as the trustee who would be responsible for the management of the trust assets and for distributing the trust property to its beneficiaries according to the terms of the trust agreement. As these are important decisions that will impact the management of your estate and the financial security of your loved ones, before you make a will that includes a trust, contact an experienced Bronx Will Trustee Lawyer who will explain to you how a testamentary trust works, including the responsibilities of the trustee in administering the trust.
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A trustee in charge of a trust that was created by a will has responsibilities that are similar to the responsibilities of an executor. The job of the executor is to manage your estate property once you pass away. Once your last will and testament is admitted to probate by the New York Surrogate's, the executor will inventory your assets, pay the estate's debts and then distribute your estate's assets to the beneficiaries you named in your will. A trust is an arrangement in which assets are managed by a trustee for the benefit of another person. Rather than leaving property directly to a beneficiary under your will, in your will you create a trust and name a trustee who would manage the assets on behalf of the beneficiary under terms you specify.
Depending on the terms of the trust, once the executor transfers property to the trust, the trustee may be required to then distribute the trust assets to the trust beneficiary immediately, or the trust may be designed such that long-term management is required.
The trustee will be required to make sure that trust funds are properly invested. If there are any tax returns due or tax payments that must be made, it is up to the trustee to do so. A trustee will be empowered to hire professionals if necessary to help manage the trust such as an attorney or accountant. Once a year the trustee must submit to the beneficiaries an accounting of the income and expenses of the trust.Will a Will Trust Avoid Probate?
No. A will trust will not avoid probate. Probate is the legal process that occurs once the New York Surrogate's Court determines that a will is valid. At the point the executor is officially appointed and has the legal authority to settle your estate. Your executor will then collect, inventory and appraise your assets, pay your estate bills, settle claims against your estate, and ultimately distribute your assets to your beneficiaries. Depending on the size and complexity of your estate probate can take several months up to a few years. If there is a will contest or any type of estate litigation, probate will likely be extended.
There are advantages to avoiding probate. If an asset is not part of the estate that is probated, then the beneficiary who you select to receive that asset will receive it a lot more quickly. Furthermore, probate can be expensive. Fees associated with probate will be paid out of estate assets. The more fees involved the fewer assets available for beneficiaries.
If an asset is not part of the estate that goes through probate, the beneficiaries will receive it sooner. One of the advantages of certain types of trusts is that trusts are not subject to probate. However, this is not the case with will trusts. A testamentary trust can only be funded once the will that creates it goes into probate.Types of Trusts
There are several different types of trusts established by a will to accomplish different goals. Examples of types of trusts that can be created in a will include:
Educational trust. The property in an educational trust is set aside specifically for educational expenses. The terms of the trust will specify the conditions under which the funds can be used for educational expenses. For example, the trust funds may be used to pay for private primary school tuition as well as college tuition or graduate school tuition. Or the trust could specify that the fund can be used for college tuition only if the beneficiary maintains a certain grade point average. The trustee may only distribute trust funds to pay for eligible education-related expenses.
Minor child trust. A trust that is set up with a minor as the beneficiary is a common way for a parent or grandparent to leave a minor an inheritance. The minor's bequest would then go straight into the trust after probate. The role of the trustee in administering a trust for a minor child is to determine how the funds can be used to benefit the minor based on the terms of the trust. For example, the trust may provide that the funds are to be used for the minor's health, welfare and education. So, paying for the child's private school tuition would be appropriate, while paying for a car might not be appropriate. The trust can be set up so that once the minor reaches majority the trustee transfers trust property to the beneficiary. If the child has become an adult at the time that your will is probated, then you will can provide that the assets be distributed directly to your adult child.
Spendthrift trust. A spendthrift trust is designed to protect the assets of an adult beneficiary who is not able to properly manage his or her own affairs. The beneficiary may be a family member who is mentally incompetent or a person who has a track record of making poor financial decisions. In administering this type of trust the trustee may be responsible for paying the beneficiary's bills or making large purchases such as buying a car or real estate. However, the terms of the trust do not allow the beneficiary to directly access trust property.
Special needs trust. A special needs trust, also called a supplemental trust, is set up to support a beneficiary who has a disability and will need special care. The beneficiary could be a child or an adult. Assets can be used to cover a variety of expenses such as medical expenses, rehabilitation, special equipment, training, companions, recreation, insurance, and quality of life enhancing expenses. A special needs trust is different from other types of trusts in that it is specifically designed to protect the beneficiary's eligibility for need-based governmental benefits such as Supplemental Security Income and Medicaid, while at the same time leaving the beneficiary property. NY EPTL § 7-1.12. It is up to the trustee to administer the trust so that only eligible expenses are paid out of trust funds. Thus, it is important to appoint a trustee who is will to learn the requirements of the applicable government benefit programs.
Honorary Pet Trust. A pet trust is a trust that provides for the care and maintenance of your pet in the event you pass away. N.Y. EPT. Law § 7-8.1. Under New York law a pet trust will terminate upon the death of the animal or after 21 years. When setting up the pet trust and funding it you must fund it only with an amount of money that is reasonable to care for the pet. The appropriate amount will depend on the type of pet, its age, and its health. If you set aside an amount that is unreasonably high a judge will reduce the amount. For example, a court will probably find it excessive to leave $3 million in a pet trust for a 12 year old Golden Retriever. After the trust is terminated the remaining assets will be distributed according to the terms of the trust, or will go to your estate as the trust grantor.How Should I Select the Trustee?
You should take great care when selecting a will trustee as the trustee will have a significant amount of responsibility and power in managing the trust assets. Accordingly, the trustee you select must be trustworthy. In addition, because the trustee will be responsible for making financial decisions related to trust assets, the trustee should have a proven track record for making wise investment decisions. Furthermore, the trustee should have an understanding of the tax ramifications of business and investment decisions that he or she will make for the trust. The trustee should understand how to keep accurate business records, as he or she will be required to regularly provide an accounting to the trust beneficiaries regarding how the trust assets have been managed.
Because the trustee may have to interact with the beneficiaries quite frequently, you should select someone who is willing to take on this long-term responsibility. The trustee should also have the appropriate disposition to maintain a good working relationship with the trust's beneficiaries. With trust matters, the trustee must make the interests of the beneficiaries primary and avoid any conflict of interest with the beneficiaries.
In selecting a trustee, you may be tempted to select a family member or a close family friend. However, before making such an important decision it is wise to consider all of the responsibilities of a trustee in order to determine if that person is the appropriate choice.
In addition to friends and family, you should also consider the advantages and disadvantages of appointing a corporate trustee. Managing a trust is a huge responsibility, with complex responsibilities, particularly if the trust has substantial assets. To make everyone comfortable with the idea of a corporate trust, you could also consider naming a co-trustee along with the corporation. The co-trustee could be a trusted family member or friend.
The advantage of hiring a corporate trustee is that with a corporate trustee comes experience, particularly in handling the investment and recordkeeping duties. Furthermore, it may be easier for a corporate trustee to make objective decisions about distributions, causing fewer family squabbles about how the trust funds are managed and distributed. A significant downside to naming a corporate trustee is that corporate trustees charge hefty fees that would be paid out of trust funds, affecting the amount of money available to the beneficiaries.What are the Duties of a Trustee?
The main job of a trustee is to carry out the terms of the trust for the benefit of the beneficiaries. This means that the trustee should not make trust decisions with his or her best interests in mind, but with the best interests of the trust and the trust beneficiaries. Depending on the purpose of the trust, the trustee has several responsibilities including recordkeeping, administration, and investment management.
Trust Administration. Administering the trust according to its terms can be a difficult task. It typically involves distributing assets to trust beneficiaries when they make requests, or making payments on behalf of beneficiaries. Beneficiaries can be demanding. It is up to the trustee to care for the current needs and wishes of the beneficiaries, while preserving trust assets for the future needs of the beneficiaries.
The trustee must also keep the trust beneficiaries reasonable informed about trust administration, including an accounting when appropriate or required by law.
Investment management. The trustee must actively manage the trust’s assets by making investment decisions that will help preserve the trust assets for the long-term needs of its beneficiaries. This is particularly important in cases where trust beneficiaries are children.
Recordkeeping. It is critical that the trustee keeps accurate records regarding the management of the assets of the trust. If the trust has substantial assets, the trustee may need to hire an accountant or financial planner to assist with the management of the trust's assets. The goal would be to maximize the trust assets and minimize expenses and tax obligations, while also distributing trust assets for appropriate purposes.
The trustee is responsible for tax preparation. He or she must make sure that the trust's tax returns are prepared accurately and filed timely. If the trust is audited, the trustee must resolve the audit, involving an accountant or tax attorney if necessary.
In order to ensure that your will trust is set up correctly and that you appoint a qualified trustee, contact Stephen Bilkis and Associates. We have years of experience designing comprehensive estate plans, including wills, trusts, and other estate planning tools. We will advise you on the best course of action for your specific estate planning concerns. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.