Estate, Powers and Trusts, § 7-1.7: Interest remaining in creator of trust
When you create a trust, a trustee holds assets in the trust on behalf of beneficiaries you choose. You can transfer practically any type of property to a trust including cash, stocks bonds, other securities, insurance policies, real estate, antiques, and artwork. The type of property that you choose to transfer to a trust depends on your goals. The trust document is critical as the creator of the trust will use it not only to name the beneficiaries, the creator of the trust can also determine what will happen to the trust assets in the event that the beneficiary passes away. New York Estate, Powers and Trust, section 7-1.7 makes it clear that in cases where there is an asset that is not disposed of in the trust, then that asset remains with the creator or reverts back to the creator. In order to ensure that upon your death all of your assets are disposed of according to our wishes, it is important that you have estate planning documents that are executed consistent with your wishes and with New York law. To learn more about the estate planning process and how to create a trust that will meet your estate planning goals, contact an experienced Manhattan Probate Lawyer.Related Statutory Provisions
- Duration of trust for benefit of creditors: Estates, Powers and Trust, section 7-1.8
- Revocation of trusts: Estates, Powers and Trust, section 7-1.9
A trust document will give instructions as to who benefits from the trust assets. In order words, the trust will name the beneficiaries. Oftentimes the creator of the trust will also state what happens to the trust assets should a primary beneficiary pass away. The assets may go to the other beneficiaries of the trust if there are any or it may go to the deceased’s estate. However, under EPTL 7.2.7, if there are circumstances where property in an estate will revert to the creator should the beneficiary predecease the creator. An example is where the creator retains a reversionary interest in the asset.Example
In In re Petition of Eric P. Milgrim, 2010 NY Slip Op 31756 (N.Y. Surr. Ct., 2010), decedent Willamm M. Parente created a trust with assets of $5 million. The beneficiaries of the trust were his wife and his children. Parente’s wife and children predeceased Parente. However, the reason that Parente’s wife and children predeceased him was because Parente killed them. The administrator of Parente’s estate filed a petition asking the court to confirm that the property in the trust were payable to Parente’s estate since there were no living beneficiaries of the trust and Parente was the creator of the trust. The administrator representing the estates of Parente’s wife and children file a cross-petition asking the court to disqualify Parente’s estate from receiving the assets of the trust. Despite the tragic circumstances of the case, the court ordered that the assets of the trust be distributed to Parente’s estate as required by EPTL 7-1.7. This is because the trust document contained a reversionary clause the require that the trust assets revert to the creator should the beneficiaries predecease him.Estate, Powers and Trusts, section 7-1.7- Interest remaining in creator of trust
Every legal estate and interest not embraced in an express trust and not otherwise disposed of remains in the creator.New York Trust Lawyer
To learn more about probate, wills, trusts and other estate planning documents, contact Stephen Bilkis and Associates. We will help create a trust for you that is consistent with your specific goals. Contact us at 1-800-NY-NY-LAW (1-800-696-9529) to schedule a free, no obligation consultation regarding your estate issue.