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Long Island Living Trusts

A living trust is an estate planning document that allows you to place assets into a trust during your lifetime and then transfer them to your beneficiaries of your choosing either while you are still living or upon your death. It is sometimes called an inter vivos trust. The trust will be administered by a trustee selected by you. It has some similarities to a will, but the differences between the two types documents are significant. A will is a written legal document that sets forth details as to how you want your property distributed when you pass away. Your executor, as named in your will, is responsible for managing your estate until assets are distributed. A living trust is also different from a will in that a living trust avoids the time and expense of probate while a will must go through probate before assets can be distributed to beneficiaries. To learn more about the differences between a will and a trust and why should consider having both, contact an experienced Long Island living trusts lawyer who will review your family and financial details and let you know how to design an estate plan that meets your goals.

Living trust

A living trust is a legal document in which you as the creator or trustor designate another person to be responsible for managing your property. It is called "living" because you create it during your lifetime. In contrast a testamentary trust is created by your will after you pass away. Because a testamentary trust is not created and funded until after the trustor's death, it does not offer some of the advantages of a living trust such as probate avoidance.

A living trust can be revocable or irrevocable. With a revocable living trust you can change it or revoke it at any time as long as you are mentally competent. A revocable a living trust becomes irrevocable when you die. With an irrevocable living trust, you cannot change it or revoke it.

A trust involves three parties:

  • The creator or trustor is the person who creates the trust.
  • The trustee is the person you appoint to manage the trust assets based on the terms of the trust agreement. The trustee is the legal owner of the assets in the trust.
  • The beneficiaries are the people you designate to benefit from the trust property. The beneficiaries are the equitable owners of the trust assets.

You can name yourself as the trustee if you want to maintain maximum control of the trust assets during your lifetime. You would also name a successor trustee who would take over the trustee duties upon your death or if you become mentally incapacitated.

Who should I appoint as the trustee or successor trustee?

If you do not appoint yourself as the initial trustee of your living trust you can name any mentally competent person who is at least 18 years old. For revocable living trusts, the trustor commonly names him or herself as the trustee or his or her spouse. In other cases the spouses are the co-trustees. If your spouse is not the trustee or co-trustee, you could name your spouse as the successor trustee. However, it is up to you to name as the trustee someone who you know well and who is trustworthy. In some cases in may be appropriate to name a corporate trustee such as a bank, attorney or professional trust company as the trustee.

It is also important to name a successor trustee as that person will take over the trust duties once you pass away. Or, if you name someone else as the trustee, the successor trustee will take over trustee duties should the trustee pass away, become incapacitated, or is unable or unwilling to serve as trustee of some other reason.

Because of the use of the phrase "trust fund kid," it is commonly believed that only wealthy people have the need for a trust. This is not a case. There are many different reasons to set up a trust. As an experienced Long Island living trusts lawyer will explain, the amount of money that is needed to fund a trust depends on the purpose of the trust. It is not unusual for a trust to be initially funded with very little money, and then more is added over time. Furthermore, trust property can include assets other than cash.

Responsibilities of the trustee

In general, the trustee is responsible for managing a trust's property according to the terms of the trust agreement, for the benefit of the trust beneficiaries. The exact duties of the trustee depend on the type of assets held in the trust as well as the terms of the trust. For example, if the trust holds real estate, the trustee will be responsible for maintaining the property, paying the mortgage, and collecting rent it the property is rental property. If the property includes bank accounts and investment accounts, the trustee will be responsible for managing the investments and making appropriate deposits to and withdrawals from the accounts. If the trust directs monthly distributions to the trust beneficiary, then the trustee must do so.

While the trustee should be able to personally perform many of the responsibilities, some of the responsibilities may be beyond the trustee's expertise. For example, if the trust hold significant assets in investment accounts, it may be wise to hire a financial advisor. If the trust holds rental property, it may be wise for the trustee to hire a property manager.

Whether the trustee is personally managing the trust or has delegated responsibilities to others, the trustee must perform his duties with great care, avoid self-dealing, and always do what is in the best interest of the trust and its beneficiaries.

Types of living trusts

A living trust can be designed to achieve a number of different personal and financial goals. It is important to discuss with an experienced Long Island living trusts lawyer your goals in order to ensure that the trust is set up to meet those goals and to ensure that it is consistent with your overall plan.

For example, you can set up a minor child trust. This will allow you to leave assets to your children or grandchildren, for example, without allowing them direct access to the funds until they are adults. You can decide exactly when they will receive distributions of the funds. For example, you can state in the trust agreement that the beneficiary will receive the funds on her 18th, 21st, 30th, or later birthday. Or you can provide that the beneficiary receive partial distributions over a course of an extended period time. This is what Whitney Houston reportedly did with the trust she left to benefit her daughter who was a minor at the time of Houston's death. It has been reported that under the terms of the trust her daughter would receive 10% at age 21, another portion at age 25, and the balance at age 30.

Another type of trust is a spendthrift trust. If you want to give property to someone who may not be a minor, but who does not have the ability to manage his or her finances, a spendthrift trust may be the way to go. The beneficiary could be someone who has shown that they do not have the skills or maturity to make sound decisions with their property. Or the beneficiary could be someone who is mentally incompetent and thus, needs a trust to manage his or her affairs. In the case of a spendthrift trust, not only will the beneficiary not be able to access the trust funds, but the beneficiary's creditors will also be unable to access the trust property. The trustee will have the authority to distribute money to the beneficiary or on behalf of the beneficiary in a responsible manner according to the terms of the trust. The late Farah Fawcett reportedly left the bulk of her estate to a trust that appears to be a spendthrift trust for the benefit of her son who has struggled with drug addiction. Under the terms of the trust, Fawcett's son will receive monthly distributions.

If you have a loved one with special needs, a special needs trust may be best way to provide for that person. A special needs trust is a trust that you can set up to support a family member who has a disability or any type of impairment that will require lifetime care or treatment. The beneficiary of a special needs trust could be a child or an adult. A special needs trust is set up in such a way that the beneficiary will remain eligible for needs based on government programs such as Medicaid. Assets in a special needs trust are earmarked for medical expenses, rehabilitation, special equipment, education and training, recreation, insurance, and quality of life enhancing expenses.

Lack of a will or a trust

If you pass away without leaving a will or a trust, then you would not have left any instructions as to what should happen with your assets. Dying without a will is referred to as dying intestate. Should this happen and there is also no trust, your property will be inherited by your closest heirs. Depending on who survives you, your statutory heirs include your spouse, children, parents, siblings, grandparents, aunts, uncles, and cousins. Non-relatives who you may have wanted to receive a portion of your assets would not. While a trust can be helpful in avoiding this result, as an experienced Long Island living trusts lawyer will explain, the best way to avoid this result is to execute a will.

In addition, if you did not leave instructions in your will as to who should raise your surviving minor children, New York State may intervene and assign a guardian who you would not have selected to be the legal guardian of your minor children.

Funding your living trust

You will not benefit from your living trust unless you fund it during your lifetime. You can fund it with practically any type of property as long as the property is classified as probate property. Probate property is generally any property that you own individually. Property that is not probate property and that cannot be used to fund your trust is property such as a retirement plan that has a designated beneficiary, property that has a pay-on-death or transfer-on-death designation such as a bank account or investment account, and property that you co-own with another person as a joint owner with survivorship rights.

As an experienced living trusts attorney in Long Island will explain, the steps required to fund your trust vary depending on the type of property. For example, to transfer real estate or a vehicle to the trust will require re-titling of the property. For other types of property such as jewelry and collectibles, you would have document the transfer in writing.

Contact the Law Offices of Stephen Bilkis & Associates

Creating a trust is complicated. A "form" trust agreement may not accomplish your goals. In addition, there may be serious financial ramifications if your trust is not set up correctly. Thus, before you set up a trust and before you transfer property to it, consult an experienced living trusts attorney serving Long Island who will be able to make sure that it is set up properly and that there will not be any negative financial consequences related to transferring property to the trust. To learn more about living trusts, wills and other estate planning tools, contact the Law Offices of Stephen Bilkis & Associates. We will help you develop an overall estate plan that reflects your individual goals. Contact us at 1-800-NY-NY-LAW (1-800-696-9529) to schedule a free, no obligation consultation regarding your case. We represent clients in the following locations: Brooklyn, Queens, Suffolk County, Bronx, Staten Island, Manhattan, Long Island, Nassau County and Westchester County.

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