Long Island Living Trusts Lawyer
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.
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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.Do I have to have a lot of money to have a living trust?
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. 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.What are some of the 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.What some examples of the different types of living trusts?
A living trust can be designed to achieve a number of different personal and financial goals. 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 birthday, or on her 21st 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.What happens if I do not have 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.
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.What type of assets can be used to fund a living trust?
Funding a living trust means transferring assets that you own to the trust. You as an individual will no longer own the assets. The assets will be owned by your trust for the benefit of the beneficiaries that you designate. Upon your death, with a few exceptions assets that you own that you did not transfer to your trust will have to go through probate before they are distributed to your beneficiaries according to the terms of your will or according to the rules of intestate succession.
A trust can be funded with a variety of property. Such property may include a house or other real estate, a business, cash, brokerage accounts, precious metals, art, jewelry, antiques, and collections. One of the most common ways to fund a trust is with cash. This usually means changing the name on your bank account from your name to the name of your trust, or opening a new account in the name of you trust and transfer cash into that account. To fund a trust with investments, you would have to follow the same procedure: open a brokerage account in the name of the trust and transfer investments to it.
Another common way to fund a living trust is with real estate. To complete such a transfer, the real estate must be re-titled from your name to the name of the trust. Thus, a new deed would have to be executed and filed with the appropriate government agency. If there is a mortgage on the property, you would have to check with the mortgage holder about the additional steps you would have to take to complete the transfer of the property to your trust.
You can also fund your trust with personal property such as jewelry, works of art, antiques, collectibles and clothing. You can even fund your trust with your pet. Unlike bank and brokerage accounts or real estate, there is no official title to transfer. In order to make it clear that you are transferring ownership of the property from you to the trust, you should sign a document attesting to such a transfer.
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 practitioner who will be able to make sure that it is set up properly and that there will not be any negative financial consequences of transferring property to the trust. To learn more about living trusts, wills and other estate planning tools, contact the experienced attorneys at Stephen Bilkis & Associates, PLLC. 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 estate plan. We serve individuals throughout the following locations: