Manhattan Living Trusts Lawyer
Estate planning is the process of planning for your future well-being, as well as the well-being of your loved ones. Many people equate estate planning with making a last will and testament. A will is indeed a critical part of estate planning. Without a valid will in place at the time of your passing New York State will step in and distribute your estate based on the laws of intestate succession. As a result your property may be distributed in a manner that is likely to be very different from your wishes. While a will is definitely essential to your estate plan, it is not the only document that you should consider having as you plan for the future of you and your family. A living trust, for example, is another powerful planning tool that offers many features that may help you reach your estate planning goals. Like a will, a living trust is a written document that lets you direct what will happen to your property after you pass away. Unlike a will, a properly created living trust can help manage assets during a disability , help children or grandchildren with special needs, and help with other aspects of estate planning. To learn more about living trusts and how they can play a vital part of your estate planning, contact an experienced Manhattan Living Trusts Lawyer.
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A living trust is a legal document in which you 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. 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 a irrevocable living trust, you cannot change it or revoke it.
A trust involves three parties:
- The grantor or trustor is the person who creates the trust.
- The trustee is the person you appoint to manage the trust assets according to the terms of the trust agreement.
- The beneficiaries are the people you designate to benefit from the trust property.
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 chose not appoint yourself as the trustee you can name any mentally competent person who is at least 18 years old. For revocable living trusts, the grantor 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.Do I have to have a lot of money to have a living trust?
Many people believe 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 the 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. It is also possible to set up a trust, but not fund it. However, if you do not fund your trust the trust has little meaning and you would not realize any of the advantages of having a trust.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.
- Educational trust. If you would like to make sure that your children, grandchildren or other relative has money to pay for college, then an educational trust may be the appropriate type of living trust. The trust document will specify that the trust property must be used only of educational expenses. You could specify that the trust can only be used to pay private school expense or college expenses. You could specify that trust funds can be used just for tuition, or also for any education-related expense including tuition, room and board, and books and supplies. There can be strings attached. For example, you could require that the trust will only pay for 4 years of college, that it will only pay for college if the beneficiary maintains a certain GPA, or that it will only pay for college tuition to a particular school.
- Minor trust. If you would like to put money into a trust for the a minor, you can do so and specify that the funds can only be used to pay for living expenses for the minor child. Then, when the child reaches the age of 18 or whatever age your chose, then you could specify that the assets will revert to the child, or the child will have greater access to the trust fund assets.
- 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.
- Special Needs Trust. 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.
Both a will and a living trust can set forth who gets your assets upon your death. However, one significant difference is that a will must be probated while a living trust does not. Also, a will becomes a matter of public so that anyone can get a copy of it while a living trust can remain private.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 effect 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. 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 and 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 estate plan.