Nassau County Revocable Trust
In planning for your financial and personal future and the futures of your loved ones, there are several estate planning tools that can help you achieve your goals. A revocable trust is a tool that offers is the process of planning for your future personal and financial well-being, as well as the well-being of your loved ones. Many people equate estate planning with making a last will and testament in which they leave loved ones assets when they pass away. However, a will 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. To learn more about wills, living trusts and the many additional estate planning tools, contact an experienced Nassau County Revocable Trust Lawyer.
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A trust is an estate planning vehicle that holds property for the benefit of another person. Trusts include four main components. You as the creator of the trust would be called the grantor. The trustee is the person or entity that manages the trust according to provisions for the trust agreement, for the benefit of the beneficiaries. The beneficiaries are those who receive the benefits of the trust
A trust can be a living trust or a testamentary trust. A living trust is created and funded while you as the grantor are still living, while a testamentary trust is created and funded upon the testator's death. A living trust can be revocable or irrevocable. With a revocable trust you name yourself as the trustee, and you maintain control over the property in the trust. You can change the terms of the trust at any time. You can even dissolve it if you want to. However, after you create an irrevocable trust and fund it with your property, you give up control over the trust and its assets. You cannot change the terms of an irrevocable trust and you cannot dissolve it.Advantages of a Revocable Living Trust
Changeable. The most obvious advantage of a revocable trust is that it is changeable. You can change it as much as you like while you are living. However, once you pass away your revocable trust becomes irrevocable.
Avoiding Probate. Property that has been transferred to a living trust does not have to go through probate. This is in contrast to property that is left through a will which must go through probate. Probate is the legal process during which your will is validated by the court, your estate debts are paid and your assets are distributed to your beneficiaries. If you died intestate, meaning that you did not leave a will, and you did not transfer property to a trust, your estate will still be required to go through the probate process. Instead of your assets ultimately being distributed to your named beneficiaries, they will be distributed to your statutory heirs.
Probate takes time and is costly. Depending on the size and complexity of the estate and whether or not there is a will contest or probate litigation, probate can take months or even well over a year. In addition, there are fees associated with probate that will reduce the value of the property in your estate that is available to distribute to your beneficiaries.
Privacy. When your executor files your will with the New York Surrogate's Court, it becomes public. Anyone can look it up and read the details. Because living trusts are not probated, with very few exceptions they remain private documents.The Different Types of Living Trusts
You can set up revocable trusts to achieve many different personal and financial goals. You trust agreement will state the purpose of the trust and detail how the trust must be administered.
Education Trust. If you would like to set aside money for your children's education, an education trust is an option. This allows you to transfer money to a trust and stipulate that the money is to only be used for expenses related to the beneficiary's expenses. For example, you can specify that the money can only be used for college tuition. Or you can allow the money to be used for college tuition as well as expenses such as books and supplies.
Children's Trust. If you have minor children, a children's trust is vehicle to set aside funds for the child without allowing the child to have direct access to it. While you can specify that the trustee can use the funds for the benefit of the child while the child is a minor, the trust can also provide that the child cannot have direct access to the trust property until he or she reaches the age of majority. At that point you can specify the child will gain control of the trust fund assets. However, when you create a trust for a minor child, you can specify how the trustee is to use the funds and at what point the child will have direct access to the trust property. In addition to controlling access to trust property, an advantage of a children's trust is that in the event that you and the child's other parent pass away or become incapacitated, your children will immediately be provided for financially without the delay of probate.
Spendthrift Trust. A spendthrift trust allows you to place property that you want to give to another person, but that person is not responsible enough to manage the funds. Thus, a trustee has that responsibility. While a the beneficiary of a spendthrift trust can be anyone, the beneficiary is typically an adult. However, typically the beneficiary is someone who has demonstrated that he or she not have the skills or maturity to make sound financial decisions. For example, if you have an adult relative who constantly has financial problems, you may chose to help that person giving him or her money. However, because you are not confident that the money will be used wisely, you instead put the money in a spendthrift trust and the trustee will manage the money. 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. This type of trust can also be established for the benefit of someone who has a mental incapacity.Comparison of a Will to a Living Trust
Living trusts and wills are both estate planning tools that enable you to transfer your property to named beneficiaries. An important difference between a will and a living trust is that living will is effective while you are still living. A will, on the other hand, does not become effective until after your death. While there are many reasons to set up a living trust, if you would like to give someone a gift while you are still living, doing so through a living trust is an option to consider.
Another significant difference between a living trust and a will is that a will must be probated, while a living trust does not have to go through the probate process. The time and expense that go along with probate is avoided with a living trust. Instead, upon your death the successor trust that you have already named in your trust agreement will take over the duties of trustee and immediately distribute the trust assets to your named beneficiaries or manage the trust assets according to the provisions of the trust agreement. The idea of avoiding probate is a very attractive benefit of a living trust for both you and your beneficiaries as compared to a will.Necessity of a Will
While a living trust is an important estate planning tool, it is important to understand that even if you have a trust your estate plan should also include a will. For a number of reasons, it is very likely that not every asset in your estate will be part of a trust that you set up. For assets that are part of a trust and do not pass outside of a will for some other reason, you will need a will to avoid rules that apply to intestacy.
Under New York's intestacy laws, there are specific rules that dictate who will get those assets. For example, if you have a spouse as well as children, most of those assets will go to your spouse with a smaller share being divided among your surviving children. If you have surviving children, but no surviving spouse, all of your assets will go to your children. If you have no surviving spouse or children, then your assets will go to your parents. After that, the intestacy specific which other relatives will be entitled to inherit your property. The laws of intestate succession generally only allow assets to go to a spouse or a blood relative. NY EPTL § 4-1.1. If you want assets to go to a friend or charity, for example, you would have had to specific it in a will or trust.Funding a Living Trust
Funding a living trust means transferring assets that you own to the trust. You will no longer be the owner of the assets you put in the trust. When you fund a trust with your property the property is governed by the terms of the trust agreement. Thus, it is important that your trust agreement be drafted with extreme care. In order to fund a trust, you can add assets such as bank accounts, brokerage accounts, stocks and bonds held in certificate form, and homes and other real estate, by changing the owner of the asset from the your name into the name of the trust. For real estate is would involve re-titling the property and filing a new deed with the appropriate government agency.
Transferring other assets to the trust will involve signing paperwork that assigns ownership rights from you to the trust. Such assets include personal property like jewelry, art work, and collectibles; royalties, copyrights and patents; mineral rights; and business interest such as partnership and liability companies interests.
If the asset is an instrument for which you are the designed beneficiary, the beneficiary designation must be changed from your name to the name of the trust. Such assets include life insurance, retirement accounts, 401(k) accounts, and pension benefits.
Revocable trusts, wills and other estate planning document are complicated. If drafted improperly both you and those your want to provide for may be negatively impacted financially. Furthermore, it is important to understand the rules and tax implication related to the administration of a trust. To learn more about living trusts, wills and other estate planning tools, contact Stephen Bilkis and Associates. We will help you develop an overall estate plan that reflects your individual goals. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.