New York City Revocable Trust Lawyer

A revocable trust is an estate planning tool that is not used as often as a will, but like a will, is an important estate planning document. A revocable trust allows you to distribute property to beneficiaries of your choice during your lifetime. Like a will, with a revocable trust you can also distribute your property to those you care about after you pass away. It has the flexibility of a will in that you can specify which property you would like each of your beneficiaries to receive, and you can disinherit specific relatives if you so choose. An important distinction between a will and trust is that after you pass away your loved ones will receive transfers from a trust a lot more quickly than they would through your will as a living trust does not have to through the probate process and a will does. Furthermore, there are numerous types of trusts that you can set up to achieve your specific planning goals. To learn more about revocable trusts and how they may fit into your estate plan, contact a New York City Revocable Trust Lawyer who has experience not only with creating trusts, but with making wills and other estate planning documents.

What is a revocable trust?

A trust is an estate planning vehicle in which one person holds property for the benefit of another person. The trustee is a fiduciary who you name in the trust agreement who will manage the trust. A beneficiary is the person who benefits from the trust. While the trustee holds legal title of the property in the trust, the beneficiary holds equitable title to the property. In other words, the trustee cannot use the property for his own benefit. The property is in the trust for the benefit of the trust beneficiary or beneficiaries. There are several terms used to describe you as the person who makes the trust: trustor, creator, grantor, settlor, or donor.

A trust can be a living (inter vivos) trust or a testamentary trust. A living trust is created and funded while you as the trustor are still living, while a testamentary trust is created and funded through your will upon your death.

A trust can be revocable or irrevocable. With a revocable trust you can change or amend the terms of the trust at any time. You can even dissolve it if you want to. On the other hand, after you create an irrevocable trust you cannot change its terms and you cannot dissolve it. An exception to this general rule is if there was an error in the trust agreement.

Upon your death, a revocable trust becomes irrevocable. It is important to note that in order for a trust to be revocable, it must contain a clause expressly reserving the right of the trustor to revoke it.

What is the purpose of creating a trust?

There are many different reasons for creating a trust. If you have a loved one such as a child or a sibling who is disabled or has special needs, you could set up a special needs trust to provide assets for the beneficiary's care while also ensuring that the beneficiary still qualifies for government benefits. If you want to gift property to a minor, a trust is a good way to do so. Once the child becomes an adult, you can distribute the assets to the beneficiary and dissolve the trust.

How does a revocable trust avoid probate?

When you create a trust and transfer your property to it, the property is no longer owned by you. In other words, the property is not part of your estate. For example, if you transfer your home to your trust the title of the house will change from your name to your trust's name. Thus, when your will is admitted to probate and your executor takes an inventory of your assets, any property that has been transferred to your revocable trust during your lifetime will not be a part of your assets that are subject to probate. Instead, the assets that are in the trust can be rather quickly distributed to the trust's beneficiaries, according to the terms of the trust agreement.

On the other hand most of your property that was not transferred to your trust during your lifetime will be subject to probate. Probate is a lengthy process. At a minimum you can expect probate to take 9 months. If your estate is subject to a will contest or probate litigation, if there is an estate tax issue, if there are beneficiaries or heirs that are hard to find, or if your estate is particularly complex, probate may take substantially longer than 9 months-- up to multiple years. 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.

On February 7, 2015, legendary North Carolina basketball coach Dean Smith passed away. Less than 2 months later, on March 16, 2015, each of the 260 college basketball players that Dean Smith coached received a check for $200 payable from the Dean E. Smith Revocable Trust. The notation on the check indicated that Smith wanted the beneficiaries to use the money to go out to dinner. If these gifts has been made via Smith's will, the recipients would not have received them less that than months after Smith's passing.

Why is a revocable trust more private than a will?

When your executor files your will with the New York Surrogate's Court in order to open your estate and have your will admitted to probate, it becomes public. Anyone can look it up, read the details, and make a copy of it. This is how the wills of many famous people are made public. For example, it is easy to go online and find a copy of Michael Jackson's will or Elizabeth Taylor's will.

Because living trusts are not probated they typically remain private documents. The exception is where a trust becomes an issue of litigation. In such a case a trust document may become part of the public record of the case.

If I have a revocable trust, why do I need a will?

While a living trust is an important estate planning document and it does some of the same things that a will does, it cannot completely replace a will. Despite your best efforts to make sure your entire estate is disposed of through trusts, it is possible that not every asset in your estate will be part of a trust at the time of your death. For example, suppose you inherited real estate or purchase a vehicle shortly before your death, but you did not get a chance to transfer it to your trust prior to your death. The real estate and vehicle would both be part of your estate that is subject your will. If you do not have a will these assets will be subject to the New York rules of intestate succession. These means that the property will not go to the beneficiaries that you select, but to your statutory heirs which could include people you do not want to get part of your estate. NY EPTL § 4-1.1.

What happens to my revocable trust when I die?

When you pass away your revocable living trust becomes an irrevocable trust. This means that the trust now cannot be changed. If you are the trustee, then your successor trustee takes over the responsibilities of administering the trust. The successor's trustee's responsibilities may be brief and similar to those of an executor of a will. For example, if the trustee may have to located, inventory and appraise the trust's assets, pay the trust's debts, determine the trust's tax liabilities, and ultimately distribute the trust's assets to the beneficiaries.

However, if the trust provides the beneficiaries receive distributions over time, then the trustee will have ongoing responsibilities of managing the trust assets according to the terms of the trust agreement.

How do I fund my trust?

Funding a living trust means transferring assets that you own to the trust. If you do not fund your trust it is meaningless. In order to transfer property that is owned by you to your trust, you must change the title of the property, assign ownership rights, or change the designated beneficiary. The steps to transfer property to a trust depend on the type of property. For example, for property such as a bank account, investment account, or real estate, in order to transfer ownership to your trust you must change the title of that property from your name to the name of the trust. For property that does not have ownership title, you must assign ownership right in writing. Such property includes personal property such as jewelry, artwork, monies owed to you, and partnership rights.

A revocable trust may be a valuable part of your estate plan. However, creating a trust is complicated. Depending on the type of trust you wish to set up, different federal and local rules will need to be carefully followed. If your revocable trust is 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 implications related to the administration of a trust. To learn more about revocable trusts, wills and other estate planning tools, contact 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:

1.800.NY.NY.LAW (1.800.696.9529)