New York City Will Trustee Lawyer

A will is an important estate planning tool used to set forth your wishes as to what should happen to your assets once you pass away. You can make specific gifts to your family, friends, or even to institutions such as your alma mater or favorite charity. One way to leave gifts is to direct that the money or other assets that you leave be transferred directly to the beneficiary that you specify. Another common way to leave gifts is by leaving instructions in your will for a trust to be established, that you assets be transferred to that trust and then be distributed to your beneficiaries according to the terms of the trust. A trust that is created by your will upon your death is called a testamentary trust. If the trust is created during your lifetime, it is called a living or inter vivos trust. When you create a trust you must name someone to serve as the trustee. The trustee of a testamentary trust has duties that are similar to the executor of a will. The trustee is responsible for administering the trust for the benefit of the beneficiaries according to the terms of the trust agreement. In order to ensure that both your will and your trust are set up in compliance with the law and in a manner consistent with your financial and family goals, it is important to contact an experienced New York City Will Trustee Lawyer who will explain to you how a testamentary trust works, including the responsibilities of the trustee in administering the trust.

Should I create a testamentary trust?

Whether not you should have a testamentary trust depends on your family situation and your goals. One reason that testators create testamentary trusts is to provide for minor children. Because minors do not have the financial maturity to manage their own finances and property, any gift that you leave your minor children in your will should be left in a testamentary trust. A testamentary trust is created when a will provides that a testator's minor children are to receive a bequest.

For example, single dad Jack has an estate worth over $500,000, and a 7 year-old-daughter, Alexis. Jack created a will that provides that he leaves his entire estate to his daughter. However, if he passes away while she is still a minor, everything that he leaves her is to be transferred to a trust. Jack named his sister, Jill, to be the trustee. Upon Alexis' 21st birthday, all of the assets in the trust are to be distributed to her.

Another reason to create a testamentary trust is to provide for a relative who has special needs. In your will you can leave a gift to your child, sibling, or other relative who has a disability such as Down's Syndrome, cerebral palsy, or autism. Instead of providing that the gift be distributed directly to that person, even if that disabled relative is an adult, you can provide that it goes to a special needs trust. In doing so you will be able to leave a much needed gift to your disabled loved one without jeopardizing his eligibility for governmental benefits such as Medicaid.

You can also choose to create a testamentary trust to leave a gift to any loved one who you feel has the financial wherewithal to handle the gift without squandering it.

How long does a testamentary trust last?

Just like a living trust, a testamentary trust lasts until it expires. The terms of the trust will state when it expires. If the testamentary trust is a minor trust, then you can state that the funds are to be distributed to the beneficiary when the beneficiary reaches the age of 18 or 21. Some trustor's provide that the trust will end and the property distributed when the beneficiary graduates from college or gets married. In other cases the trust provides that the beneficiary is to receive distributions over a period of time. For example, the first distribution is to be made when the beneficiary turns 21, the next when the beneficiary turns 25, and the final when the beneficiary turns 30.

If the trust is designed to provide distributions to the beneficiary over the course of the beneficiary's lifetime, then the trust may continue for years into the future, until the beneficiary passes away. This would be the case with a special needs trust.

Do testamentary trusts avoid probate?

No. Testamentary trusts do not avoid probate. This is one of the notable differences between a testamentary trust and a living trust. Probate is the legal process, supervised by the New York Surrogate's Court, in which a will is validated and your property is distributed to your beneficiaries. However, probate generally takes at least 9 months and often over a year. It can be delayed further if there are disputes among beneficiaries or other interested parties.

A living trust, which is a trust that you create during your lifetime, would not be part of your probate estate. This means that funds from a living trust can be distributed to beneficiaries fairly quickly after your death, while with a testamentary trust funds will not be transferred to the trust until after your estate goes through probate. For example, 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. While a $200 gift is relatively small, if these gifts had been made via Smith's will, the recipients would not have received them so quickly.

If your goal in setting up a trust is to avoid probate, there are other options that you should explore besides a testamentary trust, such as a living trust, inter vivos gifts, payable-on-death account, or a vehicle with a beneficiary designation.

Who should I name as the trustee for my testamentary trust?

You can select anyone you want to serve as the trustee of your testamentary trust. However, because of the responsibilities that your trustee will have, your trustee should be someone you trust and someone who has a track record of making sound financial decisions. Keep in mind that you are entrusting the person you name as trustee to handle money and property that is meant to provide for your children or other beneficiaries.

While family members are often named as trustees, in some cases in may be a good idea to consider using an institutional trustee such as a bank or investment company. If the trust assets will be substantial, a relative may not have expertise or time to properly manage the trust. However, trustees who are not family members, and even in some cases trustees who are family members, charge fees for their services

In addition to appointing a trustee, it is wise to also appoint one or more successor trustee. A successor trustee would become the trustee if the primary trustee is not able to serve. For example, if your primary trustee passes away before the trust assets have been distributed, if the trustee is unable to serve due to illness or incapacity, or if the trustee chooses not serve, then the successor trustee will step in. If you do not name a successor trustee, then the court will step in and name one for you.

Will the trustee of my children's trust also serve as their guardian?

The trustee of your children's trust will not serve as your children's guardian unless you nominate that person to be your children's guardian. There are two types of guardians for minor children: a guardian of the estate and guardian of the person. A guardian of the estate is responsible for managing your child's money and other property, while the guardian of the person is responsible for raising your child. You can name one person to fulfill both jobs, or name two different people.

In order to ensure that your will trust is set up correctly and that you appoint a qualified trustee, contact Stephen Bilkis & Associates, PLLC. We have years of experience designing comprehensive estate plans, including wills, trusts, and other estate planning tools. We will advise you on the best course of action for your specific estate planning concerns. 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:

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