New York 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. 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 estate document that you should consider 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 New York revocable trust lawyer at the Law Offices of Stephen Bilkis & Associates.Living trust
A trust is an estate planning vehicle that holds property for the benefit of another person. Trusts include four main components. You as the person who creates the trust would be called the grantor, creator, or trustor. The trustee is the person or entity that manages the trust according to provisions of 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 is still living, while a testamentary trust is created by the terms of a testator’s will, and is funded upon the testator's death after the will is probated. 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, as an experienced New York revocable trust lawyer will explain, 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
There are many reasons that a revocable may be a solution for you.
Changeable. One attractive feature about a rev cable trust is that it is changeable. During your lifetime you can change it as much as you like. You can add new beneficiaries and property as needed. For example, if created a revocable trust and later you have another child or grandchild, you may want to add that child as another beneficiary. 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. On the other hand assets that were transferred to a trust during your lifetime will avoid the pitfalls of probate.
Privacy. When your executor files your will with the New York Surrogate's Court, it becomes public. This means that nyone can look it up and read the details. The property in your estate, the names of your beneficiaries, as well as the terms of the will will be open to public scrutiny. Because living trusts are not probated, with very few exceptions they remain private documents.Different types of living trusts
You can set up revocable trusts to achieve many different personal and financial goals. Your 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 education-related 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 room and board, books, and school 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 those funds. You can specify that the trustee can use the funds for the benefit of the child while the child is a minor, while also specifying that the child can have direct access to the trust property upon reaching the age of 18 or 21, for example.
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 while your children are still minors, you would already have the trust set up. This will ensure that your children will immediately be provided for financially without the delay of probate.
Spendthrift trust. A spendthrift is a person who wastes his or her estate by spending money frivolously or irresponsibly. A spendthrift trust allows you to place property that you want to give to a person you consider to be a spendthrift. This allows a trustee to have the responsibility of managing the funds since the beneficiary is not responsible enough to manage the funds.
While the beneficiary of a spendthrift trust can be anyone, the beneficiary is typically an adult who has demonstrated that he or she does not have the skills or maturity to make sound financial decisions. For example, if you have an adult relative who constantly spends money unwisely, you may choose to help that person by 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 is sometimes established for the benefit of someone who has a mental incapacity or who has a history of substance abuse.Will vs living trust
Living trusts and wills are both estate planning documents that enable you to transfer your wealth to the people you want to have it. An important difference between a will and a living trust is that a living trust is effective while you are still living. This means that you can transfer property to others and maintain control over it during your lifetime. 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. Keep in mind that a trust is a highly technical document. In order to ensure that it will function as you want it to, make sure you work with an experienced New York revocable trust lawyer.
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. This is a big deal. The time and expense that go along with probate is avoided with a living trust. Instead, upon your death the successor trustee 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 document, 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 end up in your trust even if that is your intention. For assets that are not part of a trust and do not pass outside of probate for some other reason, you will need a will to avoid having those assets be subject to intestacy rules. 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 statute specifies 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 with the help of a skilled revocable trust attorney in New York. 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, it would involve re-titling the property and filing a new deed with the appropriate government agency.Contact the Law Offices of Stephen Bilkis & Associates
Revocable trusts, wills and other estate documents are complicated. If drafted improperly both you and those you 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 documents, contact a seasoned revocable trust attorney serving New York at the Law Offices of Stephen Bilkis & 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 case. We represent clients in the following locations: Nassau County, Suffolk County, Queens, Bronx, Brooklyn, Long Island, Manhattan, Staten Island, and Westchester County.