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Suffolk County Living Trust

Estate planning is a way of preparing for your future financial needs and personal care, as well as preparing for the needs of your family members. Many associate estate planning with simply making a last will and testament in which they state how their assets will be distributed upon their deaths. However, a will is not the only document in an estate plan that will help you meet your goals of planning. Indeed, without a valid will in place at the time of your death, the court will distribute your estate to your family members who are your statutory heirs based on New York's laws of intestate succession. The term "intestate" means a person who passes away without leaving a will. With intestate succession, your property may be distributed in manner that may be quite different from your wishes. While a will is important to your estate plan, it is not the only document you should consider having as you plan for the future of you and your family. For example, a living trust is another powerful planning tool that offers many features that may help you reach your estate planning goals. With a living trust you can make decisions about your estate that will go into effect while you are alive, as well as leave gifts to your family and friends. To learn more about both living trusts and wills, and how each can be used to reach your estate goals, contact an experienced Suffolk County Living Trust Lawyer.

Living Trust Defined

A trust agreement is an estate planning vehicle that holds property for the benefit of another person. 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. A testamentary trust is created and funded upon the testator's death. For example, your will can provide that upon your death you leave a cash gift o your minor niece to be used for education expenses. Until you die, there is no gift to your niece. On the other hand, you can set up a living trust immediately. When you create your living trust, you can name yourself as the trustee. This allows you to retain control over the trust assets during your lifetime.

Revocable Living Trust vs. Irrevocable Living Trust

A living trust can be revocable or irrevocable. With a revocable living trust you are the trust and have the authority to change or revoke the trust at any time. If you decide that the trust is no longer necessary, then you are free to dissolve it. Or, if you would like to change its terms, you can do that at any time. Once you pass away, a revocable living trust becomes irrevocable. Upon your death, the assets in the trust will go directly to the trust beneficiaries without going through probate.

With a irrevocable living trust, once you fund it that property is no longer yours and you cannot not change your mind. This means that you do not have control over the property. It is no longer part of your estate. The trustee of the trust (who is not you) has control, and will exercise that control for the benefit of the beneficiaries who you designated. Because of this not only will the trust property avoid probate, it also will not be subject to estate taxes.

The Different Types of Living Trusts

When you decide to create a living trust you should consider what your goals are. Depending on your goals, there are several different types of living trusts.

Education Trust. If you would like to stash away money for your kids' education or for the education of someone else, you can set up an education living trust. This allows you to put a sum of money into the trust and direct the trustee to use it only for expenses related to the beneficiary's expenses. You can be very specific as to how the money can be used. For example, you can specify that it can be used for only for tuition to private school, college or graduate school. You can include room and board, as well as books and supplies as eligible education expenses. You can also specify that the beneficiary must maintain a certain grade point average in order to continue to benefit from the trust.

Minor Child Trust. It is not uncommon for a parent or other relative to create a trust fund for a minor child. In some cases the money is set aside in the trust fund until the child 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. For example, you could allow access to 33% of the funds at age 21, another 33% at age 30 and the balance at age 40. One of the reasons for establishing a minor child trust is to give money to a child or other relative while they are minors, but not allow them to have control over it until they are adults, or until the show that they are capable of managing it in a responsible manner.

Spendthrift Trust. In some ways a spendthrift trust is similar to a minor child trust. It 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. However, with a spendthrift trust the beneficiary is not necessarily a minor. The beneficiary can be anyone who does not have the skills or maturity to make sound financial decisions. For example, if you have an adult child who constantly has financial problems, you may chose to help that adult child by giving him or her a lump sum of money. However, because you are not confident that they will use the money wisely, you instead put the money in a trust. The trustee, which can be you, will then 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.

Special Needs Trust. If you have a child, sibling or other relative who has special needs such as a mental or physical disability, then you can set up a special needs trust to ensure that he or she has funds to pay for certain expenses related to his or her care. A significant benefit of the special needs trust is that it allows you to provide resources to the beneficiary without jeopardizing that beneficiary's eligibility for governmental programs such as social security income or Medicaid.

Care must be taken when such a trust is set up and the trustee must understand the limitations on how trust funds can be used. Eligible expenses may include medical cares, rehabilitation, education and training, special equipment, companion care, and recreation.

Special needs trusts are often set up to benefit people with autism, Down's Syndrome, and cerebral palsy.

Comparison of a Will to a Living Trust

Living trusts and wills are both estate planning devices that allow you to name someone as the beneficiary to some or all of your assets. An important difference is that a living trust 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, one reason is to give a gift to someone while you are still living and at the same time avoid certain tax issues.

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. Probate is the legal process during which the New York Surrogate's Court determines whether or not a will is valid. The court will review how a will was drafted and executed to determine if it complies with the requirements of New York law. Once the Surrogate's Court determines that your will is valid the executor will go about the business of winding up your affairs. Steps in the probate process include inventorying your assets, determining the value of your assets, paying debts of your estate, and distributing your assets to your named beneficiaries. While the steps in probate are few, the process can be long and expensive. The time and expense that go along with probate is avoided with a living trust. Instead, upon you death the successor trust that you have 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 in the appropriate manner, according to the trust agreement. The idea of avoiding probate is a very attractive benefit of a living trust as compared to a will.

Keep in mind, however, that even if you have a trust, your estate plan should also include a will. For a variety of reasons, every asset in your estate will not be part of a trust. Thus, it is important to also make sure that you have a valid will that accurately expresses your wishes.

If you do pass away with assets that are not part of a trust, then the court will have to decide who gets those assets. 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. 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, 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. The trust will own them for the benefit for the beneficiary or beneficiaries that you name in the trust agreement. If you name yourself as the trustee, you will still maintain control over the assets even though you do not legally own them.

A trust can be funded with a variety of property. Trust property typically includes cash, stocks, and real estate. However, it can include almost any type of property. However, in most a cases the property has a substantial value. Examples of property that can be used to fund a trust include a house, a business, cash, brokerage accounts, gold or other precious metals, fine art, jewelry, antiques, and collectibles.

Funding a trust with cash is relatively simple, requiring you open a bank account with the trust as the owner. Each time you deposit money into that bank account owned by the trust, you will be adding to the trust's principal. Similarly to fund a trust with stocks or bonds, you would have to follow the same procedure: open a brokerage account in the name of the trust and transfer investments to it.

To fund a trust with a house or other real estate, you would have to re-titled the property from your name to the name of the trust. A new deed will have to be executed and filed with the appropriate government agency. If you still have a mortgage on the property, the transfer will become more complicated. To fund your trust with personal property such as jewelry, works of art, antiques, collectibles and clothing you would need to complete a document detailing the nature of the property and stating that you are transferring ownership to the trust. Particularly in the case of property such as a vehicle, before any property is transferred to a trust, an expert should be consulted to advise you of the property way to effect the transfer and to advise of any negative financial consequences of such a transfer.

Because there are many different types of living trusts, in order to make sure your trust meets goals, it must be set up properly. To learn more about living trusts, wills and other estate planning documents, contact Stephen Bilkis & Associates, PLLC. We will help create a trust for you that is consistent with your specific goals. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.

Client Reviews
Mr. Bilkis handled both my father and mother's estate issues through very difficult times he was compassionate kind and understanding. In fact the whole firm showed great empathy. Despite the emotional hard time we were having that quickly and efficiently handle all the matters that were necessary to get us the result we desired. Can't recommend them enough. B.B.