Suffolk County Living Trusts Lawyer
Like a will, a living trust is an estate planning document. Sometimes referred to as an "inter vivos" or "revocable" trust, with a living trust your assets are placed into a trust during your lifetime and then transferred to designated beneficiaries at your death. A trust is managed a trustee. In contrast, a will is a written legal document that sets forth details as to how you want your property distributed when you pass away. Your executor, as named in the will, is responsible for managing your estate until assets are distributed. A trust is also different from a will in that a living trust avoids the time and expense of probate while a will must go through probate before your assets can be distributed to your beneficiaries. To learn more about the advantages of having a living trust in addition to a will, contact an experienced Suffolk County Living Trusts Lawyer who will review your family and financial situation are let you know how to design an estate plan that meets your goals.
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A trust agreement is an estate planning tool that details the rules that you want followed for property held in trust for your beneficiaries. There are many estate planning objects to set up a trust including to reduce the estate taxes, to protect estate property, and to avoid probate. A living trust is a trust that is set and funded during your lifetime. When creating a living trust, you can name yourself as the trustee. Thus, you are able to maintain control over the trust assets during your lifetime.
A living trust can be revocable or irrevocable. With a revocable living trust you retail control of trust assets as the trustee. You have the authority to change or revoke the trust at any time. This means that you may dissolve the trust at anytime or change it at any time. However, a living trust becomes irrevocable upon your death. 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 add property to the trust, you have done so permanently and irrevocably. In other words, you cannot change your mind. You no longer have any control over the assets and they are no longer part of your estate. Because of this not only will the trust property avoid probate, it also will not be subject to estate taxes.Are there different types of living trusts?
In addition to a living trust being either revocable or irrevocable, a living trust can be designed to fulfill a specific need of the beneficiary.
If you would like to make sure that your children or other relative has money to pay for college, then an educational trust may be the appropriate type of living trust. The trust document will specify that the trust property must be used only of educational expenses. You could specify that the trust can only be used to pay college tuition. Or it could specify that it can be used for any education-related expense including tuition, room and board, and books and supplies. There can be strings attached. For example, you could require that the trust will only pay for 4 years of college, or that it will only pay for college if the beneficiary maintains a certain GPA.
If you would like to put money into a trust for the a minor, you can do so and specify that the funds can only be used to pay for living expenses for the minor child. Then, when the child reaches majority or whatever age your chose, then you could specify that the assets will revert to the child, or the child will have greater access to the trust fund assets.
If you want to give property to someone who may not be a minor, but who does not have the ability to manage his or her finances, a spendthrift trust may be the way to go. The beneficiary could be someone who has shown that they do not have the skills or maturity to make sound decisions with their property. Or the beneficiary could be someone who is mentally incompetent and thus, needs a trust to manage his or her affairs. In the case of a spendthrift trust, not only will the beneficiary not be able to access the trust funds, but the beneficiary's creditors will also be unable to access the trust property. 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.
A special needs trust is a trust that you can set up to support a family member who has a disability or special need such as autism, downs syndrome, or cerebral palsy, or any type of impairment that will require lifetime care or treatment. Assets in a special needs trust are earmarked for medical expenses, rehabilitation, special equipment, education and training, recreation, insurance, and quality of life enhancing expenses. They are also used to protect the beneficiary's eligibility for governmental benefits such as SSI and Medicaid, despite having being the beneficiary of the trust.How is a living trust different from a will?
Living trusts are similar to wills in that both vehicles are a means for you to leave assets to your loved ones after you pass away. A living trust is effective while you are still living, while a will only becomes effective after your death. A significant difference between a living trust and a will is that a will must be probated, while a living trust does not. Probate is the process by which the New York Surrogate's Court determines whether or not a will is valid and during which the executor distributes the estate's assets. Typically the executor named in the will initiates the probate process by petitioning the Surrogate's Court to admit the will to probate. The Surrogate's Court judge then reviews the will to determine if it is valid. If the judge determines that the will is valid, he or she will enter an order to admit the will to probate and formally name the executor. The executor will then start the process of distributing the estate's assets by first identifying the assets, paying the estate's debts, and then distributing the remaining assets to the heirs named in the will.
All of these steps in the probate process can be quite time-consuming and expensive. With a living trust, upon your death successor trustee can distribute the trust assets to your named beneficiaries without any significant delay. Thus, avoiding probate is an attractive benefit of a living trust.
While living trusts offer advantages over wills, having a living trust does not mean that you do not also need a will or other estate planning tools. If you have a trust, you can transfer most of your assets to it. However, you will inevitably have assets that will not end up in the trust. Upon your death, if you do not have a will and you leave assets that are not part of the trust, those assets will pass to heirs through New York intestate succession laws. This means that the assets will not necessarily go to the beneficiaries of your choosing. For example, under intestacy rules a friend or organization will not be able to inherit. Heirs can only be your spouse or select blood relatives. NY EPTL § 4-1.1.What type of assets can be used to fund a living trust?
Funding a living trust means transferring assets that you own to the trust. You as an individual will no longer own the assets. The assets will be owned by that trust for the benefit of the trust's beneficiaries. Upon your death, with a exceptions, assets that you own that have not been transferred to your trust will have to go through probate before they are distributed to your beneficiaries according to the terms of your will or intestate succession. If you do not fund your trust, the trust has little meaning.
A trust can be funded with a variety of property. Such property may include a house or other real estate, a business, cash, brokerage accounts, precious metals, art, jewelry, antiques, and collections. One of the most common ways to fund a trust is with cash. This usually means changing the name on your bank account from your name to the name of your trust, or open a new account in the name of you trust and transfer cash to that account. To fund a trust with investments, you would have to follow the same procedure: open a brokerage account in the name of the trust and transfer investments to it.
Another common way to fund a living trust is with real estate. To effect such a transfer, the real estate must be re-titled from your name to the name of the trust. Thus a new deed will have to be executed and filed with the appropriate government agency.
You can also fund your trust with personal property such as jewelry, works of art, antiques, collectibles and clothing. You can even fund your trust with your pet. Unlike bank and brokerage accounts or real estate, there is no documentation required by an institution or government entity to effect a transfer from you to a trust. Thus, in order to make it clear that you are transferring ownership of the property from you to the trust, you should sign a document attesting to such a transfer.
Before any property is transferred to a living trust or any time of trust, an expert should be consulted to confirm that there will not be any negative financial consequences of such a transfer.
A living trust is an important and complex estate planning tool. In order for it to be effective, it must be created properly. To learn more about living trusts as well as will trusts, wills and other estate planning tools, contact the experienced attorneys at 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: