Who Needs a Living Trust?
A trust is a legal tool that allows you to appoint a trustee to hold and manage property for the benefit of another person. You can appoint yourself as the primary trustee in a living trust, maintaining full control over the management of property in the trust, with a successor trustee chosen by you to take over upon your death. A living trust can spare your loved one’s significant hassle and expense associated with New York’s notoriously complex probate system. Do you know how your property and assets will be distributed to your loved ones when you pass? Do you have a will and/or a trust as a part of your estate plan? When you establish a living trust during your lifetime, you essentially eliminate the need for expensive, time-consuming probate when you die, ensuring a smooth transfer to your beneficiaries. The living trust attorneys in New York City at Davidov Law Group have helped countless people throughout Nassau and Queens Counties. We can walk you step-by-step through the process of creating a living trust.
Living Trusts & Probate in New York
If you do not have a living trust, your estate will have to pass through New York probate. This is regardless of whether you have a will or not. Probate can be an expensive, time-consuming process. If you have no will a New York probate court will have the final say on who will receive your estate possessions, and who will take care of your minor children after your death.
If you have only a will, family members could conceivably contest the will, dragging out probate for an even longer time. Not only is probate costly and time-consuming, but it is also a public procedure. Any interested party can access all the details of a will during probate. A living trust is the best way to ensure your possessions go to those you choose and that your estate will not have to go through the New York probate process.
What are the Different Types of Living Trusts?
A living trust can be revocable or irrevocable. A revocable trust is created during your life. You are allowed to alter, change, modify, or revoke the trust entirely, at any time. When you choose a revocable living trust, you will transfer all the titles to your property into the trust. You will likely serve as the initial trustee, naming a successor trustee in the event of your incapacitation or death.
You can remove property from the trust during your lifetime. A revocable living trust is extremely helpful in avoiding probate—for the assets that have been transferred to the trust. While a revocable trust does make it more difficult for creditors to access the assets held in the trust, it is not impossible. A revocable trust naturally evolves into an irrevocable trust upon the death of the trust maker.
An irrevocable trust does not allow you to alter, revoke, modify, or make changes after its creation. Once your properties are transferred into the irrevocable trust they cannot be removed by anyone—including you. Survivorship life insurance can be held by an irrevocable trust and is generally used for estate tax planning purposes in larger estates. Irrevocable living trusts are usually set up as a method of minimizing estate taxes, protecting assets, and accessing government benefits. An irrevocable trust offers superior creditor protection as well as tax-shelter benefits that revocable trusts do not.
What Do Living Trust Attorneys in New York City Do?
A trust attorney is an estate planning professional who can help you create the necessary paperwork to set up a trust for your estate. Unlike a will, a trust can allow your surviving family members to have much less to deal with following your death. A trust is particularly useful for those with larger estates. Although a trust can be more expensive to set up initially, it can more than pay for the set-up fees in probate and possibly tax savings. It is not advisable to attempt to set up your own trust. An experienced trust attorney goes far beyond the basics, delving into your unique situation to get answers to important considerations.
You may discuss ways to control your wealth and protect your legacy from spendthrift beneficiaries or creditors with your trust attorney. Davidov Law Group living trust attorneys will explain the different types of trusts – and assist in implementing the best solution for your goals. A trust attorney can act as a professional fiduciary—or help you find a professional fiduciary—to handle the details of trust management while you are alive or incapacitated, then handle the distribution of your assets once you pass. This is a job that is better left to a professional, thanks to the sheer size of the job, along with the legal complexities.
Your living trust attorney can be responsible for the management of your trust, including assessment of property values, filing taxes, reporting business gains and losses, and reconciling all outstanding debts. The trust attorney will notify all beneficiaries, organizations, and government entities of the death. This may include credit card companies, banks, life and health insurance companies, mortgage holders, Social Security, the Department of Health, and Veterans Affairs. The living trust attorney will distribute all assets to beneficiaries, make sure the estate administration is in compliance with state and federal trust laws, and oversee any litigation should there be contests.
What Are the Benefits of a Living Trust?
As noted, one of the primary benefits of a living trust over a will is that probate can be avoided. Probate is a court-supervised process that can be both costly and time-consuming. The time factor can result in the delay of distributions to beneficiaries. When your assets are in a living trust, your successor trustee will distribute assets according to your wishes without court intervention. Other benefits to a living trust include:
- Your loved ones will likely save money on probate costs, plus since living trusts hold up to contests better than wills, estate money is potentially saved by avoiding a contest to the trust designations. A living trust may also provide savings for married couples in the form of joint living trusts.
- Your privacy is protected when you implement a trust. When you avoid probate, the dispensation of your estate does not become part of the public record.
- A living trust can be of significant benefit in the event you become incapacitated or gravely ill. In such a case, the person you have chosen as successor trustee will step in and manage your affairs without court intervention. A court-appointed conservatorship for your affairs is avoided during this difficult time. If you choose a revocable living trust you can retain control of your own affairs at any time.
- A living trust provides peace of mind, knowing you have done the very best for your loved ones. A living trust prevents you from disinheriting someone unintentionally and can help provide for a special needs child or protect assets from specific individuals.
If you are unsure whether you need a living trust or a will, know that many people have both, particularly those who want to name a guardian for their minor children.
What Are Some Common Issues with Living Trusts?
Although the benefits of a living trust generally outweigh the drawbacks, there are a few unique issues associated with living trusts such as:
- There is more paperwork—therefore, more expense—associated with the initial setup of a living trust. Written records must be kept whenever property is transferred to or from the trust, although no separate income tax records or returns are necessary so long as you are both the trustee and the grantor.
- Assets must be properly transferred into the trust or setting up a trust is an effort in futility. Ownership of all property listed in the trust is legally transferred to the trust. All items with title documents such as vehicles, real estate, bonds, stocks, etc. must have the document changed to reflect that the property is held in trust. If a specific property has no ownership document, you may be able to list it under Assignment of Property. Jewelry, electronics, artwork, musical instruments, books, furniture, etc., can all be listed in this manner.
- It may be difficult to refinance trust properties. Since legal title to all trust real estate is held in the name of the trustee, some banks and title companies may be reluctant to refinance the property. The trust document should offer reassurance, but occasionally you may encounter an uncooperative lender. If necessary, you could transfer the property out of the trust, refinance, then transfer it back into the trust.
- There is no cutoff for creditor claims. For most people, the issue of creditors trying to collect large debts from the estate property is not an issue. If, however, you are concerned about such large claims, it could be better for your estate to go through probate which gives creditors only a specific amount of time to file a claim against your estate.
How Trust Attorneys in New York at the Davidov Law Group Will Protect Your Family and Preserve Your Legacy
The primary goal at Davidov Law Group is to build strong client relationships and understand your goals before we make recommendations. We have an in-house CFP and a depth of experience in all financial estate matters. We are a family-owned law firm with more than 25 years of dedicated legal experience and more than 2,500 families protected by our firm. We want to help other families plan for their future and have co-authored a book on estate planning called “Keeping it in Your Family—Protecting Your Family and Leaving a Lasting Legacy.” Contact Davidov Law Group today for all your estate planning needs—we have been named Super Lawyers and have a 10.0 Superb AVVO Rating for client satisfaction.