Without proper planning for the transfer of your assets before your death or incapacitation, you relinquish control over who inherits your estate, potentially causing your loved ones to bear the financial burden. Fortunately, there are several strategies to prevent this all-too-common scenario, and one vital component of a well-rounded estate plan is setting up a trust.
Setting up a trust helps you manage your assets effectively and ensures your family’s future is secured. For advice tailored to your individual situation, it is beneficial to consult with a knowledgeable Brooklyn trust planning lawyer. In Brooklyn, the attorneys at New York Legacy Lawyers are available to help you design a trust that fits your specific needs. You can contact them at (718) 713-8080 to arrange a consultation.
A Quick Primer on Trusts
Trusts are a tremendous tool you can use in addition to your Last Will & Testament. Fundamentally, a trust is an estate planning tool which helps to manage the distribution of your property by transferring your estate into a separate entity and then to your beneficiaries (which may include yourself) when certain pre-defined conditions have been met.
Reasons to Create a Trust
A Trust is set up to protect and manage a family’s assets for the benefit of both current and future generations. There are many reasons to create a trust some of which include:
- Creditor protection: Property which is managed by a trust is no longer owned by the settlor or the beneficiaries, so it cannot be claimed by future creditors. This gives the settlor an opportunity to venture into higher risks without risking the trust assets.
- Relationship Property Claims Protection: Relationship property laws permit the partners of your children to have access to the property that you gifted them during your lifetime, in case their relationship comes to an end. Placing these properties in a Trust, instead of under your children’s names will ensure that your children continue to benefit without these assets being part of their personal property.
- Protecting Family Members with Special Needs: A family trust is ideal if you want to protect children or family members with special needs or those who require medical care. You can make provisions in the trust to protect these people against other family members who may want to control the family assets for themselves in the event of your death.
There certainly are more reasons to establish a trust. Connect with us to see if your individual situation can be or should be addressed via trust establishment.
Establishing a trust
The basics of creating a trust require the settlor, who is the property owner, to transfer legal ownership of the property to the trustee, who can be an individual or an institution (including the settlor). The trustee then manages the property for the benefit of the beneficiary. A fiduciary relationship is created by the trust, running from the trustee to the beneficiary. Therefore, the trustee must work for the best interest of the recipient when managing the trust property.
In some cases, the settlor may act as the trustee and retain the ownership of property instead of transferring it, in which case, they must act in a fiduciary capacity. The settlor is also allowed to name themselves as one of the beneficiaries of a trust.
Placing Assets in a Trust
If you decide to put your assets in a trust, you will need to determine what type of trust to choose.
Living trusts are established during your lifetime. You will maintain control over the assets that are placed within the trust, allowing you to add or remove them as needed.
A testamentary trust is established after your death as part of your last will and will ensure that the chosen beneficiary receives their portion of your estate in the manner set within your will. They may receive a large part at the beginning followed by smaller amounts over time or when they receive a designated age.
There are, as mentioned earlier, many more types of trusts to consider. Contact us today and we can go over what kinds of trust would meet your needs. In the meantime, here’s some more information on trusts for you.
Maintaining Control of Your Assets
Living trusts allow you to maintain control of your assets. Because this type of trust is established during your lifetime, you have the option of continuing to use the assets or to set them aside and allow them to build interest.
As long as you are alive, you will have access to the assets held within the trust. You can add or remove things as needed. You can also close the trust if you change your mind and decide to alter how your money is dispensed, or if you need the funds for personal use.
| Reason for creating a trust | Benefits of creating a trust |
|---|---|
| Creditor protection | Assets managed by the trust are protected from future creditors |
| Relationship Property Claims Protection | Protects the assets from the partners of your children in the event of a relationship breakdown |
| Protecting Family Members with Special Needs | Protects family members with special needs from other family members who may want to control the assets |
Trusts as Part of a Will
Testamentary trusts allow you to provide for the needs of a loved one in a structured and secure manner. Trusts can be set up in a variety of ways, depending on the situation. If you have young children or grandchildren, establishing a trust through your will ensures that their financial needs are taken care of after you have passed away. Your testamentary trust may include securing their care and meeting their needs if they are a minor.
One example of how a testamentary trust might be used: establishing a college fund that will enable someone to afford their college and living expenses.
Is a Trust Better Than a Will in NY?
Deciding between a trust and a will in New York depends on your unique situation and estate planning objectives. For many individuals, especially those with straightforward assets and small families, a will is sufficient. A will specifies how your property should be distributed after your death, is relatively straightforward to create, and can be updated as needed. However, a will must go through probate, a court-supervised process that can be lengthy and expensive.
If avoiding probate is a priority, setting up a trust might be a better option. A trust allows your assets to be transferred directly to your beneficiaries without going through probate. This can save time, minimize legal fees, and maintain privacy since trusts are not public records. Trusts can also be beneficial for managing complex estates, providing for minor children, or planning for incapacity.
In New York, there are several types of trusts you can establish. A revocable living trust allows you to control your assets during your lifetime and ensures a smoother transfer process after your death. On the other hand, irrevocable trusts can offer additional benefits, such as tax reductions and protection from creditors, but they require you to relinquish control over the assets placed in the trust.
Ultimately, whether a trust is better than a will depends on your individual needs and goals. Consulting with an estate planning attorney can help you determine the best approach for your situation.
Who Sets Up Trusts
Trusts, which are legal entities designed for asset management and protection, require careful setup and administration. The individual responsible for setting up a trust is known as the grantor or settlor. This person takes the initial step to transfer their assets into the trust, establishing the terms and conditions under which the trust will operate.
The grantor plays a crucial role by defining the purpose of the trust, selecting beneficiaries, and outlining the management or distribution of assets within the trust. When establishing the trust, the grantor sets the legal framework governing its operations, including the appointment of a trustee.
Tasked with managing the trust according to the grantor’s instructions, the trustee manages assets, makes investment decisions, and ensures beneficiaries receive their distributions as outlined by the trust. This role demands diligence, integrity, and financial knowledge. The grantor can also initially serve as the trustee, retaining control over the trust’s assets and operations. However, it is common to appoint a successor trustee who will assume these duties if the grantor is unable to continue due to incapacity or death.
The involvement of an attorney in creating a trust is crucial for addressing legal requirements accurately and reflecting the grantor’s wishes in the trust documents. They can help draft the trust agreement to minimize uncertainty and prevent potential disputes between beneficiaries. By engaging an attorney, the grantor can have peace of mind that their trust is set up with professional oversight, providing a secure future for their beneficiaries in line with their wishes.
Can You Set Up A Trust Without An Attorney?
When individuals encounter the concept of a trust, they often imagine complex and intimidating legal paperwork. However, a trust fundamentally represents an arrangement in which an individual, referred to as the grantor, entrusts another person with the authority to manage specific assets on behalf of someone else’s benefit. The complexity of a trust can vary depending on the specific circumstances involved.
While it is possible for individuals without legal experience to create a trust on their own, it may not always be the most practical choice. It is important to note that trusts can become intricate, and legal regulations may change over time. Consulting with a qualified attorney can assist individuals in navigating potential challenges and ensure that their trust achieves their goals.
There are multiple situations where seeking the guidance of an attorney is highly recommended. If your net worth is approaching the estate tax exemption threshold, engaging in estate tax planning can offer substantial advantages for the beneficiaries of your estate. Additionally, if you have a child with special needs, prefer a non-standard distribution method for your estate, or need assistance with financing the trust, it is recommended to work closely with an attorney to establish a trust.
Even for less complicated matters, working with an estate planning attorney can provide the assurance of a professionally crafted estate plan and be a valuable resource for addressing any questions you may have. At New York Legacy Lawyers, our Brooklyn trust planning lawyers have the experience to help individuals and families establish trusts that meet their unique needs and goals. We can guide you through the intricacies of trust creation, ensuring that your assets are protected and your wishes are carried out seamlessly. Contact us today to schedule a consultation and take the first step towards peace of mind and comprehensive trust planning assistance.
How to Choose a Name for Your Trust
There are numerous things to consider while naming a trust. It is preferable to refrain from using names that might be mistaken for those of already-existing entities or individuals. Clarity may be improved by descriptive names, particularly if the trust has a clear objective or goal. Think about how long the trust might last and whether the name you select will still have value in the future.
A knowledgeable estate planning attorney should be consulted if you are thinking about creating a trust. A lawyer can assist you in creating a trust that satisfies your unique requirements and objectives and in understanding your possibilities. Additionally, lawyers can offer advice on trust naming and guarantee that the trust conforms with all relevant legal requirements.
Establishing a trust is a critical component of estate planning. Working with an estate planning attorney can help you set up your trust properly and guarantee that your assets are managed and distributed in line with your preferences. If you require assistance with estate planning, don’t be hesitant to consult a qualified estate planning attorney.
What Happens When One Co-Trustee Dies
When a co-trustee passes away in the state of New York, the overall effectiveness of the estate plan does not immediately cease. Rather, the legal responsibilities and duties that were previously shared amongst the co-trustees typically transition to any remaining co-trustees or to a successor trustee, if one has been specifically named in the trust agreement.
The surviving co-trustee(s) in such scenarios is entrusted with the full control and management of the trust’s administration. This ensures that the trust continues to operate smoothly without significant disruption. They will effectively manage all trust assets, make distributions as necessary, and handle any other administrative tasks that were once the responsibility of the deceased co-trustee.
In situations where the trust document does not designate a successor trustee, or in the event that all co-trustees have passed away, the probate court may step in to appoint a new trustee. This is done to ensure that the trust does not become leaderless, as this could lead to mismanagement and eventual erosion of the trust assets.
It’s important to note that this transition process may not always be straightforward. The language of the trust document and the specifics of the situation can introduce complexities that require careful navigation and understanding. Therefore, it is always advisable to engage an experienced New York trust planning attorney when dealing with the death of a co-trustee.
How Long Can a Trust Remain Open After Death
A trust can remain open for varying durations after the death of the grantor, depending on the trust’s purpose, type, and the beneficiaries involved. The time frame for a trust to remain open can range from a year to several decades, or even for the lifetime of a beneficiary.
Trusts often stay open for extended periods when beneficiaries are minors. In such cases, the trustee may be tasked with distributing funds carefully and periodically, ensuring the beneficiary receives the money and property when they reach adulthood.
Certain trusts, such as qualified perpetual trusts or dynasty trusts, are designed to continue beyond a year and can last for several decades. These trusts are often established to preserve family wealth across multiple generations.
Special needs trusts cater to beneficiaries with disabilities, providing financial support throughout their lives, far longer than the 21-year rule applied to some trusts. These trusts can remain open for the beneficiary’s lifetime or until funds are depleted.
Trusts can end sooner than the time frames mentioned above, often dissolving shortly after the grantor’s death. Once the assets and property within the trust have been distributed to the beneficiaries, the trust is terminated after signing a trust dissolution form.
In some cases, it is in the beneficiaries’ best interest for an irrevocable trust to end relatively quickly, such as within a year. This can avoid annual accountings and trustee fees that may reduce the trust’s assets. Additionally, a trust that remains open for too long may create opportunities for disputes among beneficiaries, potentially leading to legal action against the trustee.
Taking Care of Those You Love
Trusts are a great way to secure the future of your loved ones. For parents with young children, creating a trust through their last will enables them to make sure all of the expenses of taking care of their minor children are taken care of, allowing the children to live as full a life as possible.
Working With a Skilled Brooklyn Trust Planning Attorney From New York Legacy Lawyers
Understanding how to set up a trust in New York is a critical step in protecting your legacy and the future of your loved ones. A trust can provide a shield for your assets and ensure they are distributed according to your wishes, minimizing potential disputes and easing financial burdens on your family.
The importance of setting up a trust with clear and legal guidance cannot be overstated. At New York Legacy Lawyers, our Brooklyn-based attorneys are well-versed in the nuances of trust planning and are committed to helping individuals and families secure their financial future. If you’re looking to safeguard your legacy and protect your family’s interests, consider reaching out to New York Legacy Lawyers. We are ready to assist you in crafting a trust that reflects your wishes and meets your family’s needs. Call us today at (718) 713-8080 to start the conversation about securing your legacy.
