Facing the reality of death or incapacitation may be challenging, but it’s essential to have these conversations, especially if you have young children or a non-traditional family structure. Ensuring your wishes are respected and your loved ones are protected is where estate planning comes into play.
Both a will and a living trust can help you manage your estate and medical concerns in case you’re no longer able to do so yourself. But how do you know? Is a living trust right for you, and do you need one? How do you set up a will? Can a will and living trust be used together?
To make an informed decision and navigate the complexities of estate planning, consider reaching out to an experienced estate planning attorney in New York. At New York Legacy Lawyers, our team of skilled New York estate planning lawyers may be able to guide you in choosing the most appropriate option and help you create a comprehensive plan tailored to your needs. Call us today at (718) 713-8080 to schedule a consultation.
Living trusts and wills do not have to be terribly complicated. In many states, handwritten wills are acceptable (though not advised). They become more complicated if you have significant assets such as property, vehicles, stocks, or multiple potential family and friends who believe they are entitled to your assets.
There are two forms of living trusts, irrevocable and revocable. Irrevocable trusts aren’t as popular because once the papers are signed, they can’t be changed. They typically function as a means of protecting assets from a lawsuit or taxes.
A revocable trust can be changed if you change your mind or as your financial situation necessitates. It offers benefits toward reducing the complexity of distributing assets after the death of the holder.
A revocable living trust is a private contract between the trust entity and trust holder. It helps your beneficiaries by enabling them to avoid probate, the court process in place to distribute the assets after the death of the estate holder. In addition to the protection from probate, trusts are private matters and not a matter of public record.
Conversely, when a will is filed with the court to begin probate, it becomes public record. The assets and finances changing hands are open for anyone to see.
A living trust manages your financial affairs during the end of your life and after death. A will handles affairs when you are gone. Those of advanced age or suffering from illness may consider a living will.
A living will handles your medical affairs should you be unable to advocate for yourself. You can designate whether or not you want to receive life-saving treatments like life support or CPR. This is the only time a living will is necessary.
A living trust allows you to name a successor trustee in the event you become mentally incapacitated. If you have a same-sex partner, this gives your partner rights to advocate for you and your estate. This also applies if you are unmarried but want to designate a friend or non-family member as your advocate.
If you only have a will, the court designates someone to handle your affairs. You can file for a power of attorney to avoid this.
Matters Involving Children
Living trusts allow you to leave property to children. It is illegal for children under 18 to own property so you will have to designate a manager. Only a will allows the estate holder to arrange for their children’s guardianship and property.
Your Estate After Death
To designate property in a living trust, you must transfer the property into the trust. For many items, making a list and attaching it to the trust document is all that’s required. Larger items that have a title document require that you rename the title to the name of the trust.
You will need to name someone to wrap up your estate affairs after you die. In a will, this person is called an executor. They are in charge of managing your assets and distributing them after probate. In a living trust, the successor trustee manages the assets that are only in the trust.
Most estates will require an executor even if most of the property is transferred to the trust. The executor of the will and a successor trustee can be the same person.
|Complexity||Two forms: irrevocable and revocable. Revocable trusts can be changed while irrevocable trusts can’t be changed once papers are signed.||Handwritten wills are acceptable, but not advised. It can become complicated if there are significant assets or multiple potential beneficiaries.|
|Privacy||A private contract between trust entity and holder, and helps beneficiaries avoid probate.||Becomes public record when filed with the court for probate.|
|Health||Manages financial affairs during the end of life and after death. Allows naming of successor trustee if mentally incapacitated.||Handles affairs after death. Living will necessary for medical affairs if unable to advocate for oneself.|
|Matters Involving Children||Allows leaving property to children, but requires a designated manager as children under 18 can’t own property.||Only a will allows for arranging children’s guardianship and property.|
|Your Estate After Death||Property must be transferred to the trust. Large items require renaming of the title to the trust’s name. Successor trustee manages assets in the trust.||Executor manages assets and distributes them after probate. Most estates require an executor, even if property is transferred to the trust.|
Living Trust vs. Will
The proper planning of your estate will protect your assets and your loved one’s rights. Leaving it to the court will often end in disappointment for all parties.
A living trust will help your family maintain privacy. It will also protect the rights of non-traditional family members. Trusts are often a little more difficult to contest in a lawsuit should an issue arise.
A will allows you to make arrangements for young children after your death. You can also designate a manager for any property left to them.
The answer to which you should choose between a living trust vs. will?
A combination of both will provide you with the best options for caring for your estate and your family.
Don’t wait until it’s an emergency to plan your estate. Get started with us today.
Can You Have Both a Will and a Living Trust
Many individuals wonder if they can incorporate both a will and a living trust in their estate planning strategy. The answer is affirmative, and it can even be advantageous in specific situations. By combining a will and a living trust, individuals can ensure that their assets are distributed according to their preferences and their loved ones’ future necessities are fulfilled.
A living trust can provide more security to those who wish to evade probate or have minor children who might not be capable enough to manage their inheritance prudently if they receive it as a lump sum at a young age. On the other hand, a will permits the nomination of a guardian for underage children, which is not possible with a trust.
A suggested approach is to use a will to finance the living trust with any assets that were not previously included in the trust before death. A “pour-over” will directs that any assets outside the trust at the time of death be shifted to the trust, which will be supervised by a successor trustee for the beneficiaries’ advantage. This strategy guarantees that the assets intended for children are managed according to the creator’s directives.
To identify the best course of action for one’s unique circumstances, it’s recommended to seek guidance from a competent estate planning attorney in New York. They can help navigate the complexities of wills and trusts and create a plan that meets both the individual’s and their loved ones’ requirements. Contact us today at (718) 713-8080 to schedule a consultation.
Living Trust vs. Will: A Look into the Best Choice for Your Situation
58% of Baby Boomers (ages 53-71,) and 81% of those 72 or older have a living will or trust. They already see how smart it is to begin planning for the fact they will not be around forever. Likely this planning is tinged with years of experience watching family and friends go through the confusion and disputes that often arise over assets and estates when the original owner of them passes without making their wishes known.
One estate planning tool that many of these baby boomers have turned to, and that many more are looking at, is a living trust. A living trust and a last will & testament often go hand-in-hand. Here’s what you need to know about how they compare. Reach out to us at the New York Legacy Lawyers to consult with a skilled New York estate planning lawyer. Discover valuable estate planning tips and determine whether a will or trust is the best option for your situation.
PROBATE IS DIFFERENT BETWEEN A TRUST AND A WILL
Unlike a will, a living trust is something you can use and benefit from while you are still alive. In a living trust, you transfer some or all of your assets into the trust (as the grantor), then you manage the trust as the trustee, and receive the benefits of the trust as the original beneficiary. Knowing that you may become incapable or unfit to manage your assets (trust) one day, you can designate someone to be responsible for your property if and when you become mentally or physically unable to do so. When you pass away, a successor trustee becomes responsible for carrying out the intent of the trust to whichever beneficiaries you’ve designated.
You and your spouse will likely want to be co-trustees while you are still alive, maintaining full control of your assets. Your spouse can take over if you become incapacitated.
Most couples name their children as successor trustees in the event of their death. If they are uncomfortable with this arrangement, they can appoint a professional to oversee their assets.
While you are alive, your living trust can be altered or dissolved at any time.
Both a will and trust give detailed inheritance instructions, and allow you to designate someone to oversee the distribution of your assets. With a will, however, your document will likely go through probate. This process can take months and become costly if it is contentious. Your assets will be tied up during this time.
With a living trust, the parts of your estate in the trust will not pass through probate court. Instead, the person you have designated as your trustee will carry out the requirements you outlined in the trust.
OPACITY=TRUSTS | TRANSPARENCY=WILLS
Official documents, such as a will, and those that go through probate, become a part of the public record. Living trusts will not be subject to public scrutiny unless a beneficiary or trustee demands court approval. Many people prefer that their wishes remain a private matter and a trust is a great way to keep the value and assets of your estate confidential.
Why would that matter? Imagine you’re leaving $2 million for your 15-year-old son to inherit when they turn 20 years old. You can imagine some people will want to share their ideas on how to spend $2 million with anyone new to that kind of cash on hand. Or worse, if you wanted to leave that $ to your son, but your estranged sister knew about it and preyed on their guilt to siphon some of it away.
These are only two scenarios, the point here is that the fewer people you have poking around your estate and knowing who received what, the better-off the beneficiaries are likely to be.
DIFFERENCE BETWEEN TRUST AND WILL
Wills and trusts are legal documents that are commonly utilized for transferring assets to loved ones after one’s death. Despite sharing some similarities, such as the ability to modify or revoke them during one’s lifetime, the primary difference between these documents lies in their approach to asset distribution among beneficiaries.
A will, also known as a last will and testament, designates an executor to manage the distribution of assets after death. In addition, a will can also serve to appoint a guardian for minor children and outline funeral arrangements. However, a will must go through the probate court process in order to be legally binding. This involves the court assessing the value of the property left by the will and approving its distribution to beneficiaries. Unfortunately, probate can be time-consuming, expensive, and public, as the details of the estate become part of the public record.
On the other hand, a trust establishes a relationship between the assets of the owner and a trustee who manages them for the beneficiaries. Assets placed in a trust bypass probate, reducing court costs and the time required to receive inheritances. Furthermore, trusts are private documents that cannot be viewed by anyone outside of the trust, making them ideal for those concerned with privacy.
Trusts offer greater control over the distribution of funds, particularly for those with minor children, numerous beneficiaries, or concerns about their heirs’ spending habits. For example, an individual may opt to distribute a child’s inheritance over time to prevent overspending, or delay the distribution of assets until the heir reaches a specific ageTrusts can also be beneficial in supporting someone with special needs without affecting their eligibility for government benefits.
FOR ESTATES OF A CERTAIN SIZE, TAX PLANNING IS CRITICAL
Many folks with larger estates can take advantage of tax exemptions by dividing their assets smartly. Trusts and Wills have very different tax exposure risks. Make sure you choose to work with an estate planning attorney that knows about how taxes will affect your estate.
401K AND LIFE INSURANCE
Many couples have a 401K or life insurance policy that they would like to leave to their children, if they do not reach the age of retirement. If you have a will, those funds would go into the hands of a court-approved guardian until your child reaches the age of 18.
With a revocable living trust, however, a trustee can accept these funds in the event of your death. You can decide if your child receives them at age 18, 25, or 30, or through some other manner other than age.
THE LIVING TRUST AND THE WILL
Whether you draw up a living trust or a will, or likely both, depends upon the size of your estate and the complexity of your situation. A little research and consideration will save you and your loved ones a lot of time and heartache.
WE ARE HERE TO HELP.
We want you to be able to discuss these topics with familiarity and confidence that you have an expert team of New York legacy lawyers supporting you and your family when you need it. Contact us today; we’ll start you on your path to estate planning.