In this article, you will discover:
- The most frequently used trusts in New York and what they can do for you.
- The difference between a will and a trust.
- The value of a trust in relation to probate.
What Is The Purpose Of A Trust? What Are The Most Common Types Used In New York?
The two types of trusts used in estate planning law in New York are revocable and irrevocable trusts. Although most people use them to avoid probate, there are plenty of other uses.
If you have a valid trust, you do not need to go to court with it after the person in question dies. This would not be the case with a will. The terms of the trust tell your trustee, the person named to handle your affairs, precisely what to do with your assets.
A revocable trust is something that the grantor, the person writing the trust, can change. This is usually done to keep powers and maintain their own trust, to change their trust, or to revoke their trust.
With irrevocable trusts, this is not the case. You would need to name someone else entirely. You would not be able to change anything or manage your own trust. The primary reason someone would do this is for Medicaid planning. If someone thinks they may end up in a nursing home or require home care and cannot cover these expenses without Medicaid assistance, they would need to prove to Medicaid that they have no assets and have not for the past five years.
As a result, if opted for an irrevocable trust, you would not wait until you are incapacitated because you would not make the five-year look-back requirement. Doing this would cause you to lose many of the assets you are trying to protect.
With a revocable trust, you are deemed to still own those assets, and you can be forced to use them. You can be made to spend down your assets until you have little to nothing, with some exceptions like funeral planning and others.
There are some other trusts which you can use with others or entirely separately. An example is the special needs trust. This is for people with a child who requires special needs and receives public financial assistance. By leaving them money in your will, that person may become ineligible for the funds they receive. This will mitigates this risk and simply requires putting the money into a special needs trust. The child would not get the money automatically. Still, they can receive it from trustees, who need it to supplement the assistance.
There are many other trusts, such as the QTIP trusts, which protect spouses and help save on taxes, but the trusts outlined in detail above are the most common ones used in New York.
Do I Need Both A Will And A Trust For My Estate Planning Case?
Technically, you do not need either, and you do not need both. You can have either or both, but you probably should have both.
Without a will, your estate will pass by intestacy, which means your assets will be distributed by law depending on who your survivors are.
A trust is used as a planning tool and is not necessary, but it can significantly assist your estate planning case. Many use them to avoid probate. If you think that probate will be extremely difficult for some reason, such as unknown family members bursting onto the scene when someone dies who could need to be listed in a probate, using a trust would be of value to you.
With the guidance of a skilled attorney for Estate Planning Cases, you can have the peace of mind that comes with knowing that we’ll make it look easy. For more information on Estate Planning Law in New York, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (914) 358-9755 today.