Want to leave assets of any kind to loved ones? You’ll need to plan. In the intricate realm of New York estate planning, safeguarding your legacy requires strategic decisions and careful considerations. Several options, including a will, are used to pass wealth to the next generation. This legal document designates someone in charge of your estate after you die and tells them how you want your assets distributed on your death.
Another means of passing assets along is explained in the recent article from The Motley Fool, “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family.” A living or revocable trust is a legal entity created while you are living to hold assets and designates someone to manage and disburse them based on specific directions in the trust document. You don’t have to be wealthy to have a trust. A revocable trust allows individuals to maintain control over their assets while establishing a plan for their distribution upon death. Unlike irrevocable trusts, which are more rigid, a revocable trust can be altered or revoked during the grantor’s lifetime, providing flexibility that many find appealing.
While these two instruments sound similar, they have unique elements, making one better than another in certain situations. For many people, a living trust can benefit the individual making the trust (the grantor) and their families. Here are a few to consider.
Maintaining privacy. New York estate probate proceedings are a matter of public record, potentially exposing your financial affairs to scrutiny. A revocable trust provides a distinct advantage in privacy compared to a will. Unlike wills, which are subject to public probate proceedings, a revocable trust allows for the discreet transfer of assets without the public’s prying eyes. This confidentiality feature shields the details of your financial affairs, preserving your family’s privacy during the emotional and challenging times when a loved one passes.
Avoiding long delays. Since a trust doesn’t go through probate, it may be possible for the trustee to distribute assets much faster. The executor typically must file the will for probate and wait for the process to be concluded. Only then can they carry out the directions of a will.
When assets are in a trust, the trustee can implement the terms of the trust more quickly. This can significantly help loved ones, especially if they have paid for long-term care, hospital bills, funeral expenses, etc. If they were relying on an inheritance to cover these costs, the faster the trust can reimburse them, the better.
Managing assets if you become incapacitated. One of the biggest advantages of utilizing a trust is its value during your lifetime. Unlike a will, which only takes effect upon death, a revocable trust can be designed to manage your assets in the event of incapacity. This feature allows for a seamless transition of control, avoiding potential complications and ensuring that your financial affairs are handled according to your wishes.
Whether you have a trust or not, you will want to name a Power of Attorney who will manage your financial and legal affairs if you cannot do so. However, financial institutions can be challenging when dealing with a POA.
Changing the trustee does not impact the trust’s status as a separate legal entity. The successor trustee steps in, and financial institutions will generally be on notice as long as the initial trust documents specify who the successor trustee will be.
Estate planning is also about life planning and not just for what happens after you die but also for preparing to care for yourself and your family while you are living. A revocable trust serves you and your family well during life and after death.
In the realm of estate planning, a revocable trust emerges as a dynamic and flexible tool to protect your legacy. We can help you craft a comprehensive plan that aligns with your goals and safeguards your assets for generations to come. Call us or book a call with us for a consultation where we can explain some of the advantages of a New York revocable trust and take proactive steps toward securing your legacy.
Reference: The Motley Fool (Oct. 31, 2023) “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family”
