Using a Trust to Avoid Going to New York Probate Court
Losing a loved one is stressful and difficult for the surviving family members. This difficulty is made worse when those family members are faced with navigating the probate process. Probate can be time-consuming and distracting during what is meant to be a time of grieving and recovery. Fortunately, New York law allows you to utilize a trust in a way that can allow your heirs to forego the probate process. A trust can also provide you with greater flexibility as to how your estate will be distributed when it is time to do so. This article will discuss how a trust can be beneficial as well as other avenues for avoiding probate.
Trusts In New York
What is a Trust?
A living trust is an instrument that is created for the purpose of holding your assets. The trust will be created while you are still alive. An individual, known as the “Trustee,” will be charged with managing and looking after the assets in the trust. Quite often, the individual creating the trust will also serve as trustee. You will still be able to enjoy the use of your assets, such as a home, while they are in the trust. The trust, along with a last will and testament, will contain instructions as to who will serve as trustee in the event that you pass away. You may also designate a new trustee before that time comes. The trust will also designate heirs who will receive the contents of the trust when it comes time to distribute them.
There are multiple types of trusts which are commonly formed in New York. First, a “revocable” trust can be amended or terminated at any time by its creator. Second, an “irrevocable” trust cannot be amended or terminated by the person who created it. How the trust may be altered will depend on the specifics of the situation. Other types of instruments, such as special needs trusts or Medicaid trusts, can be used to distribute assets to a beneficiary without ending their eligibility for certain government programs.
How Trusts Help to Avoid Probate
If you transfer your assets into a trust, then they become the property of that trust. This means that when you pass away, assets in the trust are not subject to probate due to the simple fact that they were not your property. This allows for the assets to be managed in a way that is consistent with the terms of the trust. This includes the distribution of the assets without the need to involve the Probate Court.
Trusts Provide for Greater Flexibility
The utilization of a trust means that your assets can be distributed in a more flexible way than they would through traditional probate. If you simply have a last will and testament, then all of your assets must be distributed, and the case must be closed. A will, by itself, provides you with no ability to set requirements that an heir must meet or a certain amount of time that must pass before one receives their inheritance. A trust, however, is not bound by the probate process and can include requirements that the trustee will be required to adhere to before any assets can be distributed.
Consider the following example. Joe places all of his assets, which includes $1M in cash and securities, into a trust. The $1M is to be equally divided ($500k each) to Joe’s two children. They may not receive the inheritance, however, until after they graduate college. Money from the trust may be used to pay for tuition and books. Accordingly, the Trustee may use money from the trust to pay the tuition and book fees of each child. Once they graduate from college, they will receive $500,000 minus any money that has been spent on tuition and books. The trust may also contain a provision stating that if the children do not graduate from college within a certain amount of time, then the money is to be distributed to charity “x.” This is just one example of how a trust allows you to control the distribution of your assets and set conditions, while only having a will that would result in the children inheriting immediately.
Not All Assets Must Be in a Trust to be Exempt from Probate
There are many types of assets that can pass outside of probate without the need for a trust. These include real estate on which you are titled as a tenant in common with rights of survivorship. In such an instance, the other individual on the title or deed will automatically inherit the property. Also, bank accounts, brokerage accounts, and similar instruments will allow you to designate a beneficiary who will inherit the assets upon your passing. These are just a few examples of assets that do not need to be included in a trust but can be passed without the need for probate.
Retain an Attorney to Assist You With Helping Your Heirs Avoid the Probate Process
Ensuring that your heirs can avoid the probate process can save them time, money, and grief. Furthermore, it can help to ensure that your goals are met when it comes to the final handling of your affairs. Finally, it can help to ensure that infighting does not break out between your heirs. Setting up a trust so that it is valid and enforceable requires that several formalities be met. Retaining an attorney is one of the best ways to ensure that your trust meets your desired needs.
Call Our Long Island Trust Attorney Today
If you or a family member wish to create a trust then it is important that you retain a lawyer so that your matter is handled correctly. Our firm focuses on this area of law so that you may focus on your family and the future. Contact us by telephone at (631) 234-3030, or contact us online today to speak with a Long Island estate planning attorney.