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Learn more about trusts in New York and how it fits in your estate plan.
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HOW A TRUST FITS IN YOUR ESTATE PLAN
TRUSTS HAVE CHANGED
Historically, trusts were a legal tool used most often by wealthy families
as a way to pass down the family wealth from
one generation to the next
Trusts have evolved over the last century and, consequently, have become a common addition
to the average estate plan
WHAT IS A TRUST
A TRUST IS A LEGAL ARRANGEMENT
in which one or more persons hold property subject to certain duties to
use and protect it for the benefit of others
ELEMENTS OF A TRUST
1 Grantor –person who creates and funds the trust
2 Trustee – person or entity that oversees the administration of the trust and manages trust assets
3Beneficiary –person, entity, or even pet that benefits from the trust
4Terms –created by the grantor that dictate how the assets are to be managed and distributed to beneficiaries
5Assets – used to fund the trust. Can be cash, real property, securities – basically anything of value
Testamentary vs. Living
Testamentary trust takes effect upon the death of the grantor
A testamentary trust is often used to guard assets for minor children upon death of parent
Living trust (inter vivos) becomes effective when all requirements for creation are met and assets transferred in to fund the trust
Irrevocable vs. Revocable
REVOCABLE TRUST allows grantor to modify, change,
even terminate trust at will
IRREVOCABLE TRUST does not allow grantor to
make any changes once created
Testamentary trust is always irrevocable because grantor is no
longer around when trust becomes effective
TAX AVOIDANCE AND TRUSTS
Tax avoidance is a common reason to use a trust in an estate plan
Assets transferred to an irrevocable living trust are no longer owned by
the grantor, meaning they are not subject to gift and estate taxes at the time of the
grantor’s death
TRUSTS AND PROBATE AVOIDANCE
The larger the estate the longer it takes to probate as a general rule
TRUSTS AND INCAPACITY PLANNING
A comprehensive estate plan should include an incapacity plan
A trust can be a valuable incapacity planning tool
Create a revocable trust
Name yourself as trustee and a spouse/adult child/parent as successor trustee
Transfer assets into the trust
Upon your incapacity the successor trustee automatically takes over control of trust assets without the need for court intervention
SPECIAL NEEDS PLANNING
A trust can be a valuable special needs planning tool
Can’t gift assets directly to special needs individual because he or she
could lose eligibility for federal benefit programs
A special needs trust (supplemental needs trust)
created for this SITUATION
It is recognized by federal government if drafted properly
A special needs trust allows you provide financial support to special
needs individual without losing eligibility to assistance programs
CHARITABLE TRUSTS
Charitable lead trust provides for charity first and then remainder
to non-charitable beneficiary
Charitable remainder trust provides
for non-charitable beneficiary first with remainder to charity
Tax advantages to this
TYPE OF TRUST
GET IN TOUCH TO SCHEDULE A FREE ESTATE PLANNING
CONSULTATION
If you live in the NY metropolitan area, we invite you to contact the Law Offices of Barton P. Levine
to set up a free consultation
www.bartonlevine.com(888) 268-4425
Law Offices of Barton P. Levine