A living trust in New York allows you to place your asset into a trust but still use them during your lifetime. Your beneficiaries inherit them after your death. A revocable living trust (sometimes known as an inter vivos trust) provides many advantages that may make it a desirable part of your estate planning process.
Living Trusts in New York
A New York living trust is a legal document created by the grantor, the person putting assets into the trust. The trust is established to own your assets during your lifetime. The plan is usually to transfer as many of your assets into the trust as possible, but some assets do not qualify, such as life insurance and retirement accounts. Once the assets are in the trust, they are managed for your benefit while you are alive. The trust is managed by a trustee whom you choose. You can select anyone to be your trustee, but it is most common to simply choose yourself so that you can have complete control. You then also name a successor trustee who will step in as trustee after your death. Once you have passed, the trustee continues to manage and protect your assets and then distributes them to your beneficiaries. Your living trust is revocable, which means you can make changes to it whenever you like and also have the option of deciding to cancel it all together. An irrevocable living trust is unchangeable from the date of its creation.
A living trust New York allows you to completely bypass probate for the assets that are in the trust (this is why you want to place as many assets into it as possible). Probate is the court procedure in which a will is approved and put into force. The court can take many months to approve the will and the process also involves some expense. Your executor can charge a fee and there are attorney fees and court costs. None of the assets in the will can be distributed until probate concludes, which can leave your heirs in difficult financial straits. New York has not implemented the Uniform Probate Code, so the procedure is not simplified. If your estate is worth less than $30,000 at your death, it qualifies for a small estate administration procedure which may be less expensive than establishing a trust.
A trust does not need to be probated and because of this you can direct that your assets be distributed immediately upon your death if you want. A trust also allows you to manage assets in any state, avoiding multiple probate cases in various states.
Do I Need a Living Trust in New York?
There are many benefits stemming from creating a living trust in New York. A trust places you squarely in control of your assets during your life, even though they are technically owned by the trust. You continue to do everything you normally would—spending money however you want, living at home, giving gifts, or selling assets. You also maintain control over your assets after your death. The trustee continues to manage them until the chosen distribution dates you have set up. You can pass your assets to your beneficiaries right away, or you can schedule distribution for major birthdays or other events. A will distributes assets once probate is concluded and does not provide this long-term management option.
Your revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.
A living trust gives you privacy that is not an option when you use a will. A will passes through probate and becomes public record. A trust is not revealed to the public and your beneficiaries, assets, and specifics of the trust remain completely private. A trust is also less likely to be contested and more difficult to contest than a will, offering peace of mind.
Living Trusts and Estate Taxes in New York
Living trusts do not avoid estate taxes. New York applies estate tax to estates that are valued over $2.06 million and the federal government applies it to estates in excess of $5 million. It is possible to avoid estate tax using a QTIP trust (also known as a marital trust or AB trust) which is a specially written trust that passes assets from a deceased spouse to the surviving spouse without incurring any tax. A living trust cannot protect your assets from Medicaid and also does not shelter assets from creditors, but may make it harder for creditors to find your assets.
How to Create a Living Trust in New York
To create a living trust in New York, create your trust document and sign it in front of a notary public. The final step is to transfer ownership of assets to the trust and the trust is not effective until this occurs. A living trust is an option that can provide many benefits not available with other estate planning vehicles. A trust might be a good fit for you.
Ready to create a New York living trust? LegalZoom can help you create a living trust online in three simple steps. Get started by answering a few simple questions. LegalZoom will review your answers and mail your complete living trust package to you.