Estate Planning in New York: How to Utilize Revocable Trusts Effectively

What is Probate

Probate is the legal process for transferring assets once someone has passed away. The case’s complexity depends upon the amount and type of property the deceased person owned, whether physical, fiduciary, or divided between more than one individual. Another aspect that occasionally arises is whether or not the division of these assets spurs disputes among the beneficiaries and what to do if that happens.

If There Is A Will, Do We Still Have To Go Through Probate?

A common misperception of estate planning is that going through probate is unnecessary if there is a will since the document clarifies the division of assets. This is untrue. The probate process is the legal process in which the will be proven valid and authenticated as the deceased’s last word and testament. While there are some circumstances in which probate can be avoided, it’s beneficial for all parties, especially if there are disputes over the distribution of assets. Probate allows an impartial mediation to get involved through the courts if necessary.

Can Estate Planning Help My Kids Avoid Disputes?

With proper planning, it is possible to avoid disputes between survivors. Planning before the inevitable can address many of these issues. One of the most important steps is to draft a will explicitly stating who inherits what type of property. If those left behind know your wishes, there is less room for argument. Questions to consider: who gets the house? If there is a business, what happens to it? Are there other assets to consider?

In addition to writing a will, some people give specific directions within the will. For example, they direct that their home be sold and all the proceeds be split evenly between their survivors. Or, in some cases, there may be circumstances that lead to a person being excluded from a will. There is no law or rule stating that this is not allowed. Suppose you are considering this course of action. In that case, you should be aware that the individual who has been disinherited frequently challenges it in probate court, as it often involves terrible feelings between the deceased person and the affected person. It makes sense for the person writing the will to sit with the individual beforehand and explain their decision.

What is a Trust?

Legally speaking, a trust is a legal arrangement to ensure a person’s assets go to their beneficiaries. There are multiple kinds of trusts, and they are used for different purposes.

• A revocable trust (also called a living trust) is one in which your assets can be transferred during your lifetime, which you may change your mind about at any point and transfer the title back to yourself
• An irrevocable trust is a weightier decision, as once the title is transferred, you cannot change your mind

How Do I Utilize a Revocable Trust Most Effectively?

Trusts are more complex to set up than wills. However, they have some benefits, such as the possibility of being excluded from probate. They require the assistance of a knowledgeable financial advisor to set up. Our lawyer can discuss the options with your family during estate planning to ensure you are best prepared.

There are many advantages to choosing a revocable trust in estate planning. Some of the primary benefits are highlighted below: 

• Revocable trusts bypass probate. If they are set up correctly and all assets are included, everything will pass to the designated beneficiaries immediately upon your passing. This is less costly and ensures your privacy, as trusts, unlike wills, are not public documents 
• Revocable trusts are flexible. As your circumstances change, you can alter or modify the terms of the trust. A will is much more difficult to change 
• If you become incapacitated, a trust can ensure continuity in asset management 

When Might a Revocable Trust Be the Most Ideal?

There are certain situations where a revocable trust might be the most helpful. They are: 

• In blended families, a living trust will ensure that all assets are distributed fairly among children from multiple marriages and will also provide for your spouse
• Privacy. Nowadays, privacy- or lack thereof- is a big concern. A living trust will help maintain your confidentiality 
• Out-of-state property. If you own property outside of your home state, putting it into a trust avoids the burden of managing assets across state lines 
• Special Needs beneficiaries—If you have a beneficiary with special needs, establishing a living trust allows them to inherit from you without risking their disability benefits 

Another option is setting up a testamentary trust. Trusts of this nature are created to help manage the estate assets and will also help reduce the estate taxes. They will go into effect once the estate’s owner passes away. The point of a trust is that it sets specific parameters around the way assets are paid to beneficiaries. For example, a child may gain full access to their inheritance once they reach their 21st birthday. This ensures that they are mature enough to manage it entirely. Until that time, it will be handled by a trustee (usually a lawyer.) 

You have worked hard for what you have. A trust allows you to protect your legacy. Lauren Glynn Law PLLC will help you provide an estate plan that works well for your family. Book your Discovery Call at 607-303-6554 today