Beyond the Basics:  Estate Planning with Trusts
By Nancy J. Brady, RN, Esq., Partner Brady & Bader LLP, Attorneys at Law

When we meet with our clients for estate planning, we discuss the basic estate planning documents every adult should have in place, including Advance Medical Directives, Power of Attorney and a Last Will and Testament.  In addition to having these documents in place, individuals need to review beneficiary designations on assets, so that the beneficiary designations are consistent with the overall estate plan.  

Beyond these basic documents, depending on the individual’s or couple’s estate planning goals, different types of trusts can be a critical part of an overall plan.  For example Trusts can be part of an overall plan for estate tax planning with married couples.  Trusts are useful to preserve government benefits for disabled individuals who might otherwise lose benefits if their assets were above the eligibility threshold.  Parents of minor children often want to leave detailed instructions for the passing of assets to the children, and trusts for the children can provide for these details.  

Revocable trusts are often used when individuals own real property or cooperatives in different states- to avoid probate proceedings in each state where property is located.  For real property and cooperatives, particularly if there is no joint owner who can take care of the property upon one’s passing, titling the asset in the revocable trust will allow the named successor trustee to safeguard and maintain the property without delay.  If real property or cooperative units are titled in one person’s name, without a trust bills may go unpaid, and property fall into disrepair awaiting court proceeding and appointment of an administrator (for individuals who died without a Will) or executor (for individual who died with a Will).

Trusts can be inter-vivos trusts – created and funded during the creator’s lifetime, or testamentary trusts – included in the Last Will and Testament to be established after the passing of the testator.  The Will should provide for a trustee appointment for the testamentary trust, and the trust is established if certain conditions are met.  

In addition to the differentiation of “inter-vivos” and “testamentary”, trusts can be revocable or irrevocable.  The distinction between revocable and irrevocable would also be dependent upon one’s goals.  The revocable trust avoids probate, and the creator/grantor of the trust retains control over the trust, can withdraw assets, revoke the trust in whole or in part, and can be the trustee and name successor trustees.  By avoiding probate with the revocable trust, one can consolidate beneficiary designations in one document, and by avoiding probate avoid challenges to the estate plan- the trust remains a private document and assets can pass with much fewer requirements than through the probate process.  

In conclusion, establishing a revocable trust as part of an estate plan should not be dismissed without considering the benefits to a particular individual and his/ her beneficiaries.  The types of assets one owns may not allow for beneficiary designations to avoid the complications of probate- transfer of title of those assets to a trust may be desirable.  Deeds to real property and stock certificates for cooperative property are often transferred to revocable trusts.  

In our office, in addition to estate planning, we assist clients with the administration and probate process for their loved ones.  There are many instances where a revocable trust would have been beneficial in saving the time and expense of searching for lost relatives, maintaining the deceased person’s residence, and closing the gap of time between death of a loved one and winding up and distribution of the estate. 

Aside from estate planning with a revocable trust to avoid probate, more of our clients establish irrevocable trusts as part of their plan to avoid probate, and to plan for the possibility of a need for long term care in their future.  These types of trusts take a specific period of time to protect assets and work best when done in advance of needing care.  Typically the irrevocable trust planning is for older clients (60s, 70s and beyond) with some exceptions.  More information on this type of trust will be discussed in our next article.

Please remember this summary is provided for informational purposes and should not be substituted for specific legal advice.  If you would like to speak to an attorney at Brady & Bader LLP, feel free to reach us at 1-718-945-777, or visit us at www.bradybaderlaw.com.

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