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Trusts
Trusts are legal documents created for the protection of assets, beneficiaries, or both. For a family that has worked and saved money for decades, Trusts are a wonderful tool to maintain the family’s financial strength. Trusts offer flexibility and continuity.
Our first conversation, whether it is in your home or our office, is about priorities. Is there an expectation of long-term medical care with significant costs? Are there assets that require specific planning and estate tax advisement? Does someone own a vacation home outside of New York? Are there family members that don’t see eye to eye? The type of Trust that fits with your priorities depends on these questions.
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Types of Trusts offered by our experienced team:
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Revocable Trust
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Revocable trusts, which are sometimes referred to as revocable living trusts, offer many benefits with the primary one being the ability to control your assets during your lifetime. Of course, the other main benefit is the ability to dissolve the trust if and when necessary. There are, of course, other advantages as well as some disadvantages that you should consider.
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At The Feller Group, P.C., we want you to make the best decisions about your assets and estate planning. During a Free consultation, our team will listen to your wants and expectations and will advise you accordingly. Contact us either online or at (845) 621-8640 to learn more about the opportunities trusts can offer you.
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Understanding Revocable Trusts
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A revocable trust is a trust that allows the trustor to change its terms, or even revoke it in full, while the trustor is alive. Once the trustor passes away, the trust is distributed by a trustee according to its terms. It is a way for a person to manage and control their assets while they are living and have those assets pass to their loved ones when they die.
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The types that can be transferred to a trust include but are not limited to:
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Real property (e.g., homes, farms, vacation homes)
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Deposit accounts
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Investments (e.g., stocks, bonds, money market accounts)
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Business interests
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Collectables, art, antiques
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Life insurance policies
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Pros of Revocable Trusts in New York
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There are distinct advantages to using a revocable trust as an estate planning tool. Below are brief descriptions of the most common advantages. Not all may apply in your unique situation. Likewise, there may be other advantages not listed below. It is important to seek the advice of an estate planning attorney to ensure the trust you choose is the right one.
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Probate Avoidance: The ability to avoid probate is the main reason people consider placing assets in a revocable trust. Probate is the process where a decedent’s estate is administered through the court system. It can be a tedious and time-consuming procedure. Assets placed in a revocable trust typically do not have to go through this court-supervised process.
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Flexibility: While there are other types of trusts, the revocable trust remains a popular choice due to its flexibility. The creator of the trust is able to make changes to the trust up until the time of their death.
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Incapacity Protection: A trust provides protection in case of testator incapacity. In other words, if the person who creates the trust later becomes incapacitated (develops dementia, for example), a new or successor trustee can take over the management of the trust. They will also be required to administer the trust according to its terms.
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Privacy: If maintaining privacy over your assets is important to you, a revocable trust is an option worth considering. Assets placed in the trust are administered to beneficiaries privately, unlike assets administered through the probate process, which is public.
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Irrevocable Trust
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Irrevocable trusts can be an important component of estate plans. Much of it depends on the purpose of the trust. There are many considerations, however, that must be taken into account before creating one.
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At The Feller Group, P.C., our estate planning team will thoroughly review your needs and wants when planning your estate and provide an outline of your best options, including the creation of an irrevocable trust. Contact us either online or at (845) 621-8640 to schedule a Free consultation today.
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Understanding Irrevocable Trusts
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An Irrevocable Trust is a trust that cannot be changed, amended, or terminated after it is created (with some limited exceptions). By creating an Irrevocable Trust, the grantor is relinquishing their control over the assets placed in the trust. Irrevocable trusts are administered by a trustee for the benefit of the trust beneficiaries.
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Pros of an Irrevocable Trust in New York
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There are various reasons a grantor may choose to place assets in an irrevocable trust, including:
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Tax Avoidance: It is possible to reduce your tax liability by moving taxable assets from your estate to an irrevocable trust. This is typically a more beneficial move for owners of large estates.
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Asset Protection: Irrevocable trusts provide protection to the assets that they contain. This includes protection from creditors, judgments, and divorce. People employed in highly litigious professions are most likely to use irrevocable trusts for this purpose.
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Beneficiary Protection: Irrevocable trusts are a useful estate planning tool when you are providing for a family member with special needs. These trusts are often referred to as irrevocable special needs trusts, and they allow a beneficiary with a disability to receive funds for their living expenses without that income being used to disqualify them from receiving government benefits.
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Supplemental Needs Trusts
Supplemental Needs Trusts (“SNTs”) hold and protect assets for disabled individuals. The financial limitations imposed by governmental entitlement programs including Medicaid have made it imperative to implement SNTs to allow a disabled person to experience a proper lifestyle. Two major types of SNT’s are First Party SNT’s and Third Party SNT’s:
First-party SNTs hold money directly belonging to, owed to, or being paid to the disabled person. The Trustee of a First Party SNT is responsible for paying expenses that directly benefit the disabled person. The list of approved expenses is large and can range from home décor to travel costs. Life insurance premiums and gifts to third parties are not approved expenses. One limitation of this type of Trust is that New York State will be the primary beneficiary of the Trust as a function of its role in providing entitlement services. If there is money left over after this form of recoupment, then other named beneficiaries may inherit the balance.
An offshoot of the First Party SNT is the Supplemental Needs Pooled Trust which when utilized with Community Medicaid will hold a disabled person’s excess income allowing them to remain Medicaid eligible and pay a similar range of expenses. Although we assist with the set-up of Pooled Trusts our firm does not draft them. Pooled Trusts are managed by many non-for-profit agencies throughout New York. One important feature of Pooled Trusts is the requirement that any funds remaining in the Pooled Trust following the death of the disabled person shall remain with the Pooled Trust provider.
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Third-Party SNTs are Trusts funded with money not belonging to the disabled person. Third Party SNTs are often created by parents or siblings who want to ensure that their loved one can maintain a proper lifestyle while also receiving governmental entitlements. Third-Party SNTs have no beneficiary limitation since it is not the disabled person’s funds deposited in the Trust. Transfers to these Trusts may also be characterized as exempt transfers for Medicaid purposes if the disabled person is under 65 at the time of the Transfer – benefitting both parties.
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Trust Amendments
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A trust amendment is a legal document that changes the terms of a trust. This document may be used to modify the terms of a trust to reflect the current circumstances of the trust's beneficiaries or to comply with applicable laws. To be valid, the amendment must be signed by the trustor, trustee, and any co-trustees. It is important to be aware that not all changes to a trust are valid, even if all parties have signed the amendment. It is best to consult with an experienced estate planning attorney to ensure that any modifications you make to your trust are in compliance with applicable laws.
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