The right kind of trust saves money on estate taxes. As a result, your beneficiaries get to inherit more. With a trust are you can avoid probate because the assets are transferred to the trust for the benefit of your beneficiaries. Avoiding probate avoids delays and keeps your estate private. Placing assets in a trust also keeps the appreciation of the assets out of your estate.
Here is a video on the different kinds of trusts:
Making an irrevocable Trust with provisions that meet the federal and state Medicaid requirements will protect your assets and qualify you for Medicaid, but only five years after the trust is made. Always have a qualified attorney make your trust, to avoid triggering income tax, gift tax, and generation-skipping tax pitfalls.
An irrevocable trust has some disadvantages, the main one being that you no longer have control of managing your assets. If a person is in a stage of their life when they are ready to move control of their assets to their children, this should not be an issue.
As an additional benefit, your creditors would be hard-pressed to reach the assets placed in an irrevocable trust.
A well-written irrevocable trust will not create income tax consequences for your beneficiaries or subject the trust assets to a divorce settlement if your beneficiaries/children divorce a spouse or have their own financial problems.
By adding a supplemental needs provision a child becomes disabled, their needs will be supplemented by the trust.
You may also want to gift your assets while you are alive to your children or other beneficiaries. You can give up to $14,000 a year tax-free to each of your children. A married couple can gift up to a total of $28,000 to each child or other designated persons. There is also a federal lifetime gift tax exemption of $5,250,000 per person, and your $14,000 annual federal gift tax exemption is excluded from the lifetime exemption.
Before you make an irrevocable trust, you should consult with a New York probate and estate attorney, who will review your financial situation and customize an estate plan for your particular needs as well as prepare the necessary documents. If you would like to meet with a New York estate attorney, call the Law Offices of Albert Goodwin at (212) 233-1233.