A New York trust attorney can help protect you and your loved ones from losing your hard-earned assets to the government, attorneys, creditors and in-laws. You worked hard to get to where you are today, and it makes sense to reduce financial risk by protecting your assets with a trust. Here are some of the goals that a New York trust attorney may be able to accomplish for you:
- Qualify for Medicaid. There are several types of trust that can help some individuals qualify for Medicaid, including home care and nursing home coverage. This helps you avoid spending your hard-earned assets on medical care and long term care, leaving those assets to your family. Learn more about Medicaid trusts.
- Protection from creditors and lawsuits. A properly executed and funded irrevocable trust will shield the principal of the trust from creditors and lawsuits.
- Avoid probate. Probate proceedings can become expensive and delayed. Property that you will transfer to a trust will not have to go through probate.
- Protection from your children’s spouses and creditors. You may not want any of your hard-earned assets to go to your child’s spouse, whether in divorce or as an inheritance. You do not want any of the assets you give to your child to go to your child’s creditors, whether as a result of a lawsuit or in bankruptcy. A New York trust attorney can make sure that your hard-earned assets remain in the blood family and not be preyed on by people who are not immediately related to you.
- Maintain privacy from creditors. Proceedings in probate court are public record. Any person or organization will be able to find out the extent and location of your assets. Not so with trusts.
- Avoid multiple-state probate proceedings. If you have property in multiple states, you can avoid ancillary probate proceedings by transferring your property into a trust. Upon your death, the property will pass according to the trust and multi-state Surrogate’s Court proceedings will not be required.
- Protection from irresponsible and inexperienced children. A trust provides limits on how your beneficiaries can spend the assets. For example, you can specify amounts upon reaching a specified age.
- Management of funds for minor children or grandchildren. Minor children or grandchildren cannot manage funds and they will need a trustee to manage the funds for them. If children inherit funds without a trust, the children’s parent or guardian will not be able to access the funds without a lengthy court proceeding and tremendous court oversight, we are talking about having the court endorse every check and having to file multiple reports each year.
- Avoid interruption of income and use of assets. A trust provides for the continuity of management of your assets, and avoids interruption of income and use of assets upon your death or disability. Without a trust set up by a New York trust attorney, your estate or business may be subject to restrictions imposed by the probate court.
- Provide planning for mental disability. A trust lets you select a trustee – someone you trust to manage your estate on your behalf in the event you become unable to do so yourself. Read more in Planning for Disability.
- Preserve your loved ones’ right to qualify for Medicaid and SSI – if your loved one is disabled and is on means-tested government programs such as Medicaid or SSI, a Special Needs Trust (also known as Supplemental Needs Trust) can help preserve their eligibility. They can continue to qualify to have the government pay for their care, instead of using your hard-earned assets.
- Save money on estate taxes. Trusts can help you legally save a substantial amount on estate taxes. Read How to Avoid Estate Taxes to learn more about the credit shelter trust the life insurance trust. A “QTIP” trust or a QDT trust for the benefit of your spouse can further your tax savings goals.
A Charitable Remainder Trust (CRT) or a Charitable Lead Trust (CLT) will help you maximize your tax advantage per charitable dollar. A Grantor Retained Annuity Trusts (GRAT), an Intentionally Defective Grantor Trusts (IDGT), or a Unitrust are advanced trusts that remove appreciation of your property from your estate. Read more in Advanced Estate Planning.
A revocable trust does not offer enough protection to be considered a good asset protection tool. The law considers assets in the revocable trust to belong to the person who placed the asset into the trust, so forming an irrevocable trust, although it has some benefits, will have no impact on asset protection. This is because revocable trust gives a lot of control to the person who established the trust. You can even revoke the trust, reversing it completely. For this reason, only an irrevocable trust works as a tool that a trust attorney would use in New York. However, a New York trust attorney would still use revocable trusts for a number of situations. Revocable trusts are flexible because you can change or revoke them any time you like and for any reason. A revocable trust becomes irrevocable after the death of the person who made it, making it a flexible option but at the same time offering many of the trust benefits outlined above.
An Irrevocable Life Insurance Trust (ILIT) can be set up to own the life insurance policy, so that when the insured person dies, the proceeds of the life insurance will not become a part of the taxable estate. The insured can still pay the premiums by a “Crummy gift” to the trust. The downside of the trust is that the trust cannot be changed since it is irrevocable. The upside – no estate taxes (if set up the right way).
A Life Insurance Trust is also an important estate planning tool. It holds your life insurance for the benefit of your beneficiaries. After three years the trust would be deemed the owner of the policy, so as to minimize and chance that your estate will pay estate taxes on the proceeds. It also ensures that any appreciation of the life insurance policy is kept out of your estate. As a note of caution, a Life Insurance trust has to be carefully drafted by an experienced New York trust attorney to meet exacting IRS requirements.
Albert Goodwin was practicing as a trust attorney in New York since 2008. Since that time, he drafted over a hundred trusts, wills and other estate planning and elder law documents for his clients. He can be reached at 718-509-9774 or (718) 509-9774.