Lawyers for Making a Trust in New York City

As lawyers who make trusts, we are aware of all of the details and complexities needed to meet our clients’ goals, which may include:

• Making sure your assets go to the people you want
• Privacy
• Reliability
• Tax Considerations
• Flexibility
• Control
• Medicaid Eligibility
• Stability
• Protection from son-in-law and daughter
• Protection from creditors
• Protection from spouse’s new spouse
• Protection for children from first marriage
• Flexibility for blended families

A trust includes more complex provisions than a will or a power of attorney, and especially for irrevocable trusts, can produce a lifetime result that may not be reversed. For these reasons, having an experienced lawyer in making your trust is essential.

Initial Consultation

When drafting a trust, our first step is to conduct an initial consultation to know the client’s objectives, assets, beneficiaries, trustees, and other wishes. This can involve a questionnaire or an interview with the client. This consultation about the client’s objectives will determine whether a revocable or irrevocable trust is needed.

For Medicaid eligibility, Medicaid asset preservation, and creditor protection, irrevocable trusts are required. For probate avoidance, revocable trusts are sufficient. Some trusts are also used to minimize taxes. A lawyer making the trust will be able to distinguish the appropriate trust to use given the unique circumstances of the client’s case.

Selecting Trustees and Beneficiaries

An important aspect in making a trust is selecting the trustees and beneficiaries.

A trustee is a person to whom legal ownership of the trust assets are transferred for the purpose of managing the trust for the benefit of the beneficiaries. Because of this power to manage trust assets, the trustee enjoys a position of trust and confidence. Choosing a worthy trustee is important to ensure that the trust assets are not wasted. Our firm has witnessed instances of trustee abuse where trust assets have been used for trustee’s personal needs and expenses. By the time a trust accounting is rendered, a lot of trust assets have already been dissipated.

One method to keep in check a trustee is the appointment of a trust protector. The trust protector can oversee the trustees actions, ensuring that the trust is being managed properly in accordance with the grantor’s intentions. The grantor can even write in the trust that a trust protector can remove a trustee. Other duties and obligations of a trust protector will depend on the grantor’s written intentions in the trust document.

Beneficiaries are the persons designated by the grantor as the recipient of the income or principal of the trust assets. The beneficiary’s receipt of income or principal usually depends on the language of the trust document, which can be mandatory or discretionary and released on either a periodic basis, upon the happening of an event, or based on a standard such as for purposes of health, education, maintenance, and support.

Beneficiaries don’t need to be particularly named. Beneficiaries can be a class of individuals. A grantor can even designate the trustee to designate beneficiaries from a class of individuals, which may include the grantor (i.e., beneficiaries who are descendants of X). This allows the grantor to subsequently be a beneficiary, even in an irrevocable trust.

When the grantor, trustee, and beneficiary are all one person, it is a revocable trust. When the grantor/trustee/beneficiary dies, it becomes an irrevocable trust and the successor trustee and successor beneficiary/ies assumes the new positions. 

Drafting the Trust

Once the major details have been ironed out with the client, a lawyer making the trust can now draft the trust document for the client’s review. On the part of the client, here are some tips:

• Look out for revocability and irrevocability and see whether it is aligned with your objectives. Most charitable trusts with the objective of minimizing taxes are irrevocable.
• Ensure that the trustees are trustworthy and dependable. If needed, appoint a trust protector. Trust protectors may be granted additional authority to approve sale of specific assets or changes in the trust’s structure. Designate beneficiaries and successor beneficiaries. In cases of multiple trustees, there must be a provision in how decisions can be made to avoid conflicts and stalemates.
• Provide a method for the trustee’s removal or succession in cases of resignation, death, or incapability. Beneficiaries and successor beneficiaries should also be particularly identified.
• Anticipate potential changes in the circumstances and ensure that a trust, even if irrevocable, can be flexible enough to accommodate the change. A provision for decanting the trust can make an irrevocable trust flexible to adapt to changing circumstances.

Signing the Trust

Once the trust document has been finalized and approved by the client, the lawyer making the trust can schedule the execution of the trust document. In New York, a trust document should be signed by the grantor in the presence of two witnesses or acknowledged in front of a notary public. The trustee may accept the role in a separate document, usually acknowledged before a notary.

Funding the Trust

After the trust document is executed, the lawyer making the trust should ensure that the trust is funded in order for it to be effective. Without funding the trust, the trust will have no property to manage. Funding the trust requires the transfer of ownership of trust assets from the grantor to the trustee, as trustee of the trust. This distinguishes the trustee’s ownership of personal property from the trustee’s ownership of trust property. This also provides an indication to the public that the trustee is holding the property as a trustee and not personally.

Drafting a trust can be a complex matter. Trusts are usually used to achieve certain objectives such as being eligible for Medicaid, preserving assets of Medicaid recipients, protecting assets from creditors, or minimizing taxes. A lawyer making the trust will know how to draft a trust that will satisfy the objectives of the client. Should you need legal representation in drafting a trust, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].