Will and Trust Together in New York City

A will and a trust are estate planning documents that are usually used complementary to each other.

A will is a legal document that contains the directions of the testator on how his property should be immediately distributed after death. A will can be revoked or modified at any time prior to death.

A trust, on the other hand, is a legal document that directs the management of the grantor’s property for the benefit of the beneficiaries. It is usually effective immediately during the lifetime of the grantor upon signing and funding, unless it is a testamentary trust that is written in the last will and testament. Unlike a will which requires immediate distribution of assets, a trust allows property to be managed until 21 years after the death of the last beneficiary alive and known to the grantor at the time the trust was created. This allows the trust to be administered for a long time, spanning generations.

Will and Testamentary Trust

When you don’t want to immediately distribute your assets upon death, a testamentary trust in your last will and testament is the option to take. Here, the testator directs the distribution of the estate to the testamentary trust, which will be managed in accordance with the trust terms (which terms are stated in the will). This estate planning tool is used when the testator does not seek the immediate distribution of his estate, but instead prefers the management of his assets until a triggering event takes place, in which case the principal is distributed and the trust is terminated. Examples of triggering events are the expiration of a period (i.e., when the beneficiary turns 25) or the happening of an event or milestone (i.e., graduating from school). One disadvantage of a testamentary trust is that the property has to go through probate, which can be a long and expensive process because a petition has to be filed with court.

Revocable Trust and Pour Over Will

A revocable trust and a pour over will, on the other hand, is used when the grantor seeks to avoid probate for assets in a revocable trust. In a revocable trust, the grantor is also the trustee and beneficiary. Only when the grantor dies do the successor trustees and beneficiaries named in the revocable trust begin to manage and benefit from the trust.

The revocable trust ensures the immediate administration of the property for the beneficiaries despite the grantor’s death. This also allows the beneficiaries immediate access to the grantor’s funds after the grantor dies, which can be used for the probate of the pour over will. The pour over will, on the other hand, allows any assets that were not transferred to the revocable trust to be part of the trust after the death of the testator. This is to ensure that the testator’s assets will not be distributed in accordance with state intestacy laws but pursuant to the directions of the testator / grantor.

For example, if the testator has several bank accounts and it is transferred to the revocable trust, but after the creation of the revocable trust, the testator acquired real property that was not transferred to the revocable trust, the pour over will allows the real property that was not covered by the revocable trust to be transferred to the revocable trust after the testator’s death.

Irrevocable Trust, Revocable Trust, and Will

An irrevocable trust, on the other hand, is a trust that removes the property of the grantor from his estate. Once an irrevocable trust is established and property transferred to the irrevocable trust, such property will not be considered the grantor’s property anymore. Irrevocable trusts have their own tax identification number, where income is reported separately and independently from the grantor’s social security number.

An irrevocable trust is used by grantors when they want to remove property from their name to protect it from creditors, to become eligible for Medicaid and other government benefits, to protect property from Medicaid recovery, to remove property from their estate for purposes of computing spousal elective share, or to separate property for their children in former marriages in cases of blended marriages.

A grantor can both establish an irrevocable trust, a revocable trust, and a will. It really depends on a person’s objectives on how he wants his property to be distributed. An estate planning lawyer will be able to assist you in the preparation of your estate plan.

Aside from trusts and wills, there are several estate planning tools that can be used, depending on a person’s objectives and when he starts estate planning. Timing is usually very important in cases of Medicaid eligibility due to penalty periods on eligibility for asset transfers.

Estate planning can be a complex matter. It is important to seek the advice of an estate planning lawyer who can help you plan your estate in accordance with your objectives. Should you need assistance, 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].