Long Island Elder Law & Estate Planning

living trustA lot of people that have not explored the subject very deeply boil the process of estate planning down to a single act. You execute a simple will at some point in time, and that’s all there is to it.

This is an oversimplification, because there are other things to think about beyond the matter of asset transfers, but we will get into them in at another time. In this post, we will explain some of the reasons why a will may not be the best centerpiece for your estate plan.

Probate Hassles

If you state your final wishes in a will, you would name an executive in the document to act as the administrator. This person would not be able to distribute the assets to the beneficiaries independently. The will would be admitted to probate, and the Surrogate’s Court would supervise during the administration process.

Creditors have a chance to come forward during probate and the court will determine the validity of the will. The executor has to identify and inventory the assets, and they must be prepared for distribution. This can involve appraisals and liquidation of various types of property.

All this takes time, and the people that are waiting for their inheritances do not receive anything until the court has probated and closed the estate. It will usually take about nine months at minimum, and complicated cases can take considerably longer.

In addition to the time consumption, there are expenses that pile up, and anyone that wants to probe into your affairs can access probate records.

Asset Protection and Lump Sum Inheritances

Generally speaking, the people that are named in a will would receive lump-sum inheritances. This may not be consistent with your wishes, especially if you are going to be leaving a bequest to someone that has a tendency to spend much too freely.

Last Will Alternative

The revocable living trust is the ideal alternative if you want to avoid the drawbacks that we touched upon above.

Another one of the misconceptions that people harbor about estate planning is the notion that you lose control of assets once you convey them into a trust. This is true with some types of trusts and we will look at that in the next section, but you retain access to assets that you convey into a revocable living trust.

The person that administers a living trust is called the trustee, and the individual that will receive monetary distributions is the beneficiary. While you are alive and well, you can assume both of these roles, so nothing really changes in your day-to-day life.

It’s a simple matter of the trust being the formal owner of the property, but you have total control of the trust.

In the trust declaration, you name a trustee to act as the administrator after you are gone, and your heirs would be the beneficiaries. If you have concerns about the money management capabilities of the beneficiary, you can instruct the trustee to make incremental distributions over an extended period of time.

A spendthrift provision can be included to protect the principal from the beneficiary’s creditors, so there would be solid asset protection in place. All the distributions would take place outside of probate, and this is another major benefit.

When it comes to identifying the assets, they would all be held by the trust, and they would be listed on the schedule. This would simplify the administration process for the trustee.

Irrevocable Trusts

There are some trusts that cannot be revoked, and you would not have direct personal control of the assets. This may sound like a bad thing, but there are reasons why some people choose to utilize these trusts.

Assets in this type of trust would not be counted if you apply for Medicaid to pay for long-term care. People with estate tax concerns convey assets into irrevocable trust to mitigate their exposure. These are a couple of the reasons why they are utilized, but there are others.

Schedule a Consultation Today!

As you can see, there are many ways proceed, and this is why you should discuss your options with a licensed estate planning attorney. If you are ready to set up a consultation, we can be reached by phone at 631-265-0599, and there is a contact form on this website you can use to send us a message.

 

 

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About Eghrari Wealth Training Law Firm

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.