A revocable living trust is a very effective estate planning tool, and it can be a good alternative to a last will as a primary vehicle of asset transfer.
The thing that many people don’t understand about a last will is that a will must be admitted to probate, and the estate must be probated before the heirs can receive their inheritances. In New York, probate matters are handled by the Surrogate’s Court.
The simplest of cases can potentially pass through probate in around nine months, but it can take longer if there are any complications at all.
In addition to the time consumption, there are some other pitfalls. Anyone who wants to know how you distributed your assets can access probate records to find out the facts. This loss of privacy can be uncomfortable in a general sense, and it could cause hard feelings among family members who may feel slighted.
Probate can also be expensive, and the money that is spent during probate could have otherwise gone to the surviving family members.
With a living trust, you avoid all of these pitfalls. The trustee that you choose would follow your instructions and distribute assets to the beneficiaries after your passing. Probate would not enter the picture.
Income Taxes
You may wonder if you would enjoy any tax benefits if you convey assets into a revocable living trust. The key here is that the trust is revocable. As the grantor of the trust, you have the power to act as the trustee and the beneficiary while you are living, and you can revoke the trust entirely if you choose to do so.
Because you have the ability to directly control property that has been conveyed into the trust, if taxable income is earned by property that is held by the trust, you would be responsible for that income. You would report the income on your personal tax return, though the trust could file a statement as well. However, if you are acting as the trustee, the trust would not be required to file a separate statement.
Free Report on Living Trusts
You may not save on taxes when you create a living trust, but there are a number of benefits that you do receive that can make things easier on your loved ones after you pass away.
If you would like to learn more about revocable living trusts, download our special report. The report is free, and it will provide you with a great deal of very useful information.
To access your copy of the report, click this link and follow the simple instructions: Smithtown NY Living Trusts.
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Mark S. Eghrari, Estate Planning Attorney
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