LIVING TRUSTS

IN NEW YORK Revocable Living Trusts Are Something

Everyone Should Understand Before They Go Into the Estate Planning Process

ANTHONY J. MINKO New York Estate Planning and Elder Law Attorney

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As an essential tool in almost every modern estate plan, revocable living trusts

are something everyone should understand before they begin the estate

planning process. Sometimes simply known as living trusts, or alternately as

Inter Vivos trusts, these estate planning tools provide numerous benefits that

other tools do not. They are easy to make, relatively simple to use, and though

they require a little extra work on your part, the effort you put into them will be

well worth it when it comes time to distribute your estate.

Today we’re going to look at revocable living trusts so you can familiarize

yourself with some of their most important qualities.

THE LIVING TRUST

The term “trust” is one that many people have

heard, though few people know much about.

When we talk about trusts in estate planning we

are referring to a type of legal entity. You can

think of a trust as a company or a corporation.

Though the company only exists on paper, the

law gives that company some significant rights,

such as the ability to own property. The property

the trust owns will come from you. Essentially, you will create the living trust,

transfer some or all of your property to it, and then use the trust as a kind of

holding company that is solely responsible for managing your property in the

way you choose.

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When you create a living trust you create a type of legal entity. This entity is

designed to work in your benefit and will have to operate under the rules you

choose to impose. When you create a trust you become known as a trustor,

settlor, or grantor.

It’s important to keep in mind that a revocable living trust is but one kind of

trust. There are many different kinds of trust, each of which is designed to serve

a particular purpose. A revocable living trust is so named because you, as the

person who creates it, has the right to revoke or modify it whenever you like. It’s

also called a living trust because you create it to take effect during your lifetime.

Trusts that take effect only after you die are known as testamentary trusts.

CREATING YOUR LIVING TRUST

Just like other estate planning tools, a living trust is a device that you are not

obligated to create. But in order to create a living trust in the state of New York,

you must be a mentally capable adult. Upon deciding to create the trust, you

must do so in writing and make sure that the document you create complies with

New York law.

PEOPLE IN YOUR TRUST

The document in which you create, known as the trust instrument, will have to

contain several specific details. These include:

The Trustee. The trustee is the person or organization you appoint who

will have the responsibility of managing the trust. Most people who create

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revocable living trusts in the state of New York choose to serve as the

trustee themselves. Although you can appoint another person or

organization to manage your trust, living trusts are usually very easy to

manage because they simply own your property.

The Beneficiaries. The beneficiary of the trust is the person or

organization who gets to use or benefit from the property the trust owns.

The person who creates a revocable living trust is also usually the

beneficiary. However, you also need to name beneficiaries who stand to

inherit your property after you are gone. This naming of inheritors is the

primary reason why people create a revocable living trust. We will discuss

this a little more depth later on.

The Terms. The revocable living trust will also state any terms or

conditions you want to include. At the very least, you’ll need to name a

successor trustee who will be able to take over managing the trust should

the original trustee die or no longer be able to perform his or her duties.

Successor trustees are important because, for example, after you die

someone will have to step in and determine who inherits the trust

property. In this situation, the successor trustee will be responsible for

taking living trust property and distributing it to the inheritors you

identified.

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PURPOSES OF THE TRUST

The reason creating a living trust is so popular is because it helps your estate

avoid probate. Probate is the legal process that applies to any property you leave

behind after you die. In New York, such property will have to go through the

probate process in a New York Surrogate’s Court. That process often takes a

long time, an average of a year in New York, and can cost a lot of money. The

probate process may deplete your funds that you had worked hard for, to pass

on to the next generation. But there is an alternative—a living trust avoids this

process altogether.

When you create a living trust and transfer your property into the trust’s name,

the property you own as an individual is no longer technically yours. Instead, it

belongs to the trust. After you die, the trust will still remain as a legally

recognized entity. Because you created the trust and determined what the trust

must do with the property it owns after you are dead, the trust can therefore

distribute its property outside of probate. So, because you use a living trust to

distribute your property, you avoid probate as long as the living trust owns

everything you own. Of course, in many instances there are other considerations,

but we will cover that in our next discussion about living trusts.

LIVING TRUSTS AND YOUR ESTATE PLAN

Though they sound relatively simple, living trusts are not something most people

can create and use on their own. Like every other piece of a good estate plan,

your living trust will have to work hand-in-hand with other tools. To better

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understand how this process works, you should contact our offices and make an

appointment to discuss living trusts in more detail.

About the Author

Anthony J. Minko

As an attorney in private practice in Brooklyn, New York,

Anthony J. Minko provides a wide range of estate planning

services to clients throughout the New York City area. Mr.

Minko creates customized estate plans that enable families to

preserve their wealth and provide for the security of their

loved ones both during and after their lifetime. He dedicates

himself to informing the public of the need for careful

attention to their specific situations, regularly presenting

educational seminars addressing the growing importance of estate planning.

Before forming Minko Law Office, Mr. Minko spent over four years as a trial

attorney handling civil and commercial litigation in New York state and federal

courts. He also served the senior community as a member of Wells Fargo Bank

and the New York City Law Department. Mr. Minko is a member of the American

Academy of Estate Planning Attorneys, The National Academy of Elder Attorneys,

and several local and state bar associations.

Minko Law Office

1766 Cropsey Avenue

Brooklyn, NY 11214

Phone: (718) 238-1727

Fax: (718) 971-1059

www.MinkoLaw.com