Trusts are an important part of an estate plan for many. Simply put, a Trust is a legal vehicle that holds many assets in one place and gives direction on who is in charge of those assets and who will benefit from those assets and how. There are many different types of Trusts that can be utilized in one's estate plan depending on his need and strategy. Below are some general benefits a Trust provides.
1) Easy transition of assets from one person to another. When a person dies with a Will and without a Trust, the executor must take the Will to Surrogate's Court and receive permission to be the executor. Once s/he is declared the executor by the Surrogate's Court judge, the executor needs to notify all potential heirs and gather assets. However, this process may take up to six months before assets are released to the control of the executor.
If the decedent had a Trust, all his assets within the Trust would be fully accessible to the next Trustee named in the Trust. There would be no hold and nothing would be deemed frozen because the assets are technically owned by the Trust, not the individual.
2) A Trust provides privacy. The process of going through Surrogate's Court to settle a Will is called Probate. This process can take up to a year. It is also a public process giving any person the ability to look at court records to see what is in the decedent's estate. When a decedent has a Trust, the assets within the Trust are held privately without having to go through a court process.
3) A Trust avoids multi-state probate. If you own property in a different state than where you reside, your loved ones will have to go through the probate process in every state in which you own property. For example, if you live in NY and own property in NJ, your loved ones will have to go to Surrogate's Court in both NY and NJ to settle your estate. However, if the decedent holds all of his property within a Trust, there is no need to go through multiple probate proceedings.
4) A Trust permits you to provide financial guidance to your children even after they turn eighteen years old. A Will provides that any monies or assets left to a minor child be automatically held in a Trust until the beneficiary turns eighteen years old. This state defined Trust will release all of the asset to your minor beneficiaries as soon as they turn eighteen. However, A Revocable Living Trust allows parents to name Trustees of their choice to control and grow finances left to minor children. Through a Revocable Living Trust parents may stretch out the payments to their children to whatever age they choose.
5) Certain Trusts can also assist with medicaid planning for elders and protecting assets from beneficiaries' creditors.
Contact DY Law Group, LLC for a free consultation on the best estate planning strategy for you and your family.