Before talking about living trust Long Island, let us first discuss what a trust is.
A trust is a legal agreement between the creator (known as the grantor, settlor, or trustor) and another individual—the trustee—for the trustee to hold the grantor’s assets on behalf of a beneficiary or beneficiaries.
The trust itself is a legal entity, formalized or executed in a trust document.
For assets to be held in a trust, the asset must be re-titled to the name of the trust. Hence, the owner becomes the owner of those assets re-titled thereof.
When the grantor passes away, the trustee of manages the assets according to the grantors instructions and passes them to the beneficiaries.
Typically, all trust assets pass to the beneficiaries outside probate. This is the reason why trusts are preferred over wills.
Now, there are two types of trust: Irrevocable Living trust and irrevocable trust.
Irrevocable Living Trust Long Island
A living trust, also known as a revocable trust or revocable living trust, is a kind of trust that can be terminated or altered at any time by the grantor. He can take away assets from the trust into his ownership once again, or add more assets into the trust.
The grantor can also name himself as the trustee of his living trust Long Island and use the assets to his own benefits until incapacity or death, when his named successor trustee then takes authority.
Why do I need a Living Trust in Long Island?
The primary purpose of creating a living trust is to save your surviving loved ones the stress, cost, and delays of probate. Probate in Long Island is usually time-consuming and expensive, riddled with so many legalities. And all wills must go through probate. But by funding your assets into a living trust instead, probate is avoided. The entire trust assets will pass to your beneficiaries directly and immediately after you pass away without any court publicity.
However, if your estate value falls below $30,000, then there’s no need to worry about a living trust because the probate process for such estates are inexpensive, fast, and straightforward.
In Long Island, do I still need a Will after creating a Living Trust?
Any asset you fail to fund into your trust will not pass according to the trust terms. And it’s possible that you have assets that are better left outside a trust but which must go through probate. And without a will, such an asset will pass to a default-heir according to New York law of intestacy. But with a will, you can state who receives whatever asset that falls outside your living trust.
Can I use a Living Trust to avoid estate tax in Long Island?
No, a Long Island living trust does not help you escape estate tax. Here’s the reason.
In your revocable living trust, you can use the trust assets for your benefit, take away or add, or even terminate the trust at any time. Hence, the assets are still regarded as part of your taxable estate.
If your goal is to avoid estate tax and other financial obligations like debts and liens, then an irrevocable trust is the best instrument for you.
An irrevocable trust completely takes ownership of every asset retitled in its name. The assets are therefore beyond your reach and that of creditors and the government.
But you may not have tp worry about estate tax in Long Island if your estate does not value above the estate tax exemption amount, which is currently close to $6 million.
How to execute a Living Trust in Long Island
There are essential steps to creating a Living Trust in New York. Note that all Long Island estate planning must comply with New York State laws.
- Decide which kind of living trust you want to create, either an individual or a shared trust.
- Identify the assets you want to hold in the trust.
- Select a competent successor trustee.
- List your beneficiaries.
- Fill out the trust document. You can get one online but it’s recommended to talk to an estate planning lawyer or a trust and estate lawyer near you.
- Sign the document in the presence of witnesses.
- Retitle your selected assets such as your home or bank account into the name of the trust. You do that by changing your documents of ownership for those assets, and changing the owner from your name to the trust’s name. You would only now own and manage the assets as the trustee of the living trust.
Trusts are more complex than wills so you want to be sure you get everything right.
Get help from an estate planning lawyer near you by calling us today.
