Wills and Trusts New York are legal documents which are used in estate planning in New York. The estate planning process involves laying down instructions on what to be done to one’s estate in the event of incapacitation or death. While both documents can be used by the same individual for his estate, it is important you have in depth knowledge of each before creating one. Below is a brief overview of Wills and Trusts New York and their types.
A will is used for the disposal of assets at one’s death. A will, also called a last will and testament, is created by a testator, stating his desires concerning his estate after he dies. In a nut-shell, a testator creates a will in order to transfer ownership of his or her property to the surviving loved ones when he or she passes away. A New York will may be used to:
- Name an executor who would see to it that the instructions in the will are carried out;
- Name beneficiaries;
- State how the estate will be distributed to these beneficiaries;
- Naming a guardian who would manage the testator’s affairs when he or she gets old or incapacitated;
- Address how estate debts and taxes are to be paid.
A simple will is the usual will accepted in most states and countries. It is typewritten and signed by the testator in the presence of at least two persons, who would also sign have to sign. If there is no proof that actually there were witnesses, then such a will can not stand. Simple wills are mostly used for small estates with uncomplicated assets.
A holographic will is a will completely in the handwriting of the testator, and bearing no signature of any witnesses. Holographic wills are acceptable in NY only if two neutral parties can identify if truly the handwriting belongs to the testator. However, if such a will is taken to some other state, it would not be accepted by their laws.
An oral or nuncupative will is one spoken orally to a witness and not documented prior to the death of the speaker (testator). A nuncupative will will only be accepted in New York if it was made by a mariner at sea or a member of the armed forces during a time of war. However, this type of will is also unacceptable in other states.
A pour over will is created to transfer leftover assets into a trust at the death of the testator. Pour-over wills become necessary when you prefer disposing your assets by use of a trust rather than a will. By transferring most of your assets into a trust, you lose full control of those assets while alive. The assets not transferred into the trust are still available for your use during your lifetime but you may create a pour-over will to transfer such assets into the trust when you die, and such assets will hence be bound by the terms of the trust.
A trust is a legal agreement in which a trustee holds assets in a trust on behalf of the trustor. The trustor, despite being the creator of the trust, will cease having full control of such assets once they have been transferred into the trust. However, he has the authority to lay down specific instructions according to his wishes, thereby maintaining some control still.
A trust is a more preferred choice for disposition of assets as its assets can be passed on to the beneficiary without undergoing probate nor attracting estate taxes, and this is the major advantage trusts have over wills. With a trust, assets can be distributed to beneficiaries even while the trustor yet lives, as opposed to wills. The trustor can also define the trust such that the assets will be held by the trustee until the beneficiary comes of legal age (in the case of minors).
Due to these advantages of trusts over wills, creating trusts usually costs more than wills.
There are basically two types of trusts, namely the revocable trust and the irrevocable trust.