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Estate Planning with Living Revocable and Irrevocable Trusts

Living or “inter vivos” trusts are commonly used in estate planning. These types of trusts can be separated into two broad categories, revocable and irrevocable. Both can be used in many different ways and be an instrumental part of your estate plan.

Although many people think of trusts as planning tools for the rich, they are really planning tools for everyone. A trust, in its simplest form, is basically a box. The reasons we use boxes – for temporary storage, permanent storage, or to transport something from place to place – are the same reasons we use estate trusts. The desired goal determines the type of trust that a NY estate lawyer chooses to serve the purpose.

Common Reasons to Create a Revocable Trust

  1. Avoiding the time and money spent on completing probate. Probate, or the court-supervised process of distributing someone’s property after they’re gone, can be costly and time-consuming. Transferring all of a person’s assets into a revocable trust can avoid or minimize the need to do a probate proceeding after someone dies.
  2. Avoiding ancillary probate. If someone owns property in another legal jurisdiction, such as a different state or country, a trust holds the property in one legal jurisdiction and avoids multiple probate proceedings in the rest. It’s easier to get property distributed quickly and correctly.
  3. Protecting a loved one’s privacy. Wills become a matter of public record by default when they are submitted to probate, and anyone can see who disinherited a child, who left assets to one child outright but to another in a trust controlled by siblings, who put restrictions on a child’s inheritance, etc. Trusts are not public record by default, and can potentially be administered privately.
  4. Offering easy access to beneficiaries who have ongoing needs. Property owned in a trust can generally be accessed immediately by a trustee upon someone’s death, as the trustee always has access to the property. They do not need approval by a court. With probate, assets may be locked up and inaccessible during the court proceedings and while the court appoints an executor.

Common Reasons to Create Irrevocable Trusts

  1. To protect assets in the event long-term care is needed. In New York, long-term care costs are largely unaffordable for many seniors in need. Expertly drafted irrevocable trusts can help shelter assets while allowing them to qualify for Medicaid to pay for long-term care expenses.
  2. To avoid or mitigate estate taxes. Those New Yorkers with an estate worth more than $6,580,000 in 2023 will face New York estate tax, and if they have an estate worth more than $12,920,000, they will also face federal estate tax. Irrevocable trusts with specific provisions can potentially exclude specific assets from being considered part of the estate when someone dies.
  3. To protect the public benefits an individual currently receives. Individuals with disabilities must preserve the public benefits they need to live. But they can find themselves in an untenable position if they come into money through an inheritance, settlement, or otherwise. Though the money is not enough to replace the benefits they receive, going over certain asset limits can create a situation where they’re no longer eligible. In those cases, the individual may be able to set up an irrevocable trust and name a trustee to control it, allowing the money to remain out of their name for benefits purposes while providing them with funds for a better quality of life, and extraordinary expenses not covered by benefits.

Only an experienced NY estate lawyer knows how to use estate trusts to protect assets and transfer or gift them to others without impacting Medicaid qualifications or public benefits. They find ways to reduce your tax liability and are happy to share their expertise with your trusted financial advisor in more complex matters.

If your estate planning goals are consistent with any of the above, the attorneys at Russo Law Group, P.C. encourage you to contact us and set up an appointment to discuss whether a living trust might be right for you.

Russo Law Group, P.C.
100 Quentin Roosevelt Blvd., Suite 102
Garden City, NY 11530

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