New York Estate Planning can take many forms. One aspect of a plan can involve the creation and use of a trust. There are a number of different types of trusts and benefits that may be obtained from their utilization.
For instance, a Testamentary Trust is created by a Last Will and Testament. The provisions of the trust are part of the Will itself. Testamentary trusts can be used to provide for minimizing estate taxes by taking advantage of the exemption provided by the estate tax law. These types of trusts can also be used for other reasons such as establishing a means to administer and manage trust funds for a minor or for a person who may lack the ability to be responsible for large sums of money. Sometimes there may be the need to create a Supplemental Needs Trust. This type of trust allows a fund to be utilized for the benefit of a person who is receiving government assistance such as Medicaid without disqualifying the recipient from future government payments.
An Inter Vivos Trust is a trust that is set up as a separate document during the lifetime of the creator. A common form of an inter vivos trust is a Living Trust or Grantor Trust. This document can provide many different benefits including the avoidance of probate, estate planning and tax minimization, and a mechanism for property management in the event the creator becomes disabled or incapacitated.
Whenever a trust is created it is important that the trustees are carefully selected so that they will carry out the intentions of the creator and protect the interests of the beneficiaries. Unfortunately, there are many instances where there is controversy between the trustees and beneficiaries. In a recent case entitled “Trust of Frederick Brockway Gleason, Jr.” decided by Manhattan Surrogate Nora Anderson on November 12, 2013 and reported in the New York Law Journal on November 25, 2013, a successor income beneficiary of a trust claimed that a trustee breached its fiduciary duties by allowing the trust principal to be invaded for the benefit of the initial income beneficiary who was her father. The court denied the beneficiary’s request for summary judgment which left the matter open for future litigation and a trial on the merits.
In another interesting case, grandchildren of the late Walt Disney are involved in a court battle regarding a trust. As reported by Joshua Gardner in MailOnline on November 25, 2013 it is alleged that trustees of a trust fund held for Walt Disney’s grandson have been wrongfully withholding payments from the grandson. A court date is scheduled for December 5, 2013.
I have represented many individuals regarding the creation and administration of trusts including testamentary trusts, inter vivos trusts and supplemental needs trusts. All of these instruments can be very helpful in expressing the intention and desires of the creator and may provide tax benefits or protection and asset management for persons such as a minor or those with incapacitating conditions.