A New York Living Trust Can Provide Benefits to an Estate Plan

Living Trusts in New York present a number of beneficial options for a person’s Estate Planning. The basic planning and Advanced Directive documents begin with a Last Will, Health Care Proxy and Living Will and Power of Attorney. However, these papers may not meet all of the needs in a particular situation.

For example, a Last Will can provide for the disposition of a person’s assets in many different ways through provisions for bequests of stated monetary sums, or the specific devise of particular real estate, or a gift of a percentage of the estate. Also, a Last Will can create testamentary trusts to take advantage of estate tax planning methods or provide protection for minor children or beneficiaries who are incapacitated. However, in order for a Last Will to become validated and effective it must be filed with the Surrogate’s Court and admitted to probate. The Probate Process is typically not a barrier to a smooth estate settlement particularly where all of the interested parties involved are close family members and there is no antagonism between the parties. Unfortunately, there are many situations where conflict and complexity may hinder or interfere with probate.

A Living Trust may be used to avoid some of the Probate issues and other lifetime problems which are identified below. These items include the following:

(a) Identification of distributees (next of kin) – when a Will is offered for probate the New York estate laws and rules provides that the Court be given specific details regarding a person’s next of kin. Determining this information may be difficult particularly in situations where the decedent has not had contact with any family members for decades and may have been born outside of the United States. I recall one situation where a person who was preparing their estate plan had been brought up in foster care and had no knowledge as to his biological family. The administration of a Living Trust does not require the identification of next of kin. Upon the death of a decedent the Trustee of the trust is typically authorized to distribute the trust assets to the trust beneficiaries without any Court proceedings or any search for, or notice to, the decedent’s living heirs. The provisions for distributions under the Trust would be exactly the same as set forth in the Last Will.

(b) Avoidance of Will Contests – since the administration and distribution of trust assets does not require identifying or notifying next of kin or the commencement of a Surrogate’s Court Probate Proceeding, it is less likely that a disgruntled heir will challenge the validity of a decedent’s trust or estate plan. It is rather easy for an unhappy disinherited individual who received a notice of the Probate Proceeding to file Objections to Probate with the Court. While the validity of a Living Trust can be challenged, the person who wishes to do so must take an affirmative step and prepare Court papers and commence a new Court lawsuit to discredit the validity of the trust. Thus, a Living Trust may avoid the Contest of a Will.

(c) Management of Assets in the event of disability or incapacity – A Living Trust allows the Trustee to manage assets both before and after the death of the trust creator. A Living Trust is created during the lifetime of the creator and assets are transferred into the trust at that time. While the creator is usually the trustee of the trust, trust provisions can provide for a substitute trustee in the event the creator becomes disabled or incapacitated. This type of provision allows for a more comprehensive method to handle a person’s assets in the event of a disability. While a power of attorney can also be used to accomplish this task, the trust provides a more centralized and structured approach and reduces the problems associated with having a bank or other financial institution raise questions regarding the power of attorney. While banks and other financial institutions are now required to accept and follow the instructions of an appointed agent under a power of attorney [New York General Objection Law Section 5-1504 (2) and 5-1510(2)(i)], there are occasions where difficulties still arise. Additionally, by creating a lifetime advanced directive for asset management in the case of disability, on Article 81 Guardianship Proceeding may be avoided.

New York Estate Attorneys are familiar with the various benefits that provisions in a Living Trust can provide. Since each individual’s needs and intentions are different it is important to explore the possible advantages provided by including this type of trust in an estate plan. Not every situation calls for a trust, but when necessary, a Living Trust can expedite estate administration and avoid the time and expense of lengthy Court proceedings.

New York Trusts and Estates Attorney Jules Martin Haas, Esq. has been representing clients in New York Trusts and Estates matters and Surrogate’s Court proceedings throughout the past 30 years in New York, including Queens and Nassau Counties. If you or someone you know is involved with or has questions about a New York Estate, please contact me at (212) 355-2575 or email: jules.haas@verizon.net, for an initial consultation.

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