When people hear the phrase “estate planning,” chances are the first thing that comes to mind is writing a will. And while writing a last will and testament is an essential part of estate planning, it’s not the only thing you can do to plan for your estate. For example, one often overlooked instrument is the trust, which can be a handy legal tool for anyone trying to plan their estate.
A trust, put simply, is a legal arrangement where one person is entrusted (hence the name) with someone else’s money or property, with the expectation that they will watch over it and manage it responsibly. The person who creates the trust, known as the trustor or settlor, hands the money or property over to a trustee, who manages the trust on behalf of either the trustor themselves, or on behalf of some third party (known as the beneficiary). The trustee has a fiduciary duty, a kind of legal obligation, to manage the property they have been entrusted with, and if they breach that duty, they can be sued by the trust’s beneficiaries.
Trusts are useful in estate planning for several reasons. The first and foremost reason is that any property being held in a trust is considered non-probate property; in other words, it can be distributed without going through probate court. Additionally, property held in a trust cannot normally be attacked by creditors who might be looking to have your estate pay off any debts that remained from your lifetime. Also, anything held in trust isn’t subject to taxation, should your estate be large enough that estate taxes become an issue.
The primary issue with any trust, and especially with so-called testamentary trusts, is knowing who you can trust to carry out your wishes when you’re gone. By putting your money or property into a trust, you are giving control of that money or property over to someone else, who in theory can do what they want with it. The trustee has a fiduciary duty to manage the trust responsibly but enforcing that duty may mean taking them to court, which is a hassle at the best of times. Therefore, only appoint a trustee who you know is going to look after your best interests and the interests of your beneficiaries.
If you want to write a will, form a trust, or explore other estate planning options, please call the experienced attorneys at Wingate, Kearney & Cullen, LLP. We have assisted and advised clients with asset planning and the transfer of wealth and made sure their needs are provided for. With law offices conveniently located in Brooklyn, New York, and Melville, New York, our lawyers are available to assist residents of the five boroughs of New York City and Nassau and Suffolk County on Long Island with their estate planning needs. If you are looking to develop your own comprehensive estate plan, call (718) 852-5900.