Living TrustsCall us at 800-354-1544
Whereas a Will is a set of instructions that become effective when someone dies, a trust is a living estate plan. It exists as soon as it is signed as a container of assets. If John Smith makes a Will, it will never be of use to his family until he passes away. But if he executes the John Smith Living Trust, it becomes relevant immediately. He would change the title on the deed to his property to read the trust’s name, and he would adjust his investment accounts. The trust is akin to a company that John Smith has created for himself.
For most of our clients at Chaves and Perlowitz LLP, we focus on trusts over wills for a number of reasons, including:
Elimination of Probate
When someone dies with a Will, the estate has to go through court for the executor to be formally appointed in the role. Everything is at a standstill until this probate process can be resolved. It can be months before an Executor can sell property, pay taxes, or satisfy the beneficiaries.
Trusts avoid the probate process altogether. They are private documents that are settled outside of court. Trusts can be settled quickly and cost effectively.
Whereas a Will becomes relevant and effective after someone dies, a Trust is a plan for life that can transition seamlessly into a plan for disability. Trusts have Successor Trustees who can step in and manage assets in the event of disability, avoiding a guardianship proceeding.
Protection from Long-Term Care Costs
See our section on “Medicaid Asset Protection Trusts.”
Grantor: (also known as Trustor): The person(s) who creates the trust.
Trustee: The person(s) who manages the trust’s day-to-day operations.
Beneficiary: Any person who stands to inherit or benefit from the trust.
Revocable Trust: A trust wherein the Grantor is living and usually acting as the trustee. The Grantor retains the full right to amend, change, or cancel the trust at any time.
Irrevocable Trust: A trust wherein the Grantor is not the trustee and has therefore given up some measures of control over the trust’s operation. Under New York State law, an irrevocable trust actually can be revoked if all parties to the trust (grantor, trustees, and beneficiaries) consent. The Medicaid Asset Protection Trust (LINK) is a type of Irrevocable Trust.
Trustee’s Fees: The annual salary for a trustee (a sliding scale that averages about a fraction of 1%) that is prescribed by New York State Law. Family members acting as trustee will almost never take the fee, but professionals like financial institutions will do so.
Inter Vivos Trust: (also known as Living Trust): Any trust that a Grantor signs and executes while he/she is living.
Testamentary Trust: A trust inside the language of a Will. The Trust is not set up until the individual dies and the Will goes through Probate.