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Long Island Elder Law Blog

Creating an irrevocable trust

An irrevocable trust may be a good option for some people in New York who are creating an estate plan. Unlike the revocable variety, an irrevocable trust cannot be changed. However, it offers advantages in protecting assets that a revocable trust does not.

An irrevocable trust has a number of uses. For example, placing property such as a life insurance policy in the trust's name removes it from the estate and thus can save on estate taxes. With a charitable trust, the creator can be paid an income while the rest of the assets will go to the charity after the creator's death. A dynasty trust is set up to preserve family wealth for decades or even hundreds of years. With a spendthrift trust, a person can arrange for more oversight for a loved one who may be irresponsible with money. A special needs trust will provide funds for a person who receives government benefits without affecting eligibility for those benefits.

Estate planning protections for cohabiting couples

Beyond the romantic sentiment and vows before family and friends, marriage is also a legal contract that give rights and protections in medical emergencies, financial situations, the death of a spouse and other situations. New York couples who choose to forgo marriage in favor of cohabitation can also enjoy these benefits by understanding what those are and creating an estate plan.

An accident, stroke or other hospitalizing illness can quickly upset a family's normal routine. It is at this time that a cohabiting couple can realize the danger of life without an estate plan. Couples can give each other the rights to make health care decisions for each other with a health care proxy.

How to protect heirs with an IRA trust

New York residents are generally allowed to pass money inside of an IRA to designated beneficiaries. However, for those who are worried about how that money may be used, an IRA trust may be an effective estate planning tool. They have become more popular since a 2014 Supreme Court ruling that no longer treats inherited IRAs as protected in bankruptcy. Instead of naming a person as the beneficiary of the IRA, the trust is named the beneficiary.

A trust may be used whether a person has a traditional or Roth IRA. They may be most effective for those who have a large amount of money in the account as well as for those who name a minor as a beneficiary. While minors cannot directly inherit property, they may be able to do whatever they want with the money after turning 18 or 21. This is in spite of the fact that a young person may have no idea how to manage that money.

Estate planning and second marriages

New York couples planning a second marriage, especially one later in life, have many significant estate planning concerns to think through on their road to wedded bliss. For people who have spent their lives gathering assets and investments, remarriage can be far more complex. Considering a few estate planning guidelines along the way can help avoid misunderstandings or costly financial errors.

Couples who have joint income and assets may have real concerns if one partner has a divorce settlement that keeps them connected to a former spouse. It also could be important to keep finances separate in the case of a party having an old debt, as creditors are not bound by the provisions of a divorce settlement or decree.

Setting up a special needs trust

Some New Yorkers who are creating an estate plan may be concerned about how they will take care of a family member with disabilities. These disabilities may include genetic disorders, cerebral palsy, bipolar disorder or autism spectrum disorder, and they may be congenital or the result of an injury.

Many people who suffer from disabilities get government assistance, but it is necessary for a person to have assets under a certain amount to qualify. With a special needs trust, the assets do not belong to the beneficiary, so they are not counted toward the maximum and do not affect the person's access to benefits. Money in a special needs trust can support a person in a variety of ways including with daily care and education.

Non-probate assets in an estate plan

New York residents who are creating an estate plan should be aware that non-probate assets are not passed to beneficiaries under a will. That means that whoever is on the beneficiary designation or whoever shares the asset inherits the asset regardless of what is written in the will.

Examples of non-probate assets are those that are passed down using beneficiary designations, such as retirement accounts and life accounts. Real property in which people share rights of survivorship is another example. Certificates of deposit or bank accounts might have beneficiaries named to whom the accounts are payable upon the owner's death.

Planning for asset distribution after death in New York

When planning for the future of their assets, estate holders may want to consider speaking with their heirs. Speaking with children will allow the estate holder to get a feel for how their assets may be spent and managed. In addition, it will help them figure out the best way to leave property to beneficiaries.

Many people opt to leave assets to people through a will. While there is nothing wrong with this, it severely limits how property can be passed on and managed. As soon as the estate holder passes away, assets listed in their will are immediately distributed to heirs.

Understanding the basics of a trust

While New York residents may believe that they need a trust, this may not always be the case. Furthermore, those who want to create a trust need to choose the one that best suits their needs. One common type of estate planning instrument is the revocable living trust. It has a trustee who carries out the instructions that the document provides as well as one or more beneficiaries.

The terms of a trust may be customized to fit the needs of the individual who creates it. For instance, parents who create a trust for their children may determine when a son or daughter gets access to their inheritance. While the parents are still alive, they would be the trustees, and a secondary trustee may be named to take over when the parents pass away. The new trustee would only be able to take money out of the trust for the benefit of the children in this scenario.

The benefits of estate plans for New York residents

President Trump campaigned on eliminating the federal estate tax entirely, and some people are wondering if they need to bother with creating an estate plan if they don't have to worry about the tax burden their heirs may face. However, the exemption in 2017 is $5.49 million per person and $10.98 million for married couples. Therefore, many people do not have to worry about federal estate taxes, but that doesn't mean that estate planning is unnecessary for those individuals.

People should still create estate plans because there is more to them than mitigating taxes. Estate planning allows people to determine how their assets will be distributed upon their death. Using trusts, people can be very specific about how they want their property doled out.

Tips on estate transfers

New York residents who have assets they want to be managed a certain way after they die should have an estate plan. An estate plan, which should at least include a will, a living trust and a power of attorney form, can ensure that one's wishes are carried out and that their loved ones and assets are protected. However, there are certain steps individuals should take to make sure that their estate plan is effective.

An individual's will should state his or her intentions clearly and correctly. The will should be reviewed after it has been completed to verify all wanted beneficiaries are mention and that each one is bequeathed the share of assets according to the intentions of the testator.