When you are planning your estate, you should consider the work that must be done after you are gone to bring your wishes to fruition. This is the process of estate administration, and the way that you address it will determine how quickly and efficiently your heirs will receive their inheritances.
Simple Wills and Probate
Many people assume that they should use a simple will to state their final wishes. They are under the assumption that trusts are only useful for very wealthy people.
If you use a will as the centerpiece of your estate plan, you would name an executor in the document to act as the administrator of your estate; however, that person has no legal authority to handle your estate until he or she formally is appointment by a judge. After your passing, the executor would submit the will to probate, and once the Surrogate’s Court is satisfied that all legal requirements have been met, the executor will be appointmed. The Surrogate’s Court will supervise the process.
We should touch upon the fact that in New York, there is a simplified probate process for estates that are valued at $50,000 or less.
During probate, final debts are paid by the executor, and the court determines the validity of the will. The administrator must also inventory the assets that comprise the estate and prepare them for distribution to the heirs.
If everything goes well, it will take at least seven or eight months for probate to run its course, and more complicated cases can take longer. No inheritances are distributed while the estate is being probated by the court.
Expenses accumulate during probate as well, and this reduces the value of the estate. Since probate is a public proceeding, anyone that is interested can access the records to get all the details.
Living Trust Administration
A revocable living trust is a very useful estate planning tool.
The administrator of a living trust is the trustee. If you establish this type of trust, you can act as the trustee while you are alive and well, so you would have complete control of the assets.
To account for the events that will take place after your passing, you would name a successor trustee, and your heirs would be the beneficiaries. When the time comes, the trustee would follow your instructions and distribute the assets to the inheritors.
These distributions would not be subject to the process of probate, so the drawbacks that we listed above would not enter the picture. This is just one of the benefits, but there are many others.
Who Can Act as a Trustee?
Whether it is a revocable living trust or another type of trust, any adult that is of sound mind that is willing to assume the role can potentially serve as a trustee.
This being stated, you have to consider possible longevity if you are considering someone that you know. Real or perceived favoritism and/or conflicts of interest should be taken into consideration as well. And of course, the trustee must bring significant financial acumen to the table.
Trust companies and the trust departments of banks offer trustee services as an alternative. If the trust is well-funded and you structure it to remain viable for an extended period of time, this can be the best choice.
When you go the professional route, there would be an experienced, savvy financial manager at the helm. Regulations would be followed to the letter, and the trustee would have a fiduciary duty to act in the best interests of the beneficiaries.
Take Action Today!
There is no universal estate plan that is right for everyone. The ideal choice will depend upon the circumstances, and this is why you should discuss your unique situation with a licensed attorney.
If you are ready to take that step, you can send us a message to request a consultation appointment, and we can be reached by phone at (585) 374-5210.