Even though you may have heard of trusts, you might not know a lot about these very important estate planning tools. When people first speak to an estate planning lawyer in New York, many of the questions they have involve trusts, what they do, and how they work.
First, it’s important to realize that there are many kinds of trusts in Rochester NY. Depending on your situation and your needs, your estate plan might use one or more of them.
So, how do you know if you need a trust? Your Rochester NY estate planning lawyer will give you detailed advice after speaking to you, but here are some questions you can ask yourself that will help you determine what trust is right for you.
Trusts in Rochester NY Common Questions
Trusts Question 1. Do you have young children?
A trust is a type of legal entity. The trust itself can own property, and when you create the trust you have to appoint someone who will manage the property the trust owns.
Because of this, trusts are excellent tools for parents who have young children. Young children cannot legally own property, and need someone else to manage it on their behalf. If you should die and leave your children an inheritance, the courts will have to appoint someone to manage that property for them until they become old enough.
But you don’t have to wait for the court to step in to do this. You can create a trust and name a trustee who will manage the trust property should the worst happen. Not only that, but you can place certain restrictions and limitations on the trust property, how the trustee uses it, and when the children will be able to take possession of it.
Trusts Question 2. Are you wealthy?
In some situations, creating one or more types of trusts can help you preserve as much of your property as possible when you leave an inheritance. Even though the federal estate tax exemption is $5.25 million per individual, people with property in excess of that amount will want to consider estate tax mitigation strategies. These often involve creating various types of irrevocable trusts to reduce the amount of your estate that would be subject to estate taxes.
Trusts Question 3. Are you leaving inheritances?
One of the most commonly used type of trust today is the revocable living trust. This trust is primarily designed to help your estate avoid probate and to provide for seamless management of your property if you become incapacitated. In New York, the individual property you leave behind will be transferred to new owners only after it goes through the probate process, and if you become incapacitated it often is necessary for a court appointed guardian to manage your affairs. These processes can be costly and lengthy, as well as emotionally difficult for your family. A revocable living trust helps you avoid probate and guardianship, and also can provide significant protections for your family in the process.