Only Set Up a Trust If It Will Simplify Your Estate Plan

The best reasons to establish a trust are if you are rich or if your house is the only thing stopping you from being poor. If you own millions of dollars’ worth of property, your estate will be subject to estate tax during probate, pursuant to New York law. Another reason that people establish trusts to protect their assets is if the grantor owns a house but does not have long-term care insurance. The grantor may need to enter a nursing home as a Medicaid beneficiary, but if the grantor does this, then Medicaid will attempt to reimburse itself for the money it spent on your care by filing a claim with your estate, and the personal representative may need to sell the house to satisfy the claim. This means that the heirs do not inherit the house, and the amount of money they inherit is substantially less than the value of the house. For any other purposes, trusts are optional. You can fund your grandchildren’s college education by setting up a trust, but you can just as easily do it by giving cash gifts to your grandchildren or their parents. There are even situations where establishing a trust can cause more problems than it solves. If you are considering establishing a trust, then instead of falling for the hype about how everyone needs a trust, you should contact a Bronx estate planning lawyer.

Trusts Are the Most Bothersome Non-Probate Asset

The main advantage of a trust is that it is a non-probate asset. This means that it can begin dispensing payments to the beneficiaries as soon as the grantor dies, or even while the grantor is still alive. In other words, it does not become part of the estate that the court can supervise and that creditors and the IRS can take bites out of.

Of course, establishing a trust requires a considerable amount of money and paperwork. There are other ways to keep assets out of probate, and they are cheaper and simpler. For example, life insurance payouts do not go through probate; they go directly to the beneficiary. If you name the trust as the beneficiary of the policy, you are introducing an additional step before your family gets the money. Likewise, you can name a family member as a payable on death beneficiary of a bank account; when you die, the account will pass directly to the beneficiary, without going through probate.

Personal Property Will Not Tank Your Probate Case

Trusts are for protecting big things, like real estate properties and large sums of money. Personal property is rarely valuable enough for it to be worth the hassle of transferring it to a trust, nor is it likely to complicate your probate case.

Schedule a Confidential Consultation With a Bronx Estate Planning Attorney

A probate lawyer can help you be strategic about establishing a trust to protect your assets.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Source:

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