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​New York City Trust Attorneys

The establishment of a trust in your financial and estate planning merits careful consideration. There is a common misconception that trusts are only for the wealthiest individuals, leading many to overlook how a trust could benefit their own financial management and estate planning. Trusts serve various purposes and can be a valuable tool for individuals at different wealth levels and life stages. Understanding the potential advantages of a trust can help you make an informed decision about whether implementing a trust can further your personal and financial goals. At Holm & O’Hara LLP, our team of experienced trusts and estates lawyers is dedicated to helping you understand and utilize trusts effectively as part of your estate planning strategy.

What is a Trust?

A trust is much more than a comparatively straightforward legal document such as a deed or advance health care directive. A trust establishes a fiduciary relationship in which a designated individual or financial institution, known as the trustee, is entrusted with holding, managing, and distributing specified assets or property for the benefit of the named beneficiaries pursuant to the terms of the trust. The terms of a trust often vary greatly subject to the individual preferences and philosophy of the grantor and the age and capacity of the beneficiaries.

The decision to place assets in a trust, rather than retaining direct ownership or directly bequeathing them to heirs, may be motivated by several key considerations:

  • Maintaining Control: A trust allows you to maintain a degree of control over your assets and how they are used or distributed, both during your lifetime and after your death.
  • Asset Protection: Trusts can offer a layer of protection for your assets from creditors or legal complications.
  • Privacy: Unlike other forms of asset transfers, trusts can offer privacy regarding the details of asset distribution.
  • Tax Efficiency: Trusts can be structured to minimize the tax burden on an estate, potentially resulting in significant tax savings.
  • Avoid Probate: Trusts streamline the distribution of assets after death to designated beneficiaries by avoiding the time, expense, and uncertainty of probate.

Types of Trusts

Trusts are an integral part of estate planning, offering various structures to suit different needs. There are many nuanced variations of trusts.

Revocable Trusts vs. Irrevocable Trusts

Revocable Trusts (also known as Living Trusts or Grantor Trusts) offer a great deal of flexibility, allowing the grantor (creator) to easily make changes or terminate the trust during their lifetime. These trusts:

  • Act as an extension of the grantor, who often serves as initial trustee and manages the trust assets while living and competent.
  • Function as a semi-private substitute for a last will and testament, facilitating property transfer after death without the need for probate.
  • Enable trustees to manage and transfer real property located in different states without the need for multiple probate proceedings.
  • Become irrevocable upon the grantor’s death, ensuring the creator’s wishes can’t be changed and must be carried out.

Irrevocable Trusts are typically fixed upon creation and cannot be easily amended or revoked. These may include trusts created for Medicaid planning, life insurance policies, and special needs trusts created for personal injury settlements. Irrevocable trusts:

  • Operate as a separate entity, with their own tax ID and independent tax filings.
  • Are used for transferring assets out of the creator’s direct control for estate tax savings or asset protection.
  • Serve as a means for making strategic gifts or charitable donations.
  • Help shield trust assets from being wasted by beneficiaries or creditors’ claims.

Testamentary Trusts

This type of trust is created after a person passes as it is created pursuant to the terms of such person’s last will and testament. Testamentary trusts are ideal for managing and distributing estate assets according to the testator’s/grantor’s wishes while ensuring that some control remains over the assets, even after death. It can protect minors from inheriting too much money at too young an age and can shield beneficiaries form irresponsible spending, creditors, or loss of governmental benefits. These trusts can assist in reducing gift and estate tax liabilities.

Irrevocable Life Insurance Trusts (ILIT)

Irrevocable Life Insurance Trusts are ​specifically designed to hold title to life insurance policies, with the aim of excluding the value of such policies from the grantor’s taxable estate upon death. This can result in significant estate tax savings.

Charitable Remainder Unitrusts (CRUT)

CRUTs are a form of charitable trust that allows the grantor to designate one or more beneficiaries to receive a stream of income for life or a set term, after which the remainder of the trust assets goes to designated charity or charities. This structure can offer estate tax savings for the grantor estate, lifetime income for the beneficiaries, and support for the decedent’s preferred charitable causes.

Grantor-Retained Annuity Trusts (GRAT)

GRATs allow a grantor to place assets in a trust and receive a fixed annuity payment for a certain period. Once this period ends, the remaining assets in the trust pass to the beneficiaries, often with favorable tax implications, such as reduced gift taxes.

Why Trusts Should Be Included in Your Estate Plan

Trusts can be a powerful component of a comprehensive estate plan, offering significant benefits such as asset protection, tax optimization, and ensuring that your assets are managed and distributed in accordance with your intentions. They are versatile instruments that can be tailored for each situation, including making provisions for charitable giving, providing for minors or beneficiaries with special needs, and managing complex assets such as businesses or real estate holdings.

The Role of a Trusted Attorney in Estate Planning

An experienced estate planning lawyer is pivotal in navigating the complexities of setting up a trust and ensuring its proper administration. Holm & O’Hara LLP’s attorneys have decades of experience and provide personalized guidance to select and establish the right trust that aligns with your specific needs, whether your priorities are asset protection, tax planning, caring for your loved ones, or a combination of all three. Our meticulous approach to drafting and managing trusts ensures that every aspect of your trust is legally compliant and effectively administered.

Skilled counsel is especially invaluable when addressing the legal and tax intricacies inherent in estate planning and trust administration. With our comprehensive legal support, you can have confidence that your trust will be efficiently structured and maintained to fulfill your objectives, both now and in the future.

In addition to trusts, our estate planning services encompass a full spectrum of legal tools to provide a well-rounded estate plan designed to achieve your goals and leave a lasting legacy. We assist with drafting critical documents to complete your estate plan including a last will and testament, durable power of attorney, living will, health care proxy, and appointment of agent for the disposition of remains. These elements work in concert to ensure comprehensive management of your financial, legal, and health care decisions.

Work with a New York City Trusts and Estates Attorney Today

At Holm & O’Hara LLP, we approach estate matters with personalized attention and strategic planning. Our trusts and estates attorneys are equipped to handle the unique challenges and opportunities presented by New York’s legal landscape, providing valuable advice and personalized service. To speak with a dedicated trusts and estates lawyer in New York City, contact us today to schedule a consultation and determine whether a trust can fit into your estate plan and provide long-term benefits for you and your beneficiaries.

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