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Trust Planning


What is a Trust?

When you hear the words “trust” or “trust fund,” the first image that may come to mind is a wealthy family in a houses in Oyster Bay Cove, Southampton, and West Palm Beach, Florida with inherited wealth passed down from generation to generation. However, you don't have to be live in East Egg or be a member of the Guggenheim family to set up and benefit from a trust.

A Trust is an agreement created by a Grantor that appoints a Trustee to manage and hold assets for the benefit of a Beneficiary. The roles of these three main parties are:

  • Grantor: creates and initially funds the trust with assets for the benefit of the beneficiary;
  • Trustee: a person who manages the agreement and holds title to assets and carries out its provisions.  The Trustee is a fiduciary and must act in the best interest of all beneficiaries; and
  • Beneficiary: Person or entity/charity that benefits from Trust.

A trust greatly expands your options when it comes to managing your assets, whether you're trying to shield your wealth from taxes or pass it on to your children. 

There are many types of Trusts that mainly fall into two very broad categories: 

Revocable vs. irrevocable trusts

People often think of a trust as an alternative to a will — a way of passing on wealth after one's death. However, you can also create trust and pass on assets during your lifetime through a revocable trust.

Also called a living trust, a revocable trust allows you to retain control of the assets during your lifetime, yet can be altered and even dissolved so long as you're alive.

The downside is that while a revocable trust will usually keep your assets out of probate if you were to die, if you have a large estate, you may not be able to escape estate taxes. 

  • Revocable Living Trust:  is a legal document created and remains in existence only during a Grantor's life.  It is designed to hold ownership of assets and contains specific instructions for the use and preservation of assets.  Its provisions can be changed at any time during the Grantor's life (thus "revocable").  It typically covers three distinct phases: i) during the Grantor's life; ii) during the Grantor's possible incapacitation, and iii) what happens after the Grantor's death.  At the Grantor's death, all assets properly held in a Revocable Living Trust avoid probate. Because this Trust is fully subject to being revoked or amended during the Grantor's life, this type of Trust does not avoid taxes or provide asset protection. After the Grantor dies, a Revocable Living Trust converts in whole or part to an Irrevocable Trust.
  • Irrevocable Trust:  a type of Trust that typically cannot be changed by the Grantor after it is created.  This Trust holds assets outside of the Grantor's estate so it is generally used for asset/creditor protection and to avoid estate and other taxes. There are numerous types of irrevocable trusts depending on the specific needs and concerns of the Grantor and beneficiaries. an irrevocable trust cannot be changed once it has been created and you give up control of your assets that you put into it. But an irrevocable trust has a key advantage in that it can protect beneficiaries from probate and estate taxes. Those setting up an irrevocable trust must also.

Assets held in trust do not go through the probate process saving your loved ones time and money.

Here's how trusts might benefit you, especially in the age of coronavirus.

Maintain Privacy

You may not be aware a Will and Testament will need to be probated in New York Surrogates court, which is a matter of public record.  If you leave a Will that goes to probate, every bequest (amount and to whom) is public record for your friends, neighbors, and even unscrupulous individuals masking as financial advisers to see.   With a Trust, all assets properly funded in the trust are administered through the estate discreetly.  In a conservatorship/guardianship hearing, all your private affairs may be discussed in open court. A Trust can protect your privacy in most situations. 

A Pour-Over Will is created with a Trust and only assets that are not properly funded in the Trust will need to be probated.

Avoid Unnecessary Taxes and Expenses

You want to ensure that your assets are not unnecessarily absorbed by state or federal taxes.  Also by avoiding probate and the court's appointment of a professional executor/personal representative who bills hourly for managing or administering your estate, you can help streamline both the timeline and cost associated with estate administration.  

Asset/Creditor Protection

Because of the flexibility inherent in Trust-based planning, you are able to design protection plans that insulate assets from creditors or lawsuits.  There are different degrees of protection available based on the extent to which you are willing to cede control of those assets

Maintain Control

Assets passing through a Trust may be less susceptible to the sort of challenges that may occur with a will transfer.   It is much easier to segregate assets so there is no confusion (i.e., real estate in one trust and corporate ownership interests in another). Further, the Grantor can determine when and how distributions are made to beneficiaries including condition-based distributions, such as at specific ages or certain events (education, graduation, home purchase, marriage, starting a business)

Special Needs/Comprehensive Incapacity/Disability Planning

Trusts permit a Grantor to provide protection for numerous situations including any family members with special needs as well as his/her own incapacity and disability.   A living trust can be a mechanism for caring for you and your property in the event of your physical or mental disability, provided it is adequately funded and you named a competent and trustworthy Trustee. 

Our office working often in tandem with a  financial adviser can provide you with expert advice about whether a trust could be a useful component in your long-term financial plan. Take the next step and contact us online or at 212-233-0666 to set up either a virtual consultation from the privacy of your home or at my office. From there, you will be provided with access to a secure client portal where we can guarantee protecting lawyer-client confidentiality. Through the secure portal, you can review documents that I have prepared for you, upload a document for my review and communicate with me quickly and easily. 


Schedule a Consultation

When you're ready to take the next step you can begin the process online. If you'd like to schedule a free, no-obligation consultation in my office you can call 24 hours a day, 7 days a week at 212-233-0666.