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When people think about estate planning, they often start with a will. However, for many New Yorkers (especially those with real estate, family-owned businesses, or growing financial assets), a trust can offer far more control, privacy, and long-term security.
At the Law Offices of Vlad Portnoy P.C., we help New Yorkers make informed decisions about their future. Whether you’re focused on minimizing estate taxes, protecting loved ones, or avoiding unnecessary court involvement, our experienced team will help you understand how a trust fits into your broader estate planning strategy.
Let’s walk through what a trust actually is, the different types you might consider, and the specific benefits of a trust if you live in New York City.
What Is a Trust?
A trust is a legal arrangement that lets a person (the “grantor”) transfer ownership of their assets to a third party (the “trustee”) to manage them on behalf of one or more beneficiaries. The trust document spells out how these assets should be used during the grantor’s life and distributed after death.
Unlike a will, a trust can go into effect while you’re still alive and can even continue for years after your passing. Some trusts are revocable, which means you can make changes. Others are irrevocable, which offer added tax advantages but generally can’t be changed once created.
Types of Trusts Used in Estate Planning
There are many types of trusts, but the most common in estate planning include:
Revocable Trust
This type lets you retain control of your trust assets during your lifetime. You can modify or cancel it as your needs change. It’s a popular tool for avoiding probate and preparing for incapacity.
Irrevocable Trust
With an irrevocable trust, you give up control of the assets you place in the trust. In return, you may gain tax benefits, reduce your taxable estate, and protect certain assets from future liabilities.
Special Needs Trust
This type of trust allows you to set aside financial resources for a loved one with a disability, while preserving their eligibility for government benefits such as Medicaid or Supplemental Security Income (SSI).
Charitable Trust
A charitable trust lets you support causes you care about while also potentially reducing estate taxes and offering income tax deductions. It’s often used as part of long-term giving strategies.
Each type serves a different purpose. Working with an estate planning attorney and, where necessary, a tax advisor can help you select the right trust for your situation.
The Benefits of a Trust in NYC
So, what are the benefits of a trust, especially in a city like New York? Let’s break it down:
1. Avoiding Probate
One of the most common reasons people create trusts is to avoid probate. When someone passes away with only a will (or with no estate plan at all), their estate often goes through probate court.
This can take months or even years, especially in New York’s busy court system. Additionally, there are many fees associated with probate in the state of New York.
Trusts help bypass this expensive and lengthy process, allowing your trust assets to be distributed more efficiently and privately.
2. Maintain Confidentiality
Unlike wills, which become public record once filed, trust arrangements typically remain private. That can be helpful for those who value discretion regarding their financial resources, family dynamics, or charitable giving.
3. Minimize Estate Taxes
New York has its own state-level estate tax, and high-net-worth families may also face federal estate taxes (NY Department of Taxation & Finance). Certain types of irrevocable trusts can help minimize estate taxes by moving property out of the taxable estate, especially when set up early and structured correctly.
4. Plan for Incapacity
Trusts are intended to guide what happens after death, but they’re also useful in life. Suppose you’re ever unable to manage your finances due to illness or injury. In that case, a revocable trust gives your successor trustee the legal authority to step in and handle your trust account, pay bills, and manage assets without needing court intervention.
5. Preserve Wealth for Future Generations
A trust can allow you to set guidelines for asset distribution to children or grandchildren, rather than leaving everything outright. For example, you might allow distributions at certain ages or for specific purposes like education, home buying, or health expenses.
6. Asset Protection
While a revocable trust doesn’t shield your assets from creditors, some irrevocable trusts can. In certain cases, transferring assets to an irrevocable trust may provide a layer of protection from future lawsuits or long-term care costs, though this must be done well in advance of any claim or financial issue.
7. Manage Complex Assets
If you own rental properties, family businesses, or substantial bank accounts, trusts can simplify the process of transferring assets and help avoid joint ownership issues or future legal disputes.
Who Should Consider a Trust?
You don’t need to be a millionaire to benefit from a trust. Anyone who owns real estate, has a blended family, cares for a dependent loved one, or wants more control over how assets are distributed should consider including a trust in their estate planning.
A trust can also be a smart move for those looking to reduce the burden on surviving family members, prevent disputes, and leave a more organized legacy.
Working with an estate planning attorney can give you clarity on whether a trust makes sense for your goals. They can help draft the right legal documents, explain how state laws apply to your situation, and walk you through funding your trust, whether you’re adding real estate, bank accounts, or other financial assets.
Let’s Put Your Estate Wishes Into Action
Estate planning isn’t just about putting documents in place—it’s about protecting what you’ve built and making things easier for the people you care about.
If you’d like to learn more about how a trust might benefit you, the Law Offices of Vlad Portnoy P.C. is here to help. With extensive experience in New York estate planning, we provide clear guidance and custom strategies to help you protect your assets, minimize estate taxes, and support your family’s future.
Whether you’re starting from scratch or refining an existing plan, we’ll walk you through your options and help you move forward.
