Can You Avoid Probate by Establishing a Revocable Living Trust in New York?
Probate refers to the legal process through which the validity of a deceased person’s will is proven in Surrogate’s Court, and their assets are distributed to their named beneficiaries after the estate’s debts are paid off. If the individual dies without a valid will, the estate will still be subject to Surrogate’s Court proceedings, but the assets must be handled in accordance with New York’s intestacy laws. This is called Administration. The probate (or administration) process can take anywhere from eight months to two years to complete and typically involves the Surrogate’s Court in the county where the deceased person was living.
During probate, the decedent’s will is presented to the court, and the appointed estate representative, or executor, is given the authority to act on the estate’s behalf. In administration proceedings, the appointed estate representative is called the Administrator. The process is a matter of public record, and in probate, the court oversees the proper execution of the will. Probate may not be necessary for small estates or if there are no probate assets; however, most estates will need to be probated to complete the transfer of assets from the decedent to their beneficiaries.
Many people wish to avoid the entire probate process, if possible. Several methods for achieving this goal can be implemented independently or concurrently as part of a comprehensive estate plan. A revocable living trust is one effective tool for probate avoidance. However, speaking with a skilled New York living trusts lawyer is essential to fully understand your options.
What Are the Benefits of Avoiding Probate?
People may choose to arrange their affairs so their loved ones can avoid probate because it reduces the hassle during what is likely to be an already difficult time. Probate can, unfortunately, be expensive and time-consuming. Court fees, lawyer costs, accountant’s fees, and other expenses can quickly add up and eat away at the estate’s total value, particularly if a will contest occurs. A quick and effortless transfer of assets to the estate’s beneficiaries without probate can reduce the potential for financial hardships for those you care about.
Avoiding probate also keeps your private affairs out of the public eye. During the probate process, all the details of your will and estate become public record, and anyone can access them. Preventing your estate from going through probate can be crucial if you would rather keep your personal business private and potentially prevent awkwardness or disagreements amongst family members who received larger or smaller inheritances than others.
How Does a Revocable Living Trust Work?
One popular method to avoid probate in New York is to set up a revocable living trust. As the name implies, this is a trust you create during your lifetime. As the grantor, you transfer your assets into the trust, and you must name a trustee to oversee the administration of these assets. Depending on the type of the trust and personal circumstances, many people will appoint themselves as trustee during their lifetime, but they may also designate a co-trustee who can manage the trust if they lose their capabilities due to old age, illness, or other issues. Upon the grantor’s passing, a successor trustee will manage the distribution of the trust’s assets to the designated beneficiaries without the need for probate.
What Are the Pros of a Revocable Living Trust?
Revocable living trusts are popular because they provide maximum flexibility for the grantor to manage their assets and make changes to the trust while they are alive. Some of the most appealing aspects of a revocable living trust are:
- Lets you keep control of your wealth: If the grantor names themselves as both the trustee and beneficiary, they retain complete control of the funds and property within the trust.
- Leaves room for changes: Unlike an irrevocable trust, which does not allow the grantor to make changes once it is created, a revocable trust can be dissolved or modified at any time. You can always update your beneficiaries, change your successor trustee, or dissolve the trust entirely if you desire.
- Protects property during your lifetime: If you prefer to have someone else with experience handling your funds, you can name them as the trustee or co-trustee and allow them to manage your financial affairs. Your legal advisor can also help you structure the trust so you can benefit from the assets within it for the rest of your life, even if you become incapacitated.
- Allows you to safeguard your heirs’ inheritances: You can place specific terms or limits on the distribution of funds to beneficiaries, such as preventing the transfer of assets until they are 21. By carefully structuring the trust, you may be able to protect heirs from making poor financial choices.
- Avoids disputes and will contests: If all your estate’s assets are transferred to beneficiaries under the terms of a revocable trust, there is little room for legal challenges and other disagreements between heirs.
Are There Any Downsides to a Revocable Living Trust?
While revocable living trusts are a valuable estate planning tool, they may not be suitable for everyone. Trusts help you avoid probate because all assets within the trust are no longer considered part of your estate. However, if you do not transfer all of your assets into the trust prior to your passing, the unincluded portion of your estate will still be subject to probate.
Tax planning is another vital part of the estate planning process. However, revocable living trusts do not help reduce the tax burden for you or your heirs because you still have control over the assets. If you want to minimize the impact of taxes, you may wish to consider irrevocable trusts or other financial vehicles instead.
It’s essential to consult with a financial advisor or knowledgeable estate planning lawyer before deciding to create a revocable living trust. You should discuss the costs of creating and maintaining the trust and determine what effect it could have on your eligibility for Medicaid or other means-tested programs. You can also explore different methods for avoiding probate that may suit your circumstances better. Keep in mind that while avoiding probate is a goal for some, it may not be necessary or cost-effective for every situation.
How Can an Experienced Trusts Lawyer Help You Make the Transfer of Your Estate to Your Heirs Easier and More Efficient?
If you plan in advance, avoiding probate by utilizing available strategies to distribute your wealth effectively is possible. Ultimately, the decision to create a revocable living trust should be based on your individual circumstances and objectives. The experienced attorneys at the Law Offices of Vlad Portnoy, P.C. can provide the personalized guidance you need to reach your estate planning goals so you can meet the future with confidence. Contact our law firm today at 516-518-8586 to schedule an in-depth consultation.