Trusts & Estates FAQs
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Why should I execute a Will?
The most important reason for executing a Will is that you get to determine who enjoys your property after your death. If you die without a Will, state law prescribes who will receive your property. By executing a Will, you can also personally select your fiduciaries; that is, the Executor of your estate, the Trustees of any trusts you may have created in your Will, and the Guardian of your minor children. In addition, by executing a Will, you can create trusts for some or all of the persons receiving property under your Will.
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What kinds of property are not controlled by my Will?
Non-probate assets such as joint bank accounts, life insurance proceeds, "in trust for" accounts, "pay on death" accounts, "transfer on death" brokerage accounts and any other assets with a designated beneficiary do not pass under your Will. Generally, these assets pass outside your Will to some designated beneficiary or to a survivor. Since these assets do not pass under your Will, they cannot be used to carry out any tax planning you may have incorporated into your Will or any dispositions you make in your Will.
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When should I create an Estate Plan?
If you've never created an estate plan, now is the time. Everyone can benefit from estate planning, regardless of personal income or net worth. Estate planning deals with your concerns about the future and provides peace of mind by designating strategies for circumstances such as: Avoiding probate or the dissipation of assets due to estate taxes; retaining control of assets if becoming disabled; safeguarding yourself and your family; ensuring protection for any minor children.
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How Often Should I Review My Estate Plan?
If you already have an estate plan but haven't reviewed it in over three years, now is the time. Life changes impact estate planning. Even if you can't foresee how changes in your life might affect your estate planning documents, a review is essential to ensuring your wishes are carried out. The Estate Planning Practice at Abrams Fensterman understands the importance of keeping your plan current. We invite clients for a complimentary review three (3) years following the execution of their estate planning documents.
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What is a Revocable Living Trust?
While the revocable trust ("living trust") ultimately achieves the same objectives after death as a Will, it provides additional benefits: lifetime planning. A revocable trust is a planning tool that allows the person creating it, known as the Grantor, to control and utilize the assets placed in the trust. A revocable trust is effective immediately, not only after death.
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What is Probate?
Probate is the legal process by which the Surrogate's Court validates the Will and authorizes the nominated Executor to act on behalf of the estate. A probate proceeding is required to prove the validity of the Will, hear challenges to the Will or to the appointment of the Executor, settle the affairs of the estate, resolve claims of creditors, adjudicate the interests of heirs and other parties, and retitle the assets as the Will directs. This process can be costly and time consuming, and results in delays distributing assets to the heirs. Probate proceedings are also public, which means everything in the Court's file, including the names and addresses of family members and beneficiaries, and a list of assets and their values, is accessible to the general public.
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What are some reasons for creating a Revocable Living Trust?
A revocable living trust not only achieves the same objectives as a Will, it is effective immediately while you are alive. A living trust allows the Grantor an opportunity to manage his or her assets while alive, and usually provides directives for who will manage the assets if the Grantor becomes incapacitated. Further, there is no need to file a probate proceeding with the court. The distribution of assets begins without any interruption or delay, which also saves considerable time and money. Since the trust is not filed with the court, it is less likely to be challenged and remains private. A revocable trust can be tailored to the Grantor's specific needs. For example, it can provide protection for children too young to inherit or disabled beneficiaries.
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Do I have to pay a tax if I make a gift?
Gift tax is generally paid by the donor. At the federal level, there is an exemption from gift tax equal to the estate tax exemption (currently, $5,000,000). This exemption may be used against gifts made during life or applied against assets in your estate at death. There is currently no gift tax at the New York State level.