2012-08-17 / Columnists

Spotlight on Elderlaw

Beyond The Basics: Planning With Trusts
Commentary By Nancy C. Brady, RN, Esq. And Linda Faith Marshak, Esq.

Basic” estate planning documents include Power of Attorney, Health Care Proxy, and Last Will and Testament. The Power of Attorney and Health Care Proxy documents are useful during one’s life, to appoint representatives for financial and medical decision-making. A Last Will and Testament (Will) is documentation of how the individual wants assets to pass after his or her death. The Power of Attorney and Health Care proxy have no legal effect after one’s death, as opposed to the Will, which is only in effect after one’s death.

If a person dies with assets in his name alone, with no joint owner or beneficiary designation, that asset (whether financial, real estate, or personal property) cannot be given away without some surrogate court involvement. The process of determining the person or persons to inherit such property is known as probate (when a person dies with a Will in place), or the administration process (when no Will has been done). In New York State, if a person passes without a Will in place (intestate) there is a statute that delineates the order of priority for family members who should inherit (distributees). The process involves determining the individual’s family tree, notification of all persons involved who would have inherited from the deceased if there were no Will, and in some cases, giving interested parties the right to object to the terms of the Will. In the situation where there was no Will completed by the deceased, if that person died with assets in his name alone with no joint owner or beneficiary named, surrogate’s court involvement is still required, to determine family members entitled to inherit the deceased’s assets.

Often, for different reasons, a person may want to leave assets to family or friends in percentages or amounts that differ from the New York State intestacy statute, and thereby “disinherit” partially or in full. The reasons people choose to alter the percentages or amounts, or disinherit persons vary. In such cases, the use of a Trust can accomplish the goal of leaving one’s estate in a different way than outlined in the statute, or to avoid the delay and expense involved with court intervention.

In our practice, Trusts are employed as extremely useful tools in executing particular estate plans tailored to each of our client’s specific needs based on their unique circumstances. A Trust is a legal arrangement in which one party (the Trustee) holds and manages property for the benefit of another party (the Beneficiary), according to the terms of the arrangement.

Different types of Trusts can be used for various purposes such as avoiding the costs and delays of probate, preserving assets in the event of a long-term illness, tax planning, supplementing public benefits, planning for disabled children, among other purposes.

Our clients frequently choose to establish Irrevocable Trusts to avoid probate, and to protect assets and real estate from the costs of nursing home care. One of the advantages of the irrevocable trust is that upon the Grantor’s death, remaining Trust assets will be distributed directly to named beneficiaries without the costs, problems, publicity, or delays of probate. Another important advantage of the Irrevocable Trust is that assets retitled in the name of one’s Irrevocable Trust will be protected from future costs of nursing home care.

Since one’s home is often the most valuable asset he or she owns, engaging in the type of trust planning described in this article is often extremely beneficial to the financial well-being of our clients and their families.

The attorneys can be contacted at 1-718- 738-8500. Please feel free to call to inquire about attending one of our upcoming seminars.

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