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Can You Use New York Trusts for Asset Protection?

Davidov Law Group

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How Trusts Can Help Protect Your Assets

Having a solid estate plan can bring relief in your later years by providing peace of mind that your wishes are clearly stated and that those left behind will know what to expect. While a good estate plan has several parts and may make use of different tools, the trust is one possibility that is often overlooked but can be very helpful in many cases. Keep reading to find out how you can use a trust for asset protection.

What Is a Trust?

A trust is an estate planning tool that lets you transfer assets to another person. When you place the assets in the trust, you also designate a beneficiary — or multiple beneficiaries — as well as a trustee. The trustee is responsible for managing the trust and ensuring that the assets are properly distributed to the beneficiaries according to the terms of the trust. The person who creates the trust is called the trustor.

There are a few different types of trusts, but most people have either revocable or irrevocable trusts. An irrevocable trust is one that can’t be changed after it has been set up. It gets its name from the fact that the trustor can’t change their mind — or revoke the terms. A revocable trust is one that can be changed up until the trustor’s death. These trusts are often more popular because they allow for more flexibility.

You may also hear people use the terms living trust or testamentary trust. A living trust is one that is created while the trustor is still alive. A testamentary trust is one that is set up after the trustor’s death through instructions left in the will.

Using Trusts for Asset Protection

Many people believe that the best way to leave their assets to their children, grandchildren, or other beneficiaries is to outline their wishes in a will. However, wills can be more cumbersome, are harder to change, and can take a long time to go through probate. Using a trust as part of your overall estate plan can give you more flexibility and freedom in ensuring that your assets are distributed as you wish.

Benefits of Using Trusts

There are many benefits to using trusts for asset protection as part of your estate plan, and we’ve outlined some of the most important ones below. If you’re not sure whether a trust is the right option for you or you have questions about how a trust can help you protect your assets, talking with an estate planning attorney at Davidov Law Group is a good first step.

Bypassing Probate

One of the biggest advantages using a trust provides is that assets in a trust don’t have to go through probate. Assets that are set to be dispersed through a will can be held up for months — or even years if the will is contested — which can create problems if those assets are needed quickly to pay for a funeral or other expenses. Bypassing probate also means there are no worries about anyone trying to challenge how you’ve distributed your assets.

Ability to Change Beneficiaries

While it is possible to change how your assets are distributed in a will, it requires creating an entirely new will every time. If you work with an estate planning attorney to set up the right kind of trust, you can have more flexibility in changing the beneficiary without having to change your entire estate plan or draft new documents. Changing the beneficiary — whether you are leaving the assets to someone completely different or are adding beneficiaries — is a simple and easy process.

More Control Over How Your Assets Are Distributed

If you die without an estate plan, your assets automatically pass to a relative, such as a spouse or an adult child, depending on what living family members you have. If you have no family, the estate reverts back to the state of New York. For those who want to ensure that their assets go to a specific place — such as a charity — or person, a trust allows them to make those decisions early on and set everything up so that there’s no confusion later on.

Lower Taxes

Many people choose to use trusts as a way to protect their assets from estate or gift taxes. When done properly, a trust can make a significant difference in how taxes are handled on your estate and assets, which can preserve more of your wealth and assets for your children and other beneficiaries. However, it’s important to recognize that tax laws are complex. If you are planning on using a trust because of the lower tax implications, you need to work with an experienced estate planning attorney who understands which type of trust is your best option and can help you set things up correctly.

Ensure Your Estate Plan Meets Your Needs

While it may be tempting to try to create an estate plan on your own, it’s important to talk about your wishes and the best way to ensure they are carried out with an estate planning attorney. These lawyers have extensive experience helping clients understand their options, and they know what questions to ask and what potential challenges may come up to plan for.
At Davidov Law Group, we understand how important it is for you to know what’s going to happen to your assets after your death. We can help you create an estate plan that works for your situation and let you know if a trust may be applicable and beneficial for you. Call our New York office at 516-928-6594 to speak to a member of our team to schedule a consultation to discuss your options.

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What is a Will, and Why is it Important?

A will is a relatively straightforward document that states how you wish to handle things of importance upon your death. Items such as who will receive assets or property or become guardians of your children are included in a will.

Another critical aspect of a will is who will oversee your affairs and handle them according to your wishes after you are gone. The person appointed with this responsibility is the executor. An executor is a critical role and should not be taken lightly. It is imperative to choose someone for this role who is highly trustworthy, efficient, and able to manage your affairs as you see fit. They may need to be resourceful, as well, and reach out to attorneys or accountants as necessary to ensure your assets are handled effectively. You can also name a secondary executor to step in should the primary executor not be able to carry out the duties when it comes time.

Creating a will is essential to ensure your wishes are communicated and carried out upon your death. Without a will in place, the State of New York will need to determine how to distribute your assets and who will become guardians of your minor children should the other parent not be able to care for them.

What Ensures a Will is Legal in New York?

For a will to be enforceable, it must be written, dated, and signed by you and two witnesses. It is best practice to have your witnesses add their addresses below their signatures. The witnesses don’t need to be aware of the information in the will, just that it is your will, and they are signing as witnesses. From a legal standpoint, a handwritten will without witnesses is legal in New York but is not recommended, so it is best to take the extra step of having two witnesses.

Can I Make Changes to My Original Will Once Completed?

The best way to achieve changes to an existing will is to create a new one. By doing so, you can ensure that the process is handled effectively via the help of a trusted attorney and that your new will is enforceable and complete.

Common reasons to change a will in the future may be that tax or estate laws have changed in your state, relationship status has changed, or you have acquired significant assets since the creation of the original will.

A will can not be changed or revoked simply by crossing out verbiage in the document. You can have a codicil to a will drafted, essentially an addendum. However, the best practice is creating a new will to reflect the changes.

Do Lawyers Keep Original Copies of Wills in New York?

A lawyer may choose to keep your will on file and in a safe place but is not required to do so in New York. It is an excellent option to have an original on file with your lawyer as they typically have fireproof options for original documents, and they can assist the executor upon the client’s death in the initial steps based on the original will.

Your lawyer may deliver you an original copy of your will for you to oversee. The following section will discuss the best and worst places to store your will.

Where Should I Store My Will?

As you can imagine, a will is an essential document to create and store so that nothing happens to it. In most cases, New York probate court will require the original document rather than copies of the will, so you must be able to present the original will when necessary.

If you have a waterproof and fireproof safe deposit box at home, you can place the document there.

If you work with an estate attorney that offers storage of your will in the attorney’s office, this is a great option. They are familiar with you and your wishes as they helped you create your will, so they can easily navigate the transition and guide your executor through the critical steps necessary for your final wishes after your death.

In the state of New York, you also have the option to store your original will with the Surrogate Court. Many find this option appealing because the fees associated with storage are minimal, and as the will is filed with the probate court, there is no room for error upon your death or mistakes regarding your not having a will in place. The drawback to this option is that if you need to make changes to the original wills or create a new will, you may be charged additional fees to retrieve and replace your existing one.

Regardless of where your will is stored, it is crucial to let the executor know where they can access it. They will need to easily access it upon your death to carry out their responsibilities without trying to hunt down a secret hiding place that was not communicated to them and risk issues with your estate.

Do I Need a Lawyer to Create a Will?

The simple answer is no, but it may not be the best approach to handle such an important document alone. An experienced estate lawyer can ensure that you have included all pertinent details, have planned accordingly, and have created a legally enforceable will. After all, you have spent more of your life working towards building your estate, so let’s work together in drafting your estate planning documents to ensure that hard work is protected when it matters the most to your family.

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Handwritten Wills: What You Need to Know

It’s true that you don’t get to take your possessions with you when you die, but you can make sure they end up where you want them to go. When you create an estate plan, you get to decide who will be beneficiaries of your estate and how your assets will be distributed. And an important part of an estate plan is your last will and testament. Find out what the rules are for how wills are created and under what circumstances a handwritten will is valid in the state of New York.

Is a Handwritten Will a Valid Will in New York?

In the state of New York, a will must be dated and signed by the testator. The testator must be at least 18 years old and of sound mind. The will must also be properly signed by two witnesses. If all of these are true and the will is simply handwritten instead of typed up, the will is legally valid as long as it is clear and legible.

A will that is handwritten but is not properly witnessed is called a holographic will. In general, a holographic will is not legally valid in the state of New York except in very specific circumstances, discussed below. Even if a holographic will meets those criteria, it may have a higher chance of being challenged during probate.

Rules for Holographic Wills

A holographic will is only legally valid within New York if one of the three situations apply:

● The testator is a member of the U.S. armed forces and is in active duty service during a war or other armed conflict. “War” has a loose legal definition here and can be either declared or undeclared, but armed forces have to be specifically engaged in the conflict for this to apply.
● The testator is not a military member but is someone who “serves with or accompanies” armed forces engaged in an active military conflict.
● The testator is a “mariner while at sea.”

There have been a few other specific cases where the New York probate courts have upheld a holographic will as valid, but these are rare, and the majority of holographic wills are deemed invalid. If you’re not sure if your situation meets the definition of one of the above criteria for a holographic will to be accepted, talk with a wills attorney who can provide more information.

What Happens If a Will Is Deemed Invalid?

If a will is set aside by the probate courts because it is invalid, there are generally two options. Either the estate is distributed according to the instructions in a previous will, or the person is declared intestate — meaning having died without a will — and the state laws for distributing assets go into effect. The state of New York has specific rules for how intestate estates are distributed:

● If there is a surviving spouse but no children, everything in the estate passes to the spouse.
● If there is a spouse and children, the spouse gets the first $50,000 of the estate and half of what remains. The other half is distributed among the deceased’s legal children.
● If there are children but no spouse, the children inherit the entire estate to be divided equally between them.
● If the person dies without a spouse or children but has immediate family members, the deceased’s parents and/or siblings inherit the estate, depending on what family is there.
● If the person dies with no living relatives, the estate reverts back to the state of New York.

Keep in mind that for these guidelines, legal children means that it is the person’s biological children or adopted children. If the child was born outside the marriage, legal paternity must have been established for the child to inherit.

Working With an Estate Planning Attorney

To give your will the best chance of going through probate without an issue or being challenged, it’s best to work with an estate planning attorney who can help you draft a will and ensure that it meets all the legal requirements. An attorney can help you understand what laws apply to those you name as your beneficiaries. For example, in New York, you must leave some of your estate to a living spouse and any minor children. If you don’t, the will can be set aside because the law requires that you maintain adequate provisions for dependents.

A lawyer can also help you understand how your will functions as part of your larger estate plan and whether other tools, such as establishing a trust, may be a better option to handle some of your assets. A will is a valuable tool, but it does have its drawbacks. For example, the probate process can be quite lengthy, so if there is an immediate need for property or funds to be used directly after your death, these may be inaccessible for several months if they are in a will as opposed to a trust.

There are many reasons someone may consider a handwritten will, but it’s important to understand that trying to create a will on your own without following the proper guidelines can mean that your will ends up being thrown out and your estate may not be distributed according to your wishes. If you need to create a will or want to know how to alter or rescind a will that is already made, contact Davidov Law Group at (516) 928-6594. A member of our team can help you schedule a consultation so you can understand what you need to ensure your will is valid and how to protect your estate.

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What is a Spousal Lifetime Access Trust?

When creating an estate plan, one of the most appealing characteristics is ensuring their loved ones are cared for. The second common reason is to help alleviate tax implications for themselves or their loved ones.

Several options are available for families with all different levels of estates to choose how they wish to protect and disperse their assets. A Spousal Lifetime Access Trust (SLAT) is one of the great tools available to couples to add to their estate plan.

A SLAT is an irrevocable trust where one spouse makes a gift into the trust to benefit their partner, and vice versa. Some couples choose to create a SLAT for each other, and in some cases, other family members may be included in the SLAT.

Creating a SLAT allows either spouse to gift assets into the trust while removing those assets from the combined estate, thereby lessening the tax implications.

How Does a SLAT Work?

One of the advantages of utilizing a SLAT is allowing both parties to make sizeable gifts to reduce the amount of their total estate while maintaining a level of control over those assets. In general, assets such as real estate, cash, and life insurance can be gifted to the SLAT.

The “donor spouse” can use the federal and estate tax exclusion to mostly avoid taxes on gifts transferred to the trust. In many cases, spouses choose to elect different beneficiaries, such as children or grandchildren, in addition to their spouses.

While the donor spouse gives up their rights to the property gifted to the trust, the “beneficiary spouse” controls that asset.

Depending on your family’s specific needs, you can set up the trust so that the beneficiary spouse can utilize the assets while you are still living and provide an optional benefit to children or grandchildren upon death. In some cases, the SLAT trust can be set up so that both the beneficiary spouse and children or grandchildren can benefit from the assets before death by permitting scheduled distributions before death.

Main Advantage of a SLAT

As previously mentioned, one of the main advantages of creating a SLAT is the ability to avoid most or all estate taxes. The lifetime gift exemption rule applies to gifts transferred to the trust. While this amount fluctuates regularly, allowing couples to gift up to a certain amount each year as a tax exemption typically provides a substantial exemption of estate taxes.

Does a SLAT Provide Protection From Creditors?

Setting up a SLAT also provides additional protection of the assets for your spouse or other beneficiaries while protecting them from creditors. Generally speaking, the assets listed in the SLAT are protected from creditors of your spouse and the other heirs that may be listed, such as children or grandchildren.

Finally, creating a SLAT can provide the necessary protection of your assets from creditors. By naming the trust as the sole owner of the assets, you lose direct control of those assets but maintain indirect control through your spouse of the gifted assets. Keep in mind that some creditors are exempt from the protection of assets. Examples may include spousal support, child support, or federal tax liens.

Important Items to Consider When Creating a SLAT

Irrevocable – a SLAT is irrevocable and, therefore, can’t be changed once created. This idea can pose some risks depending on the situation and if there is an option for divorce at a future time.

Divorce – as mentioned above, if the couple is to divorce, the trust’s creator would lose their indirect access to the assets listed. However, the donor spouse, regardless of divorce, may still maintain some or all access to the gifted assets.

Beneficiaries – by creating a SLAT, the spouse is the primary beneficiary, but others can be listed and accounted for. This may get tricky depending on how you want to ensure children, grandchildren, or other relatives in the future can access the assets. It is essential to understand the tax implications for other relatives and your spouse during the life of the trust and after your death. Planning may be complex without a clear view of the future. Still, with the right estate planning attorney, you can ensure that you have reviewed several likely scenarios and planned accordingly.

Reciprocal Trust Doctrine – If both parties create a SLAT to benefit the other spouse, it is essential to ensure that the gifts are not jointly owned and that each SLAT is unlike the other. It may make sense to create similar SLATs that benefit both parties, but by doing so, you may negate the legality of the trusts and therefore avoid the tax benefits that you intended by creating the SLAT in the first place.

What Happens if the Beneficiary Spouse Passes Away?

Unfortunately, the donor spouse would lose indirect access to the assets listed in the trust upon the beneficiary spouse’s death. At this time, the trust may terminate, or the assets may be distributed to benefit the donor spouses, children, or other relatives named.

It is essential to understand this option so you can plan ahead effectively to ensure the assets are still accessible, even if indirectly, upon the beneficiary spouse’s death.

Estate Planning is Essential

Whether you feel that you have a substantial estate or not, almost everyone can benefit from effective estate planning. Experienced estate planning attorneys can be your best advocate to ensure you can continue to provide for your family long after you are gone.

Call our office today at (516) 928-6594 to examine all the options that may best suit your family and your needs.

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Incapacity planning is something that everyone should take the time to include in his or her estate plan.  If you want to be able to have a choice in your future medical decisions, you need to incorporate incapacity planning into your overall estate plan.

Take a look at some of the information below to learn more about the importance of this planning.  If you have additional questions, or if you’d like to start your planning, meet with an estate planning attorney.

  • You should take the time to create a living will.  This estate planning document will allow you to spell out your medical wishes ahead of time.  Many individuals use this document as a way to outline their wishes regarding the use of life support.
  • It’s also important to include a healthcare proxy in your estate plan.  This estate planning document is used to appoint a healthcare agent who will be responsible for helping to make important decisions if you ever become incapacitated.

Your agent will help to make sure that your medical wishes are followed while ensuring that you’re receiving proper care.  He or she will also be responsible for making important decisions regarding your health.  If you want to have control over who will help to make these important decisions, you need to create a healthcare proxy.

  • Include a HIPAA release so that your health care agent (under your health care power of attorney) has full access to your medical records and medical professionals such as doctors.

Now is the time to create an incapacity plan.  Without a plan in place, you will have no control over your medical future.  If you have additional questions about incapacity planning or if you’d like to start your plan, consult with a qualified estate planning attorney.

Davidov Law Group is a member of the American Academy of Estate Planning Attorneys.

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Trusts can be valuable estate planning tools for individuals who want to protect their assets and privacy from the costly and time-consuming probate process. Part of creating a trust is picking a name to distinguish it by. Banks and institutions will use this name to identify your assets, but you should also maintain some anonymity to protect your family members’ privacy.

If you are struggling to develop a good name for your trust, you should consult with legal professionals who work with trusts regularly. They can advise you on the best names and help you avoid mistakes that could have serious repercussions.

Why Is Naming a Trust Important?

Naming a trust is essential because it is how your assets will be identified. Your trust name will appear on loans, at the bank, and in other required paperwork. You don’t want to choose an overly long name because it may be hard to sort through your assets in the future. You could also create confusion at financial institutions if your name doesn’t adequately convey the purpose of the trust.

Picking your trust’s name is worth taking some time to consider. While you can change the name in the future, you would also have to re-classify every item in the trust under the new name, which can be challenging.

What Are Some Aspects of a Successful Trust Name?

The following are some tips to help you create a successful name for your trust:

  • Keep it short and simple – Long trust names can be confusing to banks and make it harder to keep track of your assets.
  • Don’t get too creative – Many states have laws against using names that sound like financial businesses. You want your trust name to convey the trust’s purpose rather than being misleading.
  • Don’t just use your name – Some lawyers will recommend using your name as your trust name. However, it is obvious why this can backfire if the purpose of the trust is to protect your privacy.

Should You Hire Our Trusts Attorneys?

Creating a trust is a big step in estate planning. Picking the trust name is just one aspect of this complicated process, including what kind of trust you need, who the trustee will be, who will benefit from the trust, and under what terms your assets will be distributed.

If you need help making the perfect trust for your needs or any other estate planning matters, please call us. We have helped countless clients like you create trusts that help their families now and in the future. We will be more than happy to design your trust and advise on the best name for your trust fund. Call today at (516)-928-6594.

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Creating the right estate plan can be an overwhelming prospect. However, if you die without preparing legally, you could risk putting your family members in a difficult situation. Don’t risk your hard-earned wealth by putting off estate planning until it’s too late. Contact our knowledgeable estate planning attorneys for excellent legal counsel and representation.

We can help identify your estate planning needs and draft the proper documents to get the customized estate plan that will work best for your unique situation. So call us today!

Create an Inventory of Your Possessions

An estate plan works best when you know what assets you are trying to protect and pass on to your loved ones when you die. Making a list of your valuables is a great way to start creating the perfect estate plan.

Consider Your Family’s Needs After Your Death

This step includes thinking about your family members and what they will need to have a comfortable life. Do you have minor children who may need a guardian appointed? Do you have a family member with special needs? These can all be accounted for in an estate plan.

Decide Who Your Beneficiaries Will Be

One of the biggest advantages of creating an estate plan is that you can control who receives your wealth after you die. Those who die intestate leave their estates up to the court. Don’t leave your friends, extended family members, and favorite charities with nothing. Contact our attorneys today to create a will that protects all of your loved ones.

Indicate How You Want Your Estate Divided

Once you know who your beneficiaries will be, you can dive deeper into how you want the money allocated. This step may include creating trusts that give you control over how and when your estate is distributed.

Store Your Documents Properly

A great estate plan doesn’t help if the right people can’t access it. Contact your attorney to find out who needs a copy of the plan and where you should store it so it can be accessed when the time comes.

Update Your Estate Plan Regularly

Your family’s needs today will probably not be the same next year or in five or ten years. The death or birth of family members can change how you want your estate plan. Marriage and divorce may also drastically affect your choices. Check with your attorney regularly to avoid the devastating effects of an out-of-date estate plan.

Seek Help from a Trusted Estate Planning Lawyer

One of the most important things to remember when creating an estate plan is to get professional help. While you could create a will online, this may not have the legal value and protection your family deserves.

Contact our law firm by calling (516)-928-6594 right away for the personalized attention you need when creating the ideal estate plan for your unique situation.

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Most people know that a will is foundational in an estate plan. While wills are important, they come with certain disadvantages that are important to understand.

The most significant downside to having a will is that when you die, it must go through the probate process. Probate occurs when a judge directs the handling of the will and is both time-consuming and expensive. With the right estate plan, you can avoid having most of your assets go through probate, saving your loved ones time and money after you die.

Even with the disadvantages of a will, it is still important to have one, especially if you have minor children. Contact our law group right away to learn more about wills and get help crafting the perfect estate plan.

Does My Will Have to Go Through Probate?

In many states, such as New York, individuals who die with a will are still subject to having their assets go through probate. Some estate planning tools, such as trusts, can minimize the effect probate has on their possessions.

Probate is not an ideal way of distributing funds because the judge will assign your estate to family members according to state law. This leaves you little control over how your wealth is passed on. Probate also exposes your family to the public eye, as probate is a public process. If you wish to avoid your assets becoming public knowledge, you may wish to use trusts to maintain your privacy.

Why Should I Have a Will?

Having a will is still extremely important, especially if you have young children. If both parents die, your will can provide a guardian for them of your choice. Without a will, the state will choose a family member to raise them.

You may also need a will for the small estate items left over after placing the majority of your valuables into trusts.

Should You Hire Our Attorneys?

When considering an estate plan, it is essential to speak with trusted legal professionals. Your estate planning lawyer should have a great deal of experience so they can recommend the right tools for your estate plan.

At Davidov Law Group, we have helped countless clients prepare for the future by creating thorough estate plans. We know what documents to use to protect your assets from creditors now and from future threats, such as unnecessary taxes and probate.

To learn more about what type of will and trusts are right for you, please reach out to us right away. You can contact our talented legal team at (516)-928-6594 to schedule your assessment. Taking this simple step today can pay huge dividends for your loved ones in the future, so call now!

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Estate planning isn’t easy, and thinking of your own death may not be the most cheerful way to spend an afternoon. However, taking a few simple steps now can do a lot to protect your loved ones and yourself in the future. Estate planning serves many purposes, including reducing the tax burden on your estate, allowing flexibility in distributing your assets, and eliminating the likelihood of family disputes.

Some of the most important reasons for having an estate plan boil down to two main functions: protecting your beneficiaries when you die and protecting yourself if you become incapacitated.

How Does Estate Planning Protect My Beneficiaries?

In most states, individuals who die intestate, or without a will, are subject to having their estate go through the courts. This is known as probate and can be costly and time-consuming. Having an estate plan such as a will and trusts minimizes the court’s interference in your affairs, protecting the privacy, time, and money of your loved ones.

Creating a will is also a must for parents of young children. If both parents should die, your children would go to a home decided upon by the state. While this is usually a close family member, it might not be who you would have picked. Having a will in place gives you control over the guardianship of your children if the unthinkable should happen.

How Does Estate Planning Protect Me?

Estate planning is also helpful for you, not just your surviving family members. In an estate plan, we can create documents that protect you if you become unable to make your own decisions due to illness, injury, or age. For example, you can assign a trusted friend or relative as a power of attorney who may direct your affairs in the way you would wish.

You can also create an advanced directive that gives a trusted individual the authority to make healthcare decisions for you. This document can also inform healthcare professionals how you want to be treated.

Should You Hire Our Attorneys?

There are so many options when making an estate plan that it can all seem overwhelming. Please don’t feel like you have to go through this process alone. Reach out to our knowledgeable lawyers today for excellent legal counsel and representation when creating your estate plan.

We recognize that every family is different and that you have unique needs from any other client we may serve. We promise to listen carefully to your wishes so we can craft the perfect estate plan that matches your goals. Call today at (516)-928-6594 to schedule your assessment.