Unlike a will, which is used to give away property after you die, a trust can manage and invest your money and property both during your lifetime and after you die. A trust is a fiduciary agreement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be organized in many ways and can specify exactly how and when assets pass to beneficiaries. A trust is a legal vehicle that allows a third party, a trustee, to maintain and direct assets in a trust fund on behalf of a beneficiary.
A trust greatly expands your options when it comes to managing your assets, whether you're trying to protect your estate from taxes or pass it on to your children. A trust is a legal fiduciary agreement that allows you to set up your assets to be maintained and managed by a third party. This party is known as a trustee, and the person or firm that you designate for this role will be responsible for ensuring that your estate is handled in the manner you have described. A living trust gives you privacy that is not an option when you use a will.
A will passes through probate and becomes a public record. A trust is not disclosed to the public and its beneficiaries, assets, and specific details of the trust remain completely private. A trust is also less likely to be contested and more difficult to contest than a will, offering peace of mind. A living trust (also called an inter vivos trust) is simply a trust that is created while you are alive.
Beneficiaries you name in your living trust receive trust ownership. Instead, you could use a will, but wills must go through the court process that oversees the transfer of your property to your beneficiaries. A living trust acts as a “substitute for. Assets, whether real estate, bank accounts, or other tangible or intangible assets (but not IRAs or other retirement accounts), are transferred to the trust's name while it is alive.
The trust provides for what happens to the property it contains once the person who contributed the property (called the “grantor” or “settlor”) dies. The living trust is revocable and modifiable, so if the grantor changes its mind about who should inherit or how much, the trust may be modified or, less frequently, revoked. It is called a living trust because it is created during the life of the grantor and is effective for the life of the grantor. On the contrary, a will does not take effect until after death.
Conversely, assets left through a trust can be distributed to its beneficiaries almost immediately and often without the need for an attorney. A living trust in New York allows you to place your assets in a trust, but still use them during your lifetime. A major difference between a will and a trust is that a will comes into effect only after you die, while a trust comes into effect as soon as you create it. A living New York trust allows you to completely bypass the legalization of assets that are in the trust (that's why you want to place as many assets as possible).
Irrevocable trusts can be beneficial to those in professions that are vulnerable to legal claims, such as lawyers or doctors. Trusts can be used in addition to a will to direct your assets after you die, but trusts offer a number of important planning benefits that are not included in a will, such as allowing your heirs to reach a relatively quick conclusion to liquidate your estate. However, if assets are transferred to a trust with the intention of avoiding creditors, or in circumstances that indicate that it would be reasonable to assume that creditors would seek the assets, the trust is unlikely to isolate assets from creditor claims. A trust gives you full control of your assets over your lifetime, even though they are technically owned by the trust.
The trustee is a trustee obligated to handle trust assets in accordance with the terms of the trust document and solely in the best interest of the beneficiaries. State laws vary significantly in the area of trusts and should be considered before making any decisions about a trust. A testamentary trust is a trust that is created within a will, and only takes effect after your death. The trust document may provide a successor trustee, for example, in the event of death or disability of the grantor or trustee, and include instructions for the subsequent administration and transfer of trust assets.
Also known as the Credit Shelter Trust or Bypass Trust, it is a joint trust that a husband and wife create together. In some cases, an irrevocable trust may be used as a way to protect creditor assets or evade estate tax, since you will have effectively removed yourself as the owner of any of the assets within the trust. An estate planning lawyer or financial advisor can provide you with expert advice on whether a trust could be a useful component in your long-term financial plan. .
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