Published in the Hauppauge Reporter, February 2017
February 27, 2017
For many years now I’ve heard many attorneys tout the virtues of revocable or “living” trusts over Wills. But, with the added expense, is the trust really necessary? In many cases, no! Now don’t get me wrong, there are many times when a revocable trust is the way to go, but there should be a need for it, not just a knee-jerk reaction or a scare tactic.
Below are several reasons that I’ve heard many attorneys give to get you to create a revocable trust as the primary method for disposing of your estate, followed by my response.
Reason: Using a revocable trust to distribute your estate provides a degree of privacy because the trust won’t be filed with the Surrogate’s Court and therefore won’t become a public document.
Response: Do you really care if someone sees your Will? More to the point, do you know anyone who is going to go down to the Court to read it? Unless you have a business or unequal distribution among your heirs, no one usually cares what your Will says except for the actual beneficiaries of the Will.
Reason: Property transferred into a revocable trust during your lifetime won’t be subject to the expense and delays of probate.
Response: I’ve found that more times than not, I end up assisting with the administration of a trust after the Grantor dies and the cost is about the same as if I did a probate of the Will. Also, in either case, I always suggest to the fiduciary to wait seven months so there is no personal liability for any debts of the estate.
Reason: If you become incapacitated, the successor trustee of your revocable trust can manage the assets without the need for a court‑appointed guardian.
Response: A properly drafted Power of Attorney will allow your agent access and control to manage your assets should the need arise.
Reason: You can make changes to your revocable trust at any time. But when you die, it becomes irrevocable, and the provisions that pertain to the disposition of assets to your heirs and charities will be administered by your trustee under the terms of the trust.
Response: You can do a new Will at any time, which becomes final upon your death. The person you named as Executor of your Will then executes the provisions of your Will, carrying out your wishes, with the added peace of mind that the Court will ensure that the Executor is qualified to carry out your wishes and makes sure that he or she does so.
Reason: Your trust can include language that stipulates when distributions of income and principal will be available to beneficiaries, such as children, grandchildren or others. Your trust can include distributions for specific purposes such as for education or health care expenses. You can also include language for distributions based on attaining specific ages, such as one‑third of the principal is distributed at age 30, half at 35 and the remainder at 40.
Response: Virtually any provision that you can put into a trust with respect to how your assets are distributed can be put into your Will, including setting up ongoing trusts for future generations or having various stipulations.
Reason: When a surviving spouse remarries, or in the case of second marriages, the concern arises that a new spouse’s children could inherit assets and reduce what children of the first marriage might get. In this case, a special trust provision (called a Qualified Terminable Interest Property trust, or QTIP) can be used to provide income to the second spouse while he or she is alive. After his or her death, the assets are distributed to the children of the first marriage.
Response: Again, almost any provision that is in a trust can be in a Will. Although, in this case, because of a greater potential for a contested Will proceeding, I would recommend setting up a revocable trust and, to the greatest extent possible, keeping the transfer of assets outside of the Court.
Although though there are many times when a trust is not needed, the last example is actually a good reason to create and fund a revocable trust. There are many other good reasons to create a trust. Everyone’s situation is unique and should be discussed with a qualified estate planning attorney.