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If you have begun the estate planning process in New York, you might have decided to set up a trust. This is undoubtedly a smart move, and there are many unique benefits of creating a trust. However, you may have learned that there are many different types of trusts that you can set up in New York. Which is the right choice for you? What are the various benefits and disadvantages of each type of trust?
While internet research is a solid first step, your best bet is to consult with a qualified estate planning attorney in New York. These qualified professionals can explain the entire estate planning process in a clear, concise manner. An estate planning attorney will be extremely familiar with the different types of trusts that are available to you, and they can help you choose the best option based on your unique priorities and needs. That being said, here is a brief rundown on the different types of trusts in New York:
Living Trust
A living trust is created during your lifetime, and you will have the power to revoke or change the trust until you pass away. Your trustee is responsible for overseeing the transfer and use of your assets after your passing.
Benefits: Your beneficiaries get immediate access to income, you are protected against the incapacity of your beneficiaries, and succession of trustees is easy.
Disadvantages: A living trust does not usually provide protection against creditor claims, and all income earned by the trust is taxable.
Testamentary Trust
Unlike a living trust, a testamentary trust does not go into effect until after your passing. A testamentary trust is often called a “trust under will” because it is included in your will.
Benefits: You can provide for children from a previous marriage, and you can ensure that children, spouses, and family members with special needs are provided for.
Disadvantages: This will only go into effect after you pass away, which could cause limitations in some circumstances.
Irrevocable Life Insurance Trust
Also known as an ILIT, these trusts are popular among wealthy families. Life insurance allows families to avoid steep taxes on amounts above $2 million. “Irrevocable” means that this trust cannot be altered. On the other hand, “revocable” trusts can be altered as many times as needed during your lifetime.
Advantages: An ILIT allows for a flexible planning approach. The trust is funded with a life insurance policy and helps wealthy families avoid taxes and penalties.
Disadvantages: This trust is irrevocable, which means that it cannot be changed once it is put in place.
Enlist the Help of a Qualified Estate Planning Attorney in New York Today
If you are ready to choose a trust, your next step should be to reach out to a qualified, experienced estate planning attorney in New York. Call The Glassman Law Group at your earliest convenience, and we can help you make the right choice. We recognize that this is an important decision, and we will do our best to help you find the best path forward.