A revocable living trust is an estate planning tool that allows you to place assets in a trust during your lifetime while generally retaining control over them. In New York, it can help certain assets pass to beneficiaries without probate and provide a plan for managing those assets if you become unable to handle your financial affairs.
However, a revocable living trust is not necessary for everyone. Whether one belongs in your estate plan depends on your assets, family circumstances, and goals.
How Does a Revocable Living Trust Work in New York?
When you create a revocable living trust, you transfer ownership of selected assets to the trust. You can typically serve as the trustee, which means you continue managing those assets much as you did before.
As the name suggests, a revocable trust can be changed or revoked during your lifetime, provided the trust expressly permits revocation. New York law otherwise treats a lifetime trust as irrevocable.
You also name a successor trustee who can step in under the circumstances described in the trust. After your death, the successor trustee administers and distributes the trust property according to its terms.
Creating the document alone is not enough. The trust generally must be properly funded by transferring assets into it. New York also has specific requirements for executing lifetime trusts, including requirements for acknowledgment or witnesses.
Does a Revocable Living Trust Avoid Probate in New York?
Assets properly transferred to a revocable living trust generally do not have to pass through probate when you die. Instead, the successor trustee can manage and distribute those assets according to the trust instructions.
A trust does not automatically eliminate probate for your entire estate, however. Assets that remain individually owned and do not have a beneficiary designation or another method of transferring outside probate may still be subject to probate.
What Are the Benefits of a Revocable Living Trust?
Probate avoidance is only one reason you may consider a revocable trust. Depending on your circumstances, a trust may also:
- Provide continuity in the management of trust assets if you become incapacitated
- Keep the administration of trust assets more private than a probate proceeding
- Make it easier to manage property located in multiple states
- Allow you to set detailed instructions for when and how beneficiaries receive assets
A trust can also be useful when you want a successor trustee to manage assets for beneficiaries rather than distributing everything outright after your death.
What Can a Revocable Living Trust Not Do?
A revocable living trust has limits. Because you generally retain control of the assets, creating one does not automatically protect those assets from your creditors. It also should not be confused with an irrevocable trust that may be used for different tax, asset protection, or long-term care planning purposes.
A revocable trust does not necessarily replace a will, either. Many people with living trusts also have a pour-over will addressing property that was not transferred to the trust during their lifetime.
Do You Need a Revocable Living Trust in New York?
You may want to consider a revocable living trust if avoiding probate is an important goal, you own real estate in multiple states, or you want a structured way to manage assets during incapacity and after death.
On the other hand, a trust may add unnecessary work if your estate is relatively straightforward and most of your property already passes through beneficiary designations, joint ownership, or other non-probate methods.
The decision should be based on how your property is owned and what you want your estate plan to accomplish, rather than on the assumption that everyone needs a trust.
Build an Estate Plan That Fits Your Goals
A revocable living trust can be a valuable part of a New York estate plan, but only when it serves a clear purpose. The trust also needs to be properly drafted, executed, and funded for it to work as intended.
At Hedlind Law, PLLC, we help New Yorkers evaluate their estate planning options and determine how wills, trusts, and other planning tools can work together. Contact Hedlind Law, PLLC today to discuss whether a revocable living trust makes sense for you and your family.