Individuals in New York who are planning for the distribution of their property after they die may have heard of a revocable trust but be unfamiliar with what is involved in such a document. Another name for a revocable trust is a living trust, and as its name implies, it is created and takes effect while the grantor is still alive. The terms of an irrevocable living trust cannot be changed while those of a revocable trust can.
A revocable living trust can have two functions. It can both protect a grantor who subsequently becomes incapacitated, and it can also provide a vehicle for the distribution of the assets in the trust after the grantor’s death.
Like all trusts, a revocable trust is administered by a trustee , but the trustee can be the individual who creates the trust. However, it is also possible and in most cases advisable to appoint a co-trustee. One advantage of having a revocable living trust with an appointed co-trustee is that if the grantor does become incapacitated, rather than having a guardian appointed, the other trustee can manage the affairs of the trust.
Trust and estate administration can be complicated, and a person who is appointed as a trustee may feel overwhelmed. However, an attorney can often be of assistance whether the individual is administering the trust for a grantor who is still alive but unable to manage his or her affairs or after the grantor’s death. Those who are seeking the preservation and protection of their assets for future generations may wish to consult with an estate planning and administration attorney for advice on the types of documents that can best achieve that goal.
Adults in New York who do not have an estate plan may want to consider making one. Most people include a will in an estate plan. A will is a document that indicates how an individual wants their assets distributed after their death, and it must be signed by two witnesses. Without a will, the state will decide what happens to the assets.
The people or parties who receive the assets are beneficiaries. Beneficiaries might be friends, family or organizations. A will also needs an executor. This is the person who is in charge of distributing the assets and administering the estate in other ways such as paying taxes and debts. The executor might be a friend or family member, but an attorney or a financial professional may be an executor as well.
An individual may want to appoint a separate social media executor who is in charge of the individual’s online life. This person can be responsible for closing an individual’s online accounts and profiles and handling their email. A social media will may be written separately from the regular will.
Individuals should periodically review and update their wills. Families and friendships change due to births, marriages, divorces, deaths and other transitions, and over time, an individual may want to choose different beneficiaries.
An individual who is considering preparing an estate plan may want to work with an attorney in doing so. Wills may be challenged due to incorrect preparation or even legal language that is not used correctly. Individuals who have found themselves appointed executors of a loved one’s will may also want to consult an attorney. Sometimes, a person may be appointed executor while lacking the legal and financial knowledge they feel they need to manage the estate. This may particularly be the case if the estate is a complex one.
Source: USA.gov, “Writing a Will,” Accessed April 21, 2015
In an age where digital accounts are becoming commonplace, it is important to account for them in an estate plan. For instance, if an individual has a PayPal account or Facebook profile, those accounts will continue to exist after that individual passes on. Although these accounts may be part of an estate, they can be difficult to track down after the account holder dies.
One digital service called Acorns allows people to have purchases rounded up to the nearest dollar with the change being placed into an investment account. However, the only way to know that this account exists may be to track down a conformation email or gain possession of the deceased’s smartphone or tablet and check for the presence of the app. Those who take part in virtual games such as World of Warcraft or Second Life may be in possession of valuable accounts.
A World of Warcraft user once sold a character for almost $9,500 in 2007, and Second Life characters may hold value as well. Therefore, it can be worthwhile to provide a way for friends and family members to access them if necessary. Facebook already allows users to designate a legacy contact who can access the account after they pass on. If an estate plan does not account for these potentially valuable assets, they may remain unclaimed for eternity.
Anything that an individual owns or has the right to use may be included as part of a will or trust. After that person dies, he or she may be able to pass those accounts to a beneficiary or some other entity that has the right to use or control them. Those who are interested in creating, updating or reviewing their current plan may wish to talk to an attorney.
While a will can help a family in New York avoid a legal battle after a loved one passes away, this legal document cannot always prevent against a problem. When world-famous actor Robin Williams died, his will and trust dictated that his estate go to his widow and his three children from different marriages.
Susan Schneider, William’s widow, lived with him at a home in Paradise Cay, and William’s trust allows Schneider to reside in the couple’s house while her expenses are paid for from a fund created by the late actor’s trust. Most of the possessions from the Paradise Cay house near Tiburon go to Schneider, but select personal items were left to the children as gifts in William’s trust. Some of the items intended for the children included jewelry, personal photos and awards, and a Napa Valley home last listed at $29.5 million and its contents was also left to his children.
Though it seemed that all his belongings and assets were accounted for, the family went to court when Schneider filed a suit in January 2015 alleging that the children wanted items from the couple’s house that were not willed to them. On March 30, a judge gave the family until June 1 to come to an agreement.
It seems that Williams wanted his spouse and children to have his property and personal items, but one usually does not have total freedom when dividing an estate. For example, many states have forced heirship laws that will not allow one to disinherit a spouse and sometimes children. An attorney might be able to help one ensure that any estate planning documents are in accordance with New York laws, and a mediator could help a family resolve issues with a will or trust out of court.
New York basketball fans may have heard about a former University of North Carolina basketball coach who left $200 to each of the approximately 180 players he coached during his career. The coach used a revocable trust to distribute the funds.
The distribution came to public attention because a number of the players mentioned the North Carolina coach’s payouts on social media, but normally, a revocable living trust provides privacy that a will does not. This type of trust has other advantages as well. The person who sets up the trust remains in control of it, allowing them to dissolve the trust at any time if they have a change of heart or a change in their assets.
A revocable trust does not eliminate the need for a will. Assets that do not go into the trust must still be distributed with a will, and in some cases, an individual may set up a special type of will known as a “pour-over” will, which deals with all the assets that were not moved into the trust.
Revocable trusts may be expensive to set up and administer, so anyone considering them as an option may wish to weigh the advantages and disadvantages. However, in the right circumstances, a revocable trust can serve as the main estate planning document. For example, because the probate process that accompanies a will might be more expensive for some types of estates, a trust may be a better choice. An individual who is prominent in the community may also want the privacy provided by a trust.
Establishing and administering a trust can be complex, and an individual who is considering doing so may wish to consult an attorney. An attorney may also be able to assist in correctly preparing a will and other estate planning documents.
Source: Bloomberg, ” Dean Smith’s Generosity Got Lots of Press. His Estate Plan Deserves Some Too ,” Suzanne Woolley, March 27, 2015