Trusts are important components of many New York residents’ estate plans, especially for those people who own many high-value assets. These estate planning tools can help beneficiaries to avoid taxes and probate fees while performing other functions like protecting financially irresponsible heirs from receiving a sudden windfall. Although trusts can be very useful in a variety of circumstances, they are not always necessary for every estate.
There are fees for trust administration, and beneficiaries of trusts will be required to file annual trust tax returns. For some people, these costs outweigh the benefits of creating a trust. If a person’s estate is not very complex, they may be content to simply list chosen individuals as the benefactors of their financial accounts and trust these people to handle the funds responsibly.
A person who owns property in multiple states or wishes to protect assets from creditors or a divorce settlement may want to set up a trust. A trust can also be a valuable estate planning tool for a person who has a child with special needs. Many people decide to create a living trust so that they can determine how their assets will be handled if they ever become incapacitated during their lifetime.
An attorney may be able to help an individual to determine whether or not using trusts would benefit their estate plan. There are many different types of trusts, and an attorney may help to describe the costs and benefits of each. While looking at a person’s unique circumstances, an attorney may also suggest other tax-saving financial tools such as strategic gifting.