Some New York parents may be concerned about leaving a large sum of money as an inheritance for their children. They might be worried because their children are financially irresponsible or simply because it can be difficult sometimes for anyone to suddenly come into possession of a large amount of money. While it is a good idea to discuss responsible financial management with children, a trust may be another way of protecting assets.
Trusts have a broad range of applications that may be relevant to New York residents who are planning their estate. There are many different types of trusts that provide different benefits, and here are two that might be of interest.
When individuals and couples living in New York begin the estate planning process, they are often concerned about what will happen to their real estate, investments, and savings after they die. While these are all important issues, it is also critical that estate planning address nonfinancial concerns, such as child guardianship, end-of-life planning, family pets and the distribution of personal effects.
New York residents can generally leave funds within an IRA to whoever they feel deserves it the most. If there is no person worthy of receiving the money, it may be possible to donate it to a charity. However, how an IRA is transferred generally depends on who is receiving it. For instance, if an IRA is left to a spouse, he or she could simply roll that money into his or her own account.
When New Yorkers are planning their living trusts, they will need to consider who to name to serve as their successor trustees. This decision is important because administering a trust is a complex and technical process, and the trustee must also be someone who can be trusted to work in the best interests of the beneficiaries.
New York residents may be able to plan for what happens to assets after they die by creating a will or trust. However, there is also a way to plan for what happens if an individual becomes mentally incapacitated while still alive. By adding a power of attorney, an individual can appoint an individual or entity to manage his or her financial affairs.
New York residents might like to know about funeral trusts. Planning one's own funeral ahead of time by using a trust will make the process much easier down the line for surviving family members. A funeral trust also allows a person to arrange a service based on personal preferences.
While a qualified personal residence trust may be less necessary for people in New York and others throughout the country today because of the large exemptions for estate and gift tax, many people will still have these as part of their estate plan. A QPRT works by removing the home from a person's ownership and placing it in a trust for a fixed amount of time. This reduces taxes on the home at the person's death. If the person dies before the end of the fixed term, the benefits are lost. Neither the grantor nor the spouse can repurchase the home at the end of the fixed term.
When New York residents have worked hard all of their lives to provide for their families, they want to ensure that they protect the assets that they have obtained. However, many residents who start the estate planning process still want to maintain some form of control over those assets while they are alive. One way to do this is through an irrevocable trust.
Trusts can be an important part of estate planning that help benefactors take care of their heirs. However, the good intentions of a grantor sometimes turn disastrous when the wrong person serves as a trustee.