As New York residents seek information about estate planning, they may wonder why so much attention is given to living trusts. According to experts, these tools for estate planning may not avert all possible financial problems for survivors nor protect prized assets from being distributed differently than intended, but they may enable benefactors to address delicate situations with a level of privacy not afforded by the probate process that a will requires.
One of the main concerns in probate may be that a court will determine that an asset should go to an individual that a benefactor did not include in an estate plan. With the publicity of probate, a disinherited child might contest a will and succeed in obtaining assets that were not intended for that individual. Sensitive family information could end up in the public eye, resulting in embarrassment to one or more individuals. A revocable living trust may provide a parent with the ability to avoid deviation from the intended distribution of assets and may preserve sensitive family information.
While many advantages in a living trust address a benefactor's interests, potential heirs are beginning to realize that irrevocable trusts could be to their advantage. Baby boomers have particularly picked up on this interest, realizing that an irrevocable trust might keep creditors away from a potential inheritance. However, this approach could affect a benefactor's access to and ownership of assets making it possible to experience a negative impact in quality of life. A parent dealing with suspicious recommendations from a child may want to discuss their options privately with a lawyer.
A lawyer may be able to explain current and potential future tax implications related to each type of living trust so that a decision is not based on incomplete information. Additionally, a lawyer may recommend involving a financial advisor in the estate-planning process to ensure that all important areas are considered as a trust is formed.
Source: NBR, "A matter of trusts: Benefactors, heirs and their advisors", Maureen Nevin, August 04, 2014