Parents in New York may have many issues to consider when creating an estate plan. If they intend to leave money to their children, it is important to think about when they should be able to access that money. Individuals have the option of making distributions from a trust dependent on certain events taking place or on a predetermined timeline. There is also the option of making distributions based on other criteria a grantor deems appropriate.
Trusts can be an effective estate planning tool for New York residents. However, they may not always be needed. Furthermore, a trust could be constructed in a way that doesn't meet a person's needs. For instance, making a gift could reduce the amount of a person's estate and take advantage of the $11.8 million federal estate and gift tax exemption. However, if a person needs the gifted money later, it may not ultimately benefit him or her to make that gift.
If your parents are elderly and living in New York, you may worry that they will have to move to an assisted living facility or even a nursing home sometime within the next decade. Few people, likely including your parents, have the financial means to pay for such living arrangements, and applying for Medicaid often is the only option.
People in New York often rely on trusts for the flexibility and control they provide during the estate planning process. In addition to the detailed vision for the future of a person's assets that trusts provide, they also enable people and their loved ones to avoid the complications and costs associated with the probate process. However, in order for people to make sure their plans are fully effective, it is important to ensure that the trusts they create are funded with all of the property that they want to include in the vehicle.
Some people in New York who are creating an estate plan and have relatives with special needs might wonder whether a special needs trust might be an appropriate way to provide for those individuals. A trust is an estate planning vehicle that generally involves three participants, which are the creator of the trust, the trustee and the beneficiary. A special needs trust may be used to reduce the value of the creator's estate for tax purposes or an estate's value in order for a person to be eligible for Medicaid.
There are numerous reasons why everyone, including individuals who do not have lots of assets, needs an estate plan. Such a plan benefits more than solely the rich because these documents help establish power of attorney and cause married couples to bring all their assets to the table for consideration.
Trust planning professionals in New York and throughout the country should be aware that interest rates are likely to rise in the short-term. It is also likely that the past decade of low interest rates is set to gradually come to an end. Therefore, it is a good idea for those professionals to start adjusting the advice that they give to their clients.