Trusts

An elder law attorney is often asked to prepare a trust. But there are many different kinds of trusts that serve different purposes.  For example:

  • If a potential beneficiary is improvident, you can place his/her share in trust.
  • If a child has funds from the settlement of a legal action, the best way to protect that money when the child reaches 18 is a trust of limited duration. When 50%t of marriages end in divorce, it is a good idea to avoid a financial partnership, not to mention letting an 18-year-old loose with a small fortune.
  • If there are health issues with an elderly person, a trust may help with Medicaid eligibility. The Medicaid laws are sufficiently complex (and the New York state legislature is enacting more restrictions as this is written) that a trust offers no guarantee of eligibility.  It can, however be helpful in preserving a portion of an estate in appropriate circumstances.
  • A supplemental needs trust for persons under 65 is essential to obtain or retain Medicaid for a profoundly disabled person who has funds from a gift, an  inheritance or a settlement of a legal action.
  • Other trusts can help reduce estate taxes.  Although the federal tax threshold has increased enormously, there is still a New York estate tax.
  •  There are other uses for trusts, for example, asset management or avoiding probate or creditor protection.
  • A trust to hold real property outside New York is useful, because that trust will enable the family to avoid probate in a second jurisdiction.
  •  A trust can be particularly beneficial if there is a family that has scattered and lost touch with various family members. If these family members turn out to be heirs, the probate process may be put on hold while a genealogist traces those family members. If, conversely, the assets are held in a trust, there is no break in administration while locating missing heirs.

Finally, the most frequently used estate planning tool is the will. The will (and the various trusts) have one overriding objective:  the expression of the maker’s values and objectives.