People in New York who want to get their affairs in order by establishing estate plans might have questions about the available options. What is the purpose of creating trusts, and what are the differences between living and revocable trusts? Is an irrevocable trust perhaps the suitable option? Setting up a trust is a way of protecting assets, and appointing a trustee to manage them after the owner’s death or incapacitation.
A trust is a legal entity into which assets are placed, and a trustee is a person tasked with distributing the assets according to the owner’s wishes upon his or her death, or determining how the assets should be invested. There is no difference between a living and a revocable trust — both refer to a trust whose terms the owner can modify or adjust at any time. Also, beneficiaries can be added or removed as it pleases the owner.
When it comes to an irrevocable trust, the terms as stated when it is established cannot be changed under most circumstances — with rare exceptions. It is rigid and carries the advantage of being safe from the claims of creditors, even in the event of a judgment against the owner. In contrast, putting assets into a living trust does not shield them from creditors.
Establishing trusts and drafting wills are best done by an experienced New York estate planning attorney. The lawyer can assess the client’s circumstances before explaining the different options, along with their pros and cons. Legal counsel can also answer questions about estate taxes under federal and state laws, and assist with occasional revisions to bring about any necessary changes to estate plans.