Individuals wishing to distribute assets after they pass have a few options at their disposal. People can write wills that designate individuals and/or organizations that shall receive assets after they pass away. However, there are a variety of reasons why residents of New York and other states should consider trusts when planning their estates.
One of the primary benefits of trusts is that they are more private than wills. The process of admitting a will to probate is public, and after a will has been filed with a probate court, it is usually a public record. This means that anyone can typically view a probated will and see all of the heirs that are designated by the will and other private details about a decedent’s estate. However, trust documents are often not subject to public disclosure, so individuals wishing to keep their affairs private should consider trusts.
A trust may offer greater flexibility to beneficiaries than providing assets in a will. For instance, settlors can empower individuals with a power of appointment that enables them to choose who will benefit from a trust after the initial beneficiary passes away. This means that after a settlor dies the trust assets can continue benefiting selected individuals, and powers of appointment are often more flexible than conveying assets in a will.
Protections from creditors
Trusts can also allow settlors to give assets to beneficiaries that creditors cannot obtain. Indeed, so-called spendthrift trusts are largely beyond the reach of most creditors. As a result, if a beneficiary has creditors or cannot be trusted with financial matters, it might be prudent to establish a spendthrift trust. An experienced estate planning attorney can explain the benefits of such trusts.
Trusts are often more advantageous when settlors wish to provide money to beneficiaries over an extended period of time. Although gifts provided under a will are usually paid all at once, a trust can pay out money over an extended period. It is important to speak with an experienced estate planning attorney before establishing a trust to review all tax issues and other matters related to this fiduciary arrangement.