Wills & Living Trusts
Proactively Planning your Family’s Future
Planning proactively is the best way to ensure the best result–this rings true in so many situations, yet with estate planning, people often find a reason to put it off. At DuBois Law Group, PLLC, we strive to make the planning process relaxed, comfortable and most of all, custom tailored to each individual and family.
An “estate plan” can take many different forms. Most people understand the need for a Last Will and Testament, to appoint an Executor and direct the distribution of their assets. Many people are beginning to hear about trusts, and how a properly drafted trust can accomplish their goals–the most prevalent of which tends to be protecting assets from being spent down on long term care.
At DuBois Law Group, PLLC, we have a specific process to work with our clients to ensure that their plan is right for them. Oftentimes the plan involves a trust. For families that own their home and have some savings, a well-drafted trust protects those assets from having to be spent down on long term care during lifetime. In addition, trusts are usually more effective for organizing one’s affairs in case of death, and they avoid the bureaucratic and time consuming probate process.
Making a Living Trust
Planning Means Certainty for You and Your Family
It’s easy to sit back and just assume that everything is going to work out fine. And sometimes, it does. Unfortunately, we at DuBois Law Group, PLLC, work with families every day where a loved one took that approach, and now there is severe stress, expense and overall turmoil. There are options at that point, but they are limited, and it is rarely the situation that everyone would have chosen, if they had taken the time to thoughtfully consider and plan. We of course are happy to assist families in that situation, but for the family’s sake, we would much prefer to work with families proactively to ensure the best overall result.
Proactive planning allows families to ensure, with the highest degree of certainly possible, that the house they’ve paid off and the money they’ve saved up will stay with whatever people or charities they choose, exactly in the manner they want.
Spouses will not have to wonder whether they can afford their lifestyle if long term care is needed. Children whose parents worked hard their whole lives will not have to see their parents’ savings get spent down, while the children of wealthy families remain comfortable inheriting millions. Children that do inherit their parents’ respectable savings will not have to see it lost to a divorcing spouse, or spent down on their own medical needs. A well thought-out plan protects against all of these issues, and does so in a way that is tailored precisely to the people involved.
Faq about Proactive Wills & Trusts
What is a trust?
A trust is a type of legal entity which is helpful to think of as a bucket that holds your assets. In most cases, the person or people putting the assets into the trust is also the person or people that are in charge of managing the trust (the “trustees”).
What’s the difference between a revocable trust and an irrevocable trust?
A revocable trust can be canceled, dissolved, scrapped--whatever term you like--at any time. It can be revoked, the assets can be taken back, or more commonly, it can be amended in any way you like. This might seem like the clear option, except that a revocable trust does not protect assets from long term care or anything else. Its primary benefit is avoiding probate and otherwise making administration upon death easier. This makes it a reasonably option for people with enough assets to pay privately for long term care, or perhaps people with very good long term care insurance policies that would cover long term care costs. An irrevocable trust cannot be revoked simply upon a whim. It is set in place permanently, and usually restricts access to the assets you put in it. Those two aspects: that it is irrevocable and that you cannot “spend” its assets (though you still can control them), are primarily what cause those assets to be protected from long term care costs. It is comforting that in New York, the law does permit the trust to be revoked under certain circumstances. That means that people can enjoy the protective benefits of an irrevocable Medicaid trust, but if they really need to, they can revoke it. This is not something we expect when we set up the plan, but it’s nice to know that it’s an option.
What can I put in a trust?
A trust can take title to almost anything a person can. A house, other real estate, bank accounts, investment accounts, stocks, bonds, life insurance, business interests, some annuities, personal property, etc. The most notable asset that you cannot put in a trust is a retirement account (401(k) or IRA). Changing the title on a retirement account counts as a full distribution which would cause the entire amount to be taxed as regular income.
Can I still use the assets I put into a trust?
If it is a revocable trust, then yes, absolutely--but remember, revocable trusts offer no protection against long term care costs. If it is an irrevocable trust, for the most part, you cannot spend the assets in it. That is, you cannot use them to pay for your daily expenses, care costs, any typical cost of living. If your irrevocable trust is set up to permit access to income, and it holds assets that generate income (stock dividends, investment real estate, interest on investments), you can freely spend that income, but not the principal. However, it is often the case that you can be your own trustee and manage those assets, such as how they are invested. When setting up an irrevocable trust, it is important to have a thorough discussion about what assets you should put in it, since you cannot use those assets for normal spending. You should never put all your assets in an irrevocable trust--only those that you do not plan on spending. The biggest asset people usually don’t intend on spending is their house, and often some savings or investments. A well-done plan takes into consideration a family’s income and expenses to help guide us on what assets should be protected, and which should be left outside of the trust, in case they are needed to support your lifestyle.
If I put my house in a trust, can I sell it?
Yes. A house in a trust can absolutely be sold. If the trust is an irrevocable trust, such as a Medicaid trust, the proceeds of the sale must be paid to the trust. However, the trust could then purchase another home, such as in the case of someone that wants to downsize into a smaller house.
If I put my house in a trust, will I still get my STAR, Veteran’s, Enhanced STAR or other property tax exemptions?
Yes. As long as the trust is drafted properly, a house in a trust qualifies for all the property tax exemptions it would qualify for if it were owned personally. This counts for almost all tax considerations, including capital gains tax.
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