About Us

     A Living Trust is a legal document that is set up to hold your assets. It is
called a “living” trust because it is created during your lifetime. In it, you
designate a “trustee” who manages the assets in the trust and a
“beneficiary” who gets the benefit of the assets in the trust. In fact, under
normal circumstances, you are the one who sets up the trust, you act as
your own trustee, and you are your own beneficiary!
Since you make the trust, you make the rules that the trustee must follow.
If you don’t like the trust, you can change it or do away with it. That is why
it is also called a “revocable trust.”
     A Living Trust is sometimes used as a substitute for a Will because you
can include trust provisions that dispose of your assets after you die. At the
time of death, your assets pass from the Living Trust to your designated
beneficiaries. Unlike a Will, a Living Trust does not have to be probated. It
is not submitted to a court for approval, and it is not part of any public
record. As a result, your assets go to your heirs quietly and quickly, and
your estate does not incur any costs associated with probating a Will.
In many states, the Living Trust is promoted as a cost-saving and time-
saving device because it avoids the legal fees and time delays associated
with probating a Will. However these advantages are less important to
New Yorkers because court fees to probate a Will in New York State are
capped by law at $1,000 and the Surrogate Courts on Long Island and New
York City require less than one month to approve a Will. Still, there is an
attorney’s fee to prepare the probate papers and to assist the executor in
carrying out the terms of the Will. However this fee is not substantial if it is
based on an hourly rate rather than a percentage of the estate.
     If you are the trustee of your own Living Trust and you manage the
trust assets yourself, you must name a successor trustee in case you
become incapacitated. This is another advantage of a Living Trust. In the
absence of a Living Trust or a Durable Power of Attorney, the only other
way your family could acquire the legal authority to handle your financial
affairs would be to commence a costly guardianship proceeding. While a
properly drafted Durable Power of Attorney accomplishes the same
management goal at far less cost, the Living Trust is far more accepted
especially if substantial assets are involved.
Once a Living Trust is established, all income and deductions attributable to
the property in the Living Trust flow back to you. The Living Trust does not
file a tax return. Instead, any income or losses are reported on your own
personal tax return. You add assets to the trust or spend them just as if
they were in your own name.
After the Living Trust is created, ownership of your assets should be
changed from your name to that of the Living Trust (e.g. the John Smith
Trust). Title changes to the trust name should be done for bank accounts,
stocks, bonds, real estate and other significant assets. Assets that already
have named beneficiaries such as pensions, IRAs and life insurance are not
transferred to the trust. However you are allowed to name the trust as a
beneficiary of such assets.
     Since you keep complete control over the trust and its assets, the
property held in it will be included in your gross estate for estate tax
purposes. The Living Trust does not save a penny in estate taxes, and
essentially offers no other tax advantages.
Since few persons transfer all of their assets into a Living Trust, the assets
that remain outside the trust at the time of death still must be distributed
by Will or otherwise. Absent a Will, New York State will dispose of them by
selecting family members in a particular order of preference. So it is wise to
have a “pour-over” Will that directs non-trust assets into the Living Trust at
the time of your death. Except for life insurance proceeds and property held
jointly with the right of survivorship, property held outside the trust at your
death still will be subject to probate anyway.
     A Living Trust does not protect your assets from Medicaid’s reach if you
require any Medicaid-funded health care. When you apply for Medicaid, all
assets that you hold in your Living Trust and the income derived from those
assets will be counted as “available resources” which must be spent down
to minimal Medicaid levels before you will qualify for any Medicaid-funded
services. Even your homestead -- an asset that is normally exempt for
Medicaid purposes -- will be included as an available resource if title to the
home is held in the name of the Living Trust.
     If you anticipate that you may require a nursing home placement in the
future and you transfer assets out of the Living Trust to prevent Medicaid
from considering them, Medicaid will examine every asset transfer out of
the Living Trust extending back 60 months from the date of the Medicaid
application. If any such transfer is a gift, Medicaid will consider the
transferred asset to be an available one and may impose a “penalty
period” during which time you will not qualify for Medicaid-funded nursing
home coverage.
     In sum, a Living Trust can substitute for a Will and provides for
continued management of your financial affairs in case you become
incapacitated. Upon your death, the Living Trust will distribute your assets
pursuant to your directions. The Living Trust avoids probate and the
attorneys fees associated with probate. However the Living Trust does not
avoid any estate or income taxes, and it does not protect assets held in
trust from Medicaid’s reach.