Sound the Alarm – Plan Now!

I have been experiencing an unusual phenomenon in my estate planning and elder law practice over the last month or so. There has been a literal rush of clients wanting to have living trusts prepared. While I am always happy to help new clients, this was somewhat above the norm. Typically, clients seek estate planning – wills or trusts – at two key points in their lives. The first is when they have children. They want to make sure that their children are taken care of if something happens to them. For example, if the children are minors, they will need to have a guardian appointed. Universally, parents want to be the ones to choose their children’s guardians and not leave it up to the discretion and the whims of the courts. The second most popular time to seek planning is when someone reaches a more advanced age.

Despite the difference in ages between these two groups, there does appear to be a common thread. I would suggest that what ties these people together is the desire to secure the future for themselves and their families.  Is the reason that people spanning all ages are starting to plan due to the world situation? Is it the UK leaving the EU? Or is it the fact that over 60% of our population is “alarmed” at the current presidential election? It is hard to know for certain, but let us take a look at the specifics of the Revocable Living Trust to see what is making it so attractive to so many.

A Revocable Living Trust is, without a doubt, the most effective and user friendly vehicle for passing on the assets you have accumulated throughout your life to your heirs. By way of contrast, if your sole estate planning vehicle is a will, upon your death your family will need to hire a lawyer to petition the court and prove that the will is valid – the probate process – which can be both time consuming and costly. Only then will the Judge appoint the Executor you have chosen to distribute your assets according to your wishes.

On the other hand, if you have created a Revocable Living Trust, you are named as the original Trustee (manager) while you are alive and well. You have also named a back-up Trustee to take over upon your death or should you become incapacitated. In that way, the Trust serves two functions. First, since the trust does not die with you, when you pass away, your back-up Trustee can immediately take over and distribute your assets according to your directions in the Trust. In other words, no probate, no Court, no legal fees and no long waiting period. In fact, avoiding probate and the ease of transfer of your assets to your heirs is the number one reason that people choose a Trust over a will.

The second advantage of a Trust which can come into play while you are alive is that your back-up Trustee can take over for you automatically if you become incapacitated. He or she can use your funds in the Trust to do the things for you that you could previously do in your day to day life such as paying utility bills, your mortgage, doctor bills, etc. This can avoid the very serious consequence of your family having to go to Court to be appointed as your guardian – a very expensive and heart wrenching procedure.

There is one more advantage worth mentioning especially for the “snow birds” among our readers. If you own real property in more than one state such as a house in New York and a condo in Florida and you only have a will, your family must go through not one probate but two probates. This is because the Court in Florida will not recognize the executor that is appointed here in New York. However, as we now know, if you have a Trust, you don’t need an executor to take care of either of your properties because you have a back-up trustee who can distribute both properties according to your wishes.

It is important to note that we have been talking about a Revocable Living Trust where you have complete control of your money and other assets that you put into it as long as you are alive and well. An Irrevocable Trust is quite different in that you have given up control of your assets that you transfer into it. It has distinct advantages and disadvantages and is often created for an entirely different purpose which will be the subject for a later article.

This article appeared in the July 22, 2016 issue of The Senior Gazette.

Sanford R. Altman, Retired, was a Senior Counsel member of J&G. For more information contact us by phone at 845-778-2121 toll free or 845-778-2121.