Quite often, estate clients are interested in the creation of a trust, whether revocable or irrevocable, with varied purposes in mind. A trust is what is known as a testamentary substitute, meaning that assets that are titled in the name of a trust will pass outside the purview of a Last Will and Testament. This action is often beneficial because it ensures the seamless transition of management and ownership of a particular asset, usually real property. By placing an asset in trust like the family home, the property will not have to be held up in probate while a will is offered for validity in the Surrogates’ Court. Quite often, problems can arise if objections to probate are filed which can hold up the administration of estate property.
Assets are also placed in trust, usually in the context of an irrevocable or Medicaid trust, to shield said assets from creditors or nursing homes. It is also done to further transfer assets from the name of the individual who may be seeking either a nursing home or community Medicaid with their respective “look-back” periods of transfers. Assets are also placed into an irrevocable trust to protect the grantor from possible estate tax liability as the grantor loses the incidents of ownership as said assets transferred into such a trust are not included in the decedent’s taxable estate.
Notwithstanding the above, a Will must and should be a necessary component of any person’s estate planning. For one, not every asset that becomes a part of one’s estate is either placed in trust or is an asset or account held jointly or with a named beneficiary. A will would account for any such assets not previously titled in trust. Such a Will would be known as pourover will which is often simultaneously executed the same time as a trust. The pourover Will references the trust and directs that any assets of the decedent not already placed in trust to be done so.
If a will is not executed, any assets not accounted for in trust will be distributed according to statute per the New York laws of intestacy. Such laws mandate these assets to transfer to next of kin regardless of the intention of the decedent.
Furthermore, you want to have a Will executed so the person named as Executor has the authority to search the NYS Office of Unclaimed Funds for potential accounts that were never claimed. This has lead to substantial benefit for the estate.