Many people put off the completion of their estate planning because preparing for the end often forces us to deal with difficult questions. For example, you will eventually have to make a decision as to who should look after your children and property after your death.
New York statutes allow residents to specify certain individuals as guardians and trustees in their wills. That way, after you are gone, you can rest assured that someone you trust will be looking after the best interests of your children as well as your finances. A guardian is the term used for a person you designate as the individual with whom your children will reside should you or your spouse meet an untimely end. A trustee is a person you designate as someone who will manage a trust account.
A trust is generally a legally binding right to property that is held by one person for the benefit of another. You have wide discretion as to exactly how you want that property to benefit another. For example, many trusts are set up by parents so that their children’s financial needs will be administered by a guardian or trustee until they are 18 years old.
As you might imagine, the powers of a trustee or guardian are so great that they have the potential to be abused. For that reason, New York laws specify that a guardian who manages your children’s persons and property without a trust must file annual reports that give an accounting on how they have spent the monies entrusted to them. Those guardians must also petition a court if they require funds to make some unusual expenditure.
Trustees have far fewer restrictions on their abilities. Generally, a trustee who is operating within the parameters of your trust is not required to make annual accountings of their expenditures nor request special permissions to use trust funds.
The decision to nominate someone as a guardian or trustee can prove crucial to ensuring that the beneficiaries of your estate are properly looked after. Your New York estate planning attorney can assist you with identifying a strategy designed to ensure that your wishes are carried out exactly as you specify.
Source: Committee of Interns and Residents, “Will preparation: The most frequently asked questions” accessed Jan. 27, 2015