You don’t have to use a trust with your estate plan in New York. You can simply divide your assets in your will and call it a day. However, there are some benefits to trusts that you may want to consider.
First of all, you may want to begin distributing your assets before you have even pass away. If you know how much you need to live on, this is a good way to make sure your wishes are honored. This type of trust is known as a living trust. The alternative is a testamentary trust, which doesn’t kick in until you pass away.
Another reason to use a trust is to make sure you don’t have to pay as much in estate taxes. There are limits, but a Credit Shelter Trust can be filled to $10.86 million for a couple and $5.43 million for a single person. If you have a large estate, this is a good way to keep it from being diminished when you pass it on.
Naturally, trusts give you more say in how money is used and more control over the process. You may want to use one if you have something specific that you want the money to go toward. For example, leaving $400,000 to a grandchild in your will may be your attempt to pay for the child’s college, but the child doesn’t necessarily have to use it that way and could instead use it to buy anything he or she desires. However, if you put the same $400,000 into an educational trust, there’s no way to use it for anything but school.
Make sure you consider all of your options, including trusts, when doing estate planning.
Source: Forbes, “Do You Need A Trust For Your Estate Plan?,” accessed May. 22, 2015