Skip to Content
Call Us Today! 516-740-1184

Reviewing Trust Options May Benefit New York Residents


Many readers in New York and elsewhere may have heard of trusts. While the term is familiar, however, many people do not fully understand their benefits, how to set one up or how to conduct trust administration after creating it. In part, the confusion likely stems from the variety of trust options available to individuals.

The first thing someone considering a trust needs to consider is his or her goal. Which trust people will select depends in large part on whether, for example, they want to safeguard their assets should they need long-term care, minimize the size of the estate tax their children will pay or simply to help their heirs avoid probate.

Trusts come in three basic forms: revocable, estate tax and asset protection. In a revocable trust, the person who creates the trust (the "settlor" in legal speak) can act as his or her own trustee, which means the creator can personally administer the trust. Some of the main benefits of this trust are that the creator has full control over the trust assets while also bypassing the costs and delays that come with probate.

The second form is the estate tax trust. It is an irrevocable trust which takes assets out of the trust creator's gross taxable estate. Unlike the revocable trust, the creator of an estate tax trust does not control or even access to assets transferred into it. This kind of trust makes sense for individuals who wish to shield some of their assets that are more than the estate threshold.

Finally, the asset protection trust aims to protect a person's assets in the event they need long-term care. A "look back" period of five years on transfers is associated with this type of trust. However, in order to start the countdown, the trust must be created as irrevocable. This "look back" time frame does not apply if the transfers are to a spouse.

Trusts are not just for the super wealthy. New Yorkers from all walks of life would benefit from considering whether to set up a trust and, if so, deciding who should administer it.

Source: The Huffington Post, "Select the Right Trust Before Ringing in 2013," Ann Margaret Carrozza, Sept. 18, 2012