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Living Trust vs. Will in New York: https://www.hauseit.com/living-trust-vs-will-new-york/

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Estate planning is an important yet overlooked topic for many existing homeowners and first time home buyers in New York, particularly in NYC.

While the use of a will is the most commonly used way to plan for the distribution of assets upon death, a living trust can also perform the same function while offering additional benefits such as the avoidance of probate.

More specifically, the use of a living trust, or a living trust in conjunction with pour over will, can completely eliminate or minimize the time and monetary expenses associated with probate as would be required when exclusively using a will as an estate planning tool. Consequentially, a living trust is generally regarded as a great probate avoidance mechanism and will substitute.

A living trust provides additional benefits such as greater privacy and additional protection from court challenges as compared to a Last Will and Testament. A living trust is especially helpful if you reside out-of-state, as it can avoid the need for Ancillary Probate proceedings in the states where you own property.

Now let’s do a quick refresher. What is a living trust?

A living trust, also known as a ‘revocable trust’, is a way of allocating assets to beneficiaries after death while avoiding or minimizing the probate process. Assets such as real estate and bank accounts are transferred into a living trust by the grantor, and the trust documentation names a Trustee as well as Successor Trustee.

The living trust outlines what happens to the property once the grantor or settlor (the person who contributed the property) passes away. Because the assets have been transferred into the trust, they are not considered to be part of a decedent’s estate and are not subject to probate.

The grantor typically serves as the Trustee, and this means that the grantor maintains full control of the trust and the assets contained therein during her or his lifetime. Consequently, a living trust may be amended or revoked at any time while the grantor is still alive. Any income or tax obligations arising from the assets transferred into the trust remain the responsibility of the grantor.

Upon death of the grantor, the Successor Trustee is tasked with managing the assets, paying bills and making distributions as outlined in the Trust documentation while winding down the estate.

Unlike a will, a living trust is a private document which never becomes public. Therefore, it offers additional privacy compared to a Last Will and Testament which must be submitted publicly for probate and becomes a matter of public record. A living trust also offers additional protection from court challenges compared to a will.

Advantages of a living trust vs. a will in New York

As we’ve mentioned, the primary advantage and benefit of a living trust versus a will is that a living trust avoids probate. Probate is a public, time consuming and costly process through which a decedent’s Last Will and Testament is recognized through the courts and the Executor becomes authorized to manage and unwind the estate.

While probate cannot be avoided if there are assets which were not transferred into a living trust prior to death, the time and costs associated with probate can be minimized through the combination of a living trust and a pourover will. A pourover will stipulates that any assets which weren’t transferred into the trust prior to death become part of the living trust and are to be disposed of as instructed by the living trust.

In addition to avoiding or minimizing probate, a living trust also provides additional privacy and protection from court challenges compared to a traditional will.

Drawbacks of a living trust vs. a will in New York

The primary disadvantage of a living trust versus a will is the additional time, effort and cost associated with creating a trust and transferring assets such as real estate into the trust itself.

How much does a living trust cost in NY and NYC?

The typical cost associated with setting up a living trust in New York is $3,000 to $6,000.

Individuals typically prepare a living trust as one component of an overall estate planning process which may also include additional documents such as a pour-over will, health care directives, Powers of Attorney and asset integration guidance.

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