New York residents have plenty of options when it comes to estate planning. In fact, the wide variety of options is oftentimes the reason that many people put off estate planning for so long – they simply do not know which options to choose. However, a little knowledge can go a long way. Understanding some basic concepts about estate planning could help our readers in New York to determine which options are best for their own unique situations.
Trusts as an option
One option that has gained in popularity over the recent years is trusts. Trusts can be a good method of minimizing tax implications for heirs and beneficiaries, and can also be an excellent choice for attempting to avoid the probate process to the greatest extent possible. Although trusts may seem mysterious to many people, it is important to understand the most basic concept about trusts: revocable versus irrevocable.
As may be obvious, a “revocable” trust is one that is created with the ability for the creator of the trust to terminate it at will. For those who take advantage of establishing a revocable trust, the benefits are primarily enjoyed while the creator of the trust is still alive. Assets transferred to the trust are owned by the trust, rather than an individual. If the creator of the trust decides, for any reason, that the trust is no longer beneficial, the trust can be ended.
An “irrevocable” trust, on the other hand, typically cannot be terminated after it is created – thus the name. In fact, not only is termination of an irrevocable trust prohibited, but modifications to the terms of the trust in any way are usually prohibited as well.