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Law Offices of
Michael Rosenberg

3 Spruce Hollow
Armonk, NY 10504
Phone: (914) 683-0800
Fax: (914) 273-3285
 mr@mrosenberglaw.com

Law Offices of Michael Rosenberg
 

Who Needs a Living Trust?

By Michael Rosenberg
 Reprinted from "Perspectives" newsletter

Occasionally I get calls from clients who have just returned from a trip to Florida or California. They say, with some enthusiasm, that while visiting friends in Florida, they heard that you can avoid probate with a living trust—and they want me to draw one up for them as soon as possible.

To be sure, there are some good reasons to have a living trust (see below), but in New York, avoiding probate is not one of them. It is true that in Florida and California, and in some other states like Illinois and Michigan, probate can be time-consuming and costly. In New York, however, probate is usually relatively simple, quick and inexpensive. So the expense of drawing up a living trust, and transferring all your assets to the trust, is usually not justified if the only objective is avoiding probate. And I do mean all your assets—those you have when you first set up the trust, and those you acquire later on. Few people are able to manage this on a continuing basis. And for certain assets, such as a car or a household checking account, trust ownership can be awkward. For that reason, you still need a will for the assets that are in your name at the time of your death.

Furthermore, contrary to some popular belief, a revocable living trust will not save you a dime in estate taxes; nor will it protect your assets for purposes of Medicaid eligibility and long-term care planning.

Good reasons for a living trust

Still, there are times when a living trust may be advantageous, including the following:

  • If you anticipate a challenge to your estate plan by a disgruntled heir, a trust usually offers more protection than a will.

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  • If the grantor is disabled or in declining health, a living trust can be a better vehicle for asset management than a power of attorney and may avoid the necessity for court appointment of a guardian; a will offers no protection in that regard.

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    • Sometimes (but not always) a trust offers more privacy than a will.

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