Federal estate and gift taxes are no longer a concern for all but the wealthiest people. The Federal exclusion (non-taxable) amounts currently (in 2020) are $11,580,000 for individuals and $23,160,000 for married couples. The New York State exclusion amount has increased as well, and is currently (in 2020) $5,850,000 per person. While the focus of estate planning for about 99% of our population is no longer on taxes, estate planning remains important for many people. The main issues are (1) how do you make sure that your estate is distributed in the manner you wish, (2) how do you reduce costs and inconvenience for your heirs and beneficiaries, and (3) how can you provide for immediate liquidity so that necessary obligations can be met without undue delay.
The absence of a carefully considered estate plan can lead to unintended consequences, or to painful bickering or lawsuits among your family members. While it is important to have a Will, for many a Trust will become the main vehicle for distribution of their estate. Here’s why…
- First, a trust can avoid probate of your estate. Probate can be a complicated legal process of identifying and acquiring the deceased’s assets, and then paying their bills and finally making distributions to beneficiaries. It can take months and even years before your spouse, children, family members and friends get anything. The court process can be slow, costly, and frustrating. When your money and property are placed in a trust that has been properly drafted, distributions can be made quickly and efficiently. Liquidity is usually immediately available for the payment of obligations.
- Second, your beneficiaries get protection against the possibility of lawsuits that might be filed by unhappy relatives who disagree with the way you want your assets distributed. Trusts are a far better shield against litigation, and that means your wishes will be carried out as you intended with a much smaller risk of dispute.
- Third, your family gets privacy. Unlike Wills, with rare exceptions, trust documents are not required to be filed with the courts. Your intentions are kept secret from prying eyes, and that affords greater peace and protection for your beneficiaries.
For a detailed discussion of trusts, click here. Lamson & Cutner advises clients regarding efficient, cost-effective estate plans, whether they live in New York City, Bronx, Brooklyn, Queens, Westchester, Nassau, Suffolk, or other counties in New York State.