Revocable living trusts (RLTs) are a popular estate planning tool in New York that allow individuals to transfer ownership of assets into a trust, which they control during their lifetime. Upon their death, the assets are distributed to beneficiaries without going through probate court.
To create an RLT in New York, one must draft a trust document that complies with the requirements of EPTL Section 7-1.17. The document should include the grantor’s name, the trust’s name, the beneficiaries, the trustee, and instructions for how the trust assets should be managed and distributed. The grantor must then transfer ownership of assets into the trust, which often involves changing the title on bank accounts, real estate, and other assets from their name to the trust’s name. The grantor must also sign the trust document in the presence of a notary public, as required by EPTL Section 3-2.1.
One of the primary benefits of an RLT is that it avoids probate, which can be time-consuming, expensive, and public. EPTL Section 3-2.1 states that probate is required when a person dies leaving assets in their own name with a gross value exceeding $50,000. By transferring assets into an RLT, those assets are not subject to probate and can be distributed to beneficiaries more quickly and efficiently.
In addition to probate avoidance, an RLT provides flexibility and privacy. Because the grantor maintains control over the assets during their lifetime, they can change the trust terms or revoke the trust entirely if they wish. The trust document is also private, unlike a will, which becomes a public record when it is submitted to probate court.
When creating an RLT, it is important to choose a trustee who will manage the trust assets according to the terms of the trust document. EPTL Section 7-2.4 sets forth the duties of a trustee, which include managing the trust assets prudently and distributing the assets to the beneficiaries according to the trust document. The grantor can serve as the trustee and manage the trust assets during their lifetime, but must name a successor trustee to take over management of the trust assets upon their death.
It’s important to note that while an RLT can help avoid probate, it does not provide total protection from estate taxes. If an estate is large enough to be subject to federal or state estate taxes, additional estate planning strategies may be necessary.
In conclusion, creating an RLT in New York involves drafting a trust document that complies with EPTL Section 7-1.17, transferring ownership of assets into the trust, and signing the document in the presence of a notary public as required by EPTL Section 3-2.1. An RLT provides probate avoidance, flexibility, and privacy, but does not provide protection from estate taxes. When creating an RLT, it’s important to choose a trustee who will manage the trust assets according to the terms of the trust document and name a successor trustee to take over management of the trust assets upon death, as required by EPTL Section 7-2.4. Please consult an attorney before attempting to create an RLT. Feel free to contact Burrell Law for a consultation.