Who Keeps the Original Will on Long Island, New York?

In the course of our lives, it is essential to plan ahead for our loved ones’ financial and emotional well-being when we are no longer around. Creating a will is a vital part of this planning, as it provides clear instructions on how to distribute our assets and handle other matters after our passing. However, having a will is not enough; it is equally important to store the original copy in a safe and secure location. This article explores the significance of a will, its key components, and the various options available for storing it on Long Island, New York. It also outlines the factors to consider when choosing a storage method and the process of retrieving the original will after the testator’s death.

Aside from drafting a will, it is also important to consult an attorney for keeping and securing an original will on Long Island, New York. A will is a legal document that outlines how a person’s assets will be distributed after their death, and if the original will is lost, damaged, or not properly executed, it may result in the assets being distributed in a way that the deceased did not intend. At Schlessel Law, PLLC, our team of experienced lawyers, led by Long Island estate planning attorney Seth Schlessel, understands the importance of allowing individuals the choice of how they want their assets to be distributed in a way that provides clarity and peace of mind for their loved ones. Our team of competent lawyers can ensure that the will is properly executed and provide guidance on any legal requirements that need to be met to ensure the validity of the will. To schedule a free consultation, call us today at (516) 574-9630.

Importance of a Will

A will is an essential legal document that outlines how an individual’s assets and properties will be distributed upon their death. Especially in this age of financial uncertainty, the importance of having a will cannot be overstated.

Moreover, securing and keeping the original will is just as important due to its critical role in ensuring the deceased’s final wishes are carried out accurately and legally. The original will serves as undeniable evidence of the testator’s intentions, providing clarity and preventing disputes among beneficiaries. By safeguarding this crucial document, one can maintain the integrity of the deceased’s estate plan, minimize the risk of fraudulent claims, and preserve the testator’s legacy with the utmost respect and fidelity.

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Definition and Purpose of a Will

A will, also known as a testament, is a legal document that expresses an individual’s wishes as to how their estate should be distributed after their death. It also appoints an executor to administer the estate and carry out the directives stated in the will. The main purpose of a will is to ensure that the deceased’s assets are managed and distributed according to their wishes in the most efficient and accurate way possible.

In some cases, the absence of a valid will can result in disagreements, confusion, and lengthy legal procedures, as the state then steps in to administer the distribution of assets according to intestacy laws. Such laws can vary depending on the place of residency, and might not necessarily distribute the assets in accordance with the deceased’s desires.

Key Components of a Will

According to New York statute, it is mandatory for the testator to be a minimum of 18 years old and possess a state of “sound mind and memory.” Typically, a will must be created in a physical format, specifically on paper. Moreover, to create a legally binding will, certain requirements must be met. While it is advisable to consult with an attorney for specific details and local requirements, the following components are generally necessary:

• Execution of a Will: There are certain requirements that must be met for the proper execution of a will. Firstly, the testator must personally sign the will, or if directed by the testator, another person may sign on their behalf in the presence of the testator. In the latter case, the person signing must also sign the will and provide their address (although the absence of an address does not render the document invalid).
• Witnesses: The signature on the will must be witnessed by at least two individuals. These witnesses can either observe the testator signing the will or receive confirmation from the testator that the signature is indeed theirs. The witnesses should sign the will within a 30-day period from each other, and include their addresses (although the omission of addresses does not invalidate the will).
• Declaration: At some point during the execution and attestation of the will, the testator must inform each witness that the document they have signed is, in fact, their last will and testament.

By including these key components in your will and regularly reviewing it, you can ensure that your final wishes are legally binding and your loved ones are provided for according to your intentions.

Key Components of a Will	Requirements	Details
Execution	Testator signs or directs someone to sign on their behalf in their presence	If the testator is unable to sign, someone else can sign for them if the testator directs them to do so, and the person signs in the testator’s presence. The signature must be at the end of the will.
Witnesses	Two witnesses must sign in the presence of the testator and each other	Witnesses must be present when the testator signs or acknowledges their signature, and they must sign the will in the presence of the testator and each other. Witnesses must also include their full addresses.
Declaration	Testator must declare the document as their last will and testament to the witnesses	The testator must make a clear declaration to the witnesses that the document is their will, and the witnesses must understand that they are witnessing the execution of a will. This declaration can be made before, during, or after the signing of the will.

Benefits of Having a Will

Creating a will has numerous benefits for both the individual and their loved ones. Some of the most notable advantages include:

• Take control of the distribution of your assets after your passing by creating a personalized will. By doing so, you avoid leaving the decision to the state and ensure that the right individuals receive their rightful inheritances. Failing to create a will can result in your assets ending up in the wrong hands.
• Empower yourself to choose a trusted executor who will handle your estate affairs and asset management when you’re no longer around. Through a will, you can designate this person to fulfill important responsibilities such as asset distribution based on your wishes, debt settlement, tax payments, and more. Safeguarding the reliability and trustworthiness of your executor necessitates the creation of a will.
• Prioritize the protection and care of your minor children by appointing a guardian through your will. Recognizing the immense significance of your children in your life, it becomes crucial to ensure their well-being even in your absence. By clearly designating a guardian in your will, you guarantee that your children will be looked after according to your wishes.
• Maintain the flexibility to modify your will while you’re in good health. Have you had a change of heart regarding inheritance or wish to allocate assets to a different beneficiary? Have your financial circumstances or assets undergone alterations? In such cases, it may be necessary to update your will. Remember, a will can be revised at any time when you are alive and well.
• Experience a profound peace of mind for both yourself and your family by having a well-thought-out plan in place. Knowing that you have taken the necessary steps to secure your affairs brings a sense of calm and assurance. Without a will, concerns about the handling of future matters may linger, creating unnecessary worries.

In summary, by taking the time to create a well-crafted will, you may be able to ensure a smooth transition of your estate, provide for your loved ones, and leave a lasting legacy that reflects your values and intentions.

Necessity of Storing the Original Will

A will is a crucial legal document that outlines the distribution of a person’s assets and estate after their death. Proper storage of the original will is essential to ensure that the testator’s wishes are respected and executed accordingly. 

Difference between Original and Photocopies

The original will is the actual document that was signed and dated by the testator in the presence of witnessing parties. The original document carries more significant legal weight and is predominantly required when the court is asked to approve the will as valid, a process known as probate. Photocopies, on the other hand, are exact reproductions of the original document made by a copying machine. They typically do not have the same legal weight and may not be sufficient evidence of a testator’s intentions in probate proceedings.

A photocopy will usually not be considered an authentic will by the probate court, as it lacks essential elements such as original signatures, initials, and dates. Additionally, a photocopy may not accurately represent any alterations or annotations made on the original will after it was initially drafted. In some cases, a testator might have intentionally destroyed the original will to revoke it, and relying on a photocopy can lead to the distribution of the estate against their intended wishes.

Legal Requirements for Presenting the Original Will

When a person dies, the probate court evaluates their will to authenticate it and confirm that it abides by the legal requirements. The original will is usually required in this process, and failure to produce it may lead to significant delays, increased expenses, and potential disputes among beneficiaries.

In New York, a party applying for probate must provide the original will along with relevant application forms and supporting documents. The Surrogate’s Court then examines the will thoroughly to ensure that it meets the requirements such as being in writing, signed and dated by the testator, and witnessed by appropriate parties. Moreover, the court might check for any signs of tampering, alterations, or inconsistencies that might invalidate the will.

If the original will cannot be found or is accidentally destroyed, the probate court may require the party applying for probate to provide substantial evidence to prove that the testator intended the photocopy of the will to be considered as the original. This could entail an exhaustive process, including gathering testimonies from witnesses who saw the testator sign the will or obtaining expert opinions on the authenticity of the photocopy.

Challenges Due to Lost or Damaged Original Will

Losing or damaging the original will can result in several challenges during the probate process, including delays, increased costs, and potential disputes among beneficiaries. Some of the issues that may arise due to a lost or damaged original will include:

• Presumption of Revocation: When an original will cannot be found, the court may assume that the testator intentionally destroyed it to revoke its provisions. This assumption can only be overturned with strong evidence to prove that the will was never revoked.
• Burden of Proof: If the original will is missing or damaged, the party applying for probate must produce extensive evidence to prove the validity of a photocopy, if available. As mentioned earlier, this may involve testimonies from witnesses, expert opinions, and comparisons with other documents signed by the testator.
• Disputes among Beneficiaries: When a will is lost or damaged, it may create doubts among beneficiaries about the testator’s intentions. This situation might lead to disputes, litigation, and a prolonged probate process, adversely impacting the estate’s distribution and the relationships among the beneficiaries.

Safeguarding the original will and ensuring its accessibility after the testator’s death is essential to avoid numerous challenges and complications that may arise due to a lost or damaged original will.

Options to Store Original Will on Long Island

Creating a will is an essential step in estate planning. However, the existence of a will is of little value if it cannot be located after the testator’s death. Properly storing the will is crucial to ensure that the testator’s assets and possessions are distributed according to their wishes. There are several options for storing an original will, and each has its advantages and drawbacks. This article discusses four common storage options on Long Island, New York: at home, in a safe deposit box at a bank, with an attorney, and at New York’s Surrogate’s Court.

At Home

Some people may choose to store their will at home, which can be convenient but also fraught with risks. A fireproof, waterproof safe should be used to protect the document from damage, theft, or accidents. Burglary, fire, or natural disasters could result in damage or loss of the will. Moreover, the will’s location should be communicated to a trusted family member, executor, or friend to prevent it from being misplaced or overlooked.

One advantage of keeping the will at home is that it is readily accessible, making it easier to update or review when necessary. However, storing a will at home is generally not the best option, especially if the testator is concerned about confidentiality or the risk of the document being lost or damaged.

Safe Deposit Box at a Bank

Safe deposit boxes at banks are commonly used for securing valuable documents, including wills. These boxes offer greater security than storing at home, protecting the will from theft, fire, and other disasters. They also provide a level of confidentiality since only authorized individuals can access the box.

However, there are potential pitfalls to using a safe deposit box for storing a will. In some cases, the safe deposit box may be inaccessible to the family or executor until the bank receives proper authorization. This could cause delays in the probate process, as the bank may require a court order to grant access to the safe deposit box. Additionally, renting a safe deposit box incurs a recurring fee, which may not be desirable for all individuals.

Entrusting to an Attorney

Entrusting the will to an attorney offers several benefits, including convenience, security, and professional management. An attorney who has drafted the will is often the best choice for this option since they are already familiar with the testator’s estate plan. Attorneys are typically required to maintain a safe and secure location for storing clients’ original documents, thereby ensuring the will’s protection. Additionally, assigning the attorney as the executor of the estate can streamline the probate process.

There are some potential disadvantages to this arrangement as well, such as the attorney retiring, relocating, or passing away. To counter this, the testator should ensure they have a clear understanding of the attorney’s document-storage practices and ensure that their personal representative or a trusted family member knows the attorney’s contact information. This combination of security and accessibility typically makes leaving a will with an attorney a favorable option.

New York’s Surrogate’s Court

Another option specific to New York State is the Surrogate’s Court Filing System. The Surrogate’s Court is responsible for overseeing the probate process, making it an appropriate institution for storing original wills. For a one-time fee, the court will store the will in a secure location, providing both protection and accessibility. The court will also issue a receipt for the will, which should be kept in a safe place as it serves as proof of the will’s existence.

While this option provides the added security of a court institution and ensures access for authorized individuals, it may not be the most convenient choice for individuals looking to revise or review their will regularly. Additionally, the will’s location should be communicated to a trusted person to ensure it is not forgotten or overlooked.

In conclusion, there are several options for storing an original will on Long Island. These options include at home, in a safe deposit box at a bank, with an attorney, and at the New York Surrogate’s Court. Each option has its advantages and disadvantages, so individuals should carefully weigh their preferences and consider the level of security and accessibility that best suits their needs.

Retrieve the Original Will After a Testator’s Death

Retrieving the original will after a testator’s death is an essential part of initiating the probate process. The executor, an attorney, or a storage facility may be responsible for locating and preserving the will, depending on where it was kept. Here, we will discuss the process and responsibilities of each party and further steps required for administering the testator’s estate.

Process for Executors

As an executor of an estate, it is crucial to locate and access the original will as promptly as possible. This task typically involves the following steps.

1. Finding and Accessing the Original Will: The executor should start by searching the testator’s personal belongings and important documents. Common storage places include a safe deposit box in a bank, a home safe or fireproof box, or a secure filing cabinet. The testator may have also informed the executor or other trusted individuals about the will’s whereabouts. If the will is not found in the testator’s possession, it could be held by an attorney or at a specialized storage facility. The executor should contact the testator’s attorney, financial planners, or tax advisors to inquire about any knowledge of the will.
2. Submitting the Will to the Surrogate’s Court: Once the original will is located, the executor must submit it to the Surrogate’s Court to initiate the probate process. The court typically requires the will, proof of the testator’s death (such as a death certificate), and other essential documents. The executor may also need to provide their photo identification and contact information. It is essential to consult with an attorney to ensure compliance with all applicable probate procedures and requirements.
3. Probate Process: The probate process involves validating the will, identifying and informing creditors and beneficiaries, paying outstanding debts and taxes, and ultimately distributing the assets as per the will. The executor is also responsible for managing the estate throughout the probate process, which may include filing necessary documents, providing notifications to interested parties, and accounting for the estate’s assets and liabilities.

Navigating the process of locating the original will and initiating the probate process can be complex, but with careful attention to detail and compliance with all relevant procedures and requirements, the executor can fulfill their duties with confidence.

Responsibilities of the Attorney or Storage Facility

If the original will is held by an attorney or a storage facility, they also have vital responsibilities to fulfill upon the testator’s death.

Notifying Executors and Beneficiaries

Upon the testator’s death, the attorney or storage facility must notify the executor or other interested parties (such as beneficiaries) about the will’s existence and location. They will also need to provide the necessary information or documents to the executor to facilitate the estate administration process.

If the testator has not specified an executor or beneficiaries, the attorney or storage facility might need to take additional actions. They may need to search for and contact potential heirs, perform an investigation in coordination with the local court system, or inform relevant government agencies or financial institutions.

Releasing the Original Will

The attorney or storage facility should release the original will to the executor or their designated agents upon providing proper identification and proof of the testator’s death. In some circumstances, the holder of the will may be required to deliver the original will to the Surrogate’s Court or other competent authorities.

It is essential for the will holder to preserve the will’s safety and confidentiality throughout this process. They must also ensure compliance with all applicable laws, regulations, and professional responsibilities governing the handling of wills and deceased clients’ affairs.

Schedule a Consultation with our Top-Rated Long Island Estate Planning Attorneys at Schlessel Law, PLLC

Our experienced Long Island estate planning attorneys at Schlessel Law, PLLC, led by Seth Schlessel, understand the importance of keeping an original will securely to protect it from loss, damage, tampering, and to facilitate a smooth probate process. Storing an original will properly can help preserve the testator’s intentions and ensures that their wishes are fulfilled as intended. Our legal team can provide guidance on ways to properly store and secure the will to ensure its safety and accessibility when needed. Our attorneys can also help prevent disputes or challenges to the validity of the will in the future. If you would like to explore how we can assist you with your will, contact us at (516) 574-9630 to arrange a complimentary consultation.

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Biggest Mistakes Parents Make When Setting Up a Trust Fund

Trust funds in New York are highly regarded as versatile financial tools that individuals, families, and organizations utilize for sound financial management and strategic long-term planning. With their inherent flexibility, trust funds offer many benefits, including asset protection, wealth preservation, tax optimization, and the ability to support philanthropic endeavors. In New York’s dynamic financial landscape, trusts stand as an essential mechanism for effectively managing wealth and achieving various financial objectives.

However, creating a trust is not a one-and-done scenario. Getting the help of an experienced Long Island trusts attorney can be beneficial in ensuring that your trust is aligned with your estate planning goals. At Schlessel Law, PLLC, skilled Long Island estate planning lawyer Seth Schlessel and his team of legal professionals can conduct a comprehensive evaluation of your situation and help you navigate the process of creating a trust. We can also help evaluate which type of trust such as an irrevocable trust or a life estate may be applicable in your case. To learn more about how we can help you, contact us today at (516) 574-9630.

What is a Trust Fund?

A trust fund is a legal and financial arrangement that allows a third party or trustee to manage and hold assets on behalf of one or more beneficiaries. The person or entity that creates the trust is called the grantor or settlor. The purpose of a trust fund is to provide a structured means of managing and distributing assets for the benefit of the named beneficiaries, according to the terms set by the grantor.

Assets that can be placed in a trust fund include, but are not limited to, cash, stocks, bonds, real estate, and life insurance policies. Trust funds can be customized to meet specific needs and goals, such as providing for the education of children, supporting a family member with special needs, or funding a charitable organization.

Types of Trust Funds

There are various types of trust funds, each offering unique features and benefits depending on the grantor’s objectives. Some common types of trust funds include:

Revocable Trusts

A revocable trust, also known as a living trust, is an arrangement in which the grantor retains the right to alter, amend or terminate the trust during their lifetime. This type of trust provides flexibility for the grantor, as they can make changes according to their needs and circumstances. However, revocable trusts do not offer the same level of asset protection and tax advantages as irrevocable trusts.

Irrevocable Trusts

An irrevocable trust is one in which the grantor relinquishes control and rights to the assets placed in the trust, and the trust cannot be modified or terminated without the permission of the beneficiaries. Irrevocable trusts offer significant asset protection and tax advantages since the assets are no longer considered part of the grantor’s estate. This type of trust can be beneficial in reducing estate taxes and safeguarding assets from potential creditors and lawsuits.

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Living Trusts

A living trust, also known as an inter vivos trust, is established during the grantor’s lifetime and may be either revocable or irrevocable. The primary benefits of a living trust include the avoidance of probate, privacy of the trust’s terms, and the ability to manage and distribute assets according to the grantor’s wishes in the event of incapacity.

Testamentary Trusts

A testamentary trust, also referred to as a will trust, is created within the grantor’s will to take effect after their death. This type of trust can help provide for minor children, ensuring that assets are distributed according to the grantor’s wishes, and offering asset protection for beneficiaries who may not be responsible enough to manage their inheritance.

Benefits of Setting Up a Trust Fund

Trust funds offer numerous advantages, including:

• Asset protection: Trust funds can safeguard assets from litigation, creditors, and spendthrift heirs.
• Estate tax reduction: By removing assets from the grantor’s estate, trust funds can help minimize estate taxes.
• Avoiding probate: Trust funds enable a timely and private transfer of assets to beneficiaries, bypassing the often lengthy and public probate process.
• Control and flexibility: Trusts can be tailored to meet specific needs and objectives, stipulating when, how, and under what conditions assets are distributed to beneficiaries.
• Support for beneficiaries: A trust fund can provide for the well-being of family members, including education and healthcare expenses, as well as support for charitable causes.

New York State Trust Law Basics

New York trust law is governed by the state’s Consolidated Laws, including the Estates, Powers, and Trusts Law (EPTL) and the Surrogate’s Court Procedure Act (SCPA). Key factors to consider in the establishment and administration of trust funds in New York include:

• Formalities: Creating a valid trust in New York requires a written document containing a clear declaration of trust, identification of beneficiaries, and specific provisions for the management and distribution of assets.
• Trustee appointment: New York law requires the appointment of a trustee, who must be at least 18 years old and capable of fulfilling the legal duties and responsibilities that come with managing a trust.
• Statute of limitations: New York trust law includes various deadlines for contesting trusts, filing claims against trust assets, and disputing trustee actions.
• Trust accounting and reporting: New York trustees must maintain accurate records and provide periodic account statements to beneficiaries regarding the trust’s assets and transactions.

Before establishing a trust fund in New York, it is essential to consult with an experienced estate planning attorney to ensure compliance with state laws and the creation of a trust that meets your specific needs and objectives.

Common Mistakes Made by Parents

When parents decide to establish a trust for their child or children, they often have the best of intentions. A trust can provide financial stability and a safeguard for the future. However, there are several common mistakes parents make when setting up trusts that can complicate matters and potentially cause financial troubles to the intended beneficiary. 

Not Properly Assessing the Purpose of the Trust

One of the most important aspects of creating a trust is determining its purpose. Parents need to decide what they want the trust to achieve and how it will benefit their child or children. It’s essential to have a clear understanding of the trust’s objectives, whether it’s to provide for education expenses, cover living expenses, or pass along assets to future generations.

Parents should also consider the child’s age, needs, and potential future financial circumstances when outlining the trust’s purpose. By thoroughly assessing these factors, parents can establish a trust that truly meets their child’s needs, rather than creating a restrictive or inefficient trust arrangement.

Choosing the Wrong Type of Trust

There are numerous types of trusts, each designed to serve specific purposes and offer various benefits. Some of the most common trust types include revocable and irrevocable trusts, living trusts, and testamentary trusts. Parents should consult with an experienced attorney or financial advisor to help determine the ideal type of trust for their child’s needs.

Choosing the wrong type of trust can result in unnecessary expenses or undesirable consequences for the beneficiary. For example, some trusts are subject to higher taxes or may not provide the intended level of asset protection. Parents should take the time to research and understand the different types of trusts available to them before making a decision.

Selecting an Inappropriate Trustee

Selecting the right trustee is critical to the successful administration of a trust. Trustees have significant responsibilities and must act in the best interests of the trust’s beneficiaries. Unfortunately, some parents choose a trustee based on personal relationships or convenience rather than their ability to effectively manage the trust.

When selecting a trustee, parents should consider their potential appointee’s financial acumen, experience, and willingness to take on the role’s responsibilities. In some cases, it may be prudent to appoint a professional trustee, such as a bank or trust company, to provide added experience and impartiality in administering the trust.

Failing to Fund the Trust

A trust is only beneficial if it is properly funded. Parents must ensure that they transfer the appropriate assets into the trust, either during their lifetime or upon their death. Without proper funding, the trust can’t fulfill its intended purpose, and the beneficiary may not receive the intended financial support.

To avoid this issue, parents should work with experienced professionals to properly title assets in the trust’s name and make provisions in their estate plan for funding the trust in the event of their death.

Failing to Keep the Trust Updated

A trust is not a static document. As circumstances and laws change, it’s important for parents to review and update the trust to ensure it continues to meet the beneficiary’s needs and remains compliant with current regulations.

Parents should periodically review their trust with a qualified attorney, particularly after significant life events such as marriage, divorce, or the birth of additional children. Maintaining an up-to-date trust can help avoid disputes or complications that may arise from outdated or unclear provisions.

Inadequately Planning for Taxes and Expenses

Taxes and expenses related to trusts can be complex and may impact the trust’s ability to fulfill its intended purpose. Parents should work with an attorney or financial advisor to ensure that they have properly accounted for potential taxes, fees, and other expenses associated with the trust.

This may include planning for the payment of estate taxes, considering the tax implications of distributing trust assets, or ensuring that the trust has sufficient funds to cover ongoing expenses and fees. Parents should also understand that trusts are subject to different tax rules and rates than individuals or corporations, so careful planning and professional guidance are essential in navigating these issues.

Common Mistakes Made by Parents	Implications	Recommendations
Not Properly Assessing the Purpose of the Trust	Creating a restrictive or inefficient trust arrangement	Thoroughly assess the child’s needs, age, and potential future financial circumstances
Choosing the Wrong Type of Trust	Unnecessary expenses or undesirable consequences	Consult with an experienced attorney or financial advisor to determine the ideal type of trust
Selecting an Inappropriate Trustee	Ineffective management of the trust	Consider appointing a professional trustee with financial acumen and experience
Failing to Fund the Trust	Trust cannot fulfill its intended purpose	Work with professionals to properly transfer assets into the trust and plan for funding in the future
Failing to Keep the Trust Updated	Disputes or complications from outdated provisions	Periodically review and update the trust with an attorney, especially after significant life events
Inadequately Planning for Taxes and Expenses	Inability to fulfill the trust’s purpose	Work with an attorney or financial advisor to account for potential taxes, fees, and expenses

Effective Trust Fund Planning for Parents

Trust funds can be a powerful tool for parents to ensure their children’s financial future, providing ongoing financial support, education, healthcare, and other important aspects of a well-rounded life. Effective trust fund planning includes several key components: identifying long-term goals for the trust, seeking professional assistance, allocating assets to fund the trust, periodically reviewing and updating the trust, and educating beneficiaries about trust fund responsibilities.

Identifying Long-term Goals for the Trust Fund

Before establishing a trust fund, parents must clarify their objectives for the trust. What are the desired outcomes? Are there specific educational, financial, or personal milestones to be achieved? Identifying long-term goals for the trust fund will help parents design the trust in a way that aligns with their ultimate wishes for their children.

To provide a solid foundation for trust fund planning, parents should consider a few factors. First, estimate the total amount needed to fund the trust and the timeline required for it to mature. Then, establish any restrictions or limitations to be placed on the trust, such as disbursements only for educational expenses or investments in sustainable businesses. Finally, determine the types of assets to be included in the trust and the order in which they will be liquidated or distributed.

Seeking Professional Assistance

For many parents, trust fund planning can be a complex process. It is essential to seek assistance from professionals with expertise in this area. Consider working with financial advisors, estate planning attorneys, and tax professionals who specialize in trust funds.

Financial advisors can provide guidance on the types of investments and strategies to use for generating income and preserving capital within the trust. Claims too not guaranteed. They can also suggest the best ways to fund the trust, such as using life insurance policies or setting up a family-limited partnership.

Estate planning attorneys can help parents navigate the legal intricacies of trust fund creation, administration, and distribution. They will work with parents to draft the necessary documents, including the trust agreement, to clearly outline trust terms and conditions.

Tax professionals are essential in understanding the complex tax implications of trust fund creation and distribution. They will help minimize any tax burden associated with the trust and ensure compliance with all relevant tax regulations.

Allocating Assets to Fund the Trust

Parents should consider the types of assets they can use to fund the trust. Some options include cash, stocks, bonds, real estate, life insurance policies, retirement accounts, and business interests. The choice of assets will depend on various factors, such as the parents’ financial situation, the intended purpose of the trust, and potential tax implications.

It is important to carefully evaluate the assets’ current value and future growth potential when allocating them to the trust. This is where the assistance of a financial advisor or a trusts attorney can be invaluable. By diversifying the trust’s assets, parents can minimize risk and create a more balanced investment strategy.

Periodically Reviewing and Updating the Trust

As circumstances change over time, parents should review and update the trust to reflect their current situation and intentions. Major life events like marriage, divorce, the birth of additional children, or the death of a family member can necessitate modifications to the trust.

Periodic reviews should also assess the trust’s investment performance and align it with long-term objectives. Evaluating the trust’s asset allocation and making adjustments as needed may be key to ensuring ongoing trust fund success.

Educating Beneficiaries about Trust Fund Responsibilities

Finally, parents must educate their children about the responsibilities that come with being trust fund beneficiaries. Providing a solid understanding of trust fund management and the purpose behind the trust can help prevent potential disputes and ensure the responsible use of the funds.

Open and ongoing communication with beneficiaries is essential for the successful functioning of the trust. Educate young beneficiaries about budgeting, financial planning, and investment strategies as they grow older to prepare them for the responsibility of managing their trust fund.

In conclusion, effective trust fund planning is a vital aspect of securing a financially stable future for your children. By following these steps and working with the right professionals, parents can create a trust fund plan that delivers on their long-term objectives and expectations.

Tips for Avoiding Common Trust Fund Mistakes

Establishing a trust can be an effective way to transfer wealth and protect your financial legacy. However, mistakes can lead to complications and potential disputes among beneficiaries. To ensure the smooth administration of a trust, consider these tips for avoiding common trust fund mistakes.

Creating a Well-defined Trust Distribution Plan

Clearly defining your trust distribution plan is essential. Ambiguity in trust instructions can lead to misunderstandings and disputes among beneficiaries, increasing the likelihood of a legal challenge. To prevent this, ensure that specific details about the trust assets are included in the trust document. Be very clear about the conditions under which assets or income will be distributed to beneficiaries. For example, you might specify that a beneficiary must reach a certain age, complete a specific educational milestone, or undergo substance abuse counseling before receiving their inheritance.

Additionally, it’s essential to balance flexibility with control. A well-drafted trust should allow for amendments or adjustments, as needed, while still maintaining the grantor’s original intent. This balance can be achieved by incorporating mechanisms like a trust protector, who can modify the trust as circumstances change, or by using discretionary trusts that give the trustee decision-making power regarding distributions.

Attending to Required Legal Formalities

Trusts must be established and executed according to applicable laws and regulations to be valid and legally enforceable. This means that you should seek the advice of a qualified New York estate planning attorney to ensure the trust document is accurate and reliable. Formally executing the trust typically includes having the document notarized and witnessed by independent third parties.

Furthermore, it is essential to fund the trust correctly by transferring assets (like real estate or investment accounts) into the trust’s name. Properly funding the trust ensures that the assets will be protected and managed according to the trust’s terms.

Considering the Beneficiaries’ Needs and Circumstances

When designing a trust, be sure to consider the unique needs and circumstances of each beneficiary. One size does not fit all, so it may be wise to develop customized trust provisions tailored to each beneficiary’s situation. This might include special provisions for beneficiaries with disabilities, addiction issues, or considerable financial inheritance.

It may also be wise to prepare a letter of intent outlining your wishes, values, and vision for the trust. This document can serve as a valuable guide for the trustee and provides context for the trust’s goals and purpose.

Real-life Trust Fund Mistakes and Their Consequences

Unfortunately, not all trust fund setups end successfully. The following examples illustrate some common mistakes and the resultant negative consequences.

Breaches of Fiduciary Duty

Fiduciary duty is a legal obligation for a trustee to act in the best interests of the trust’s beneficiaries. However, there have been cases where trustees have acted for their personal benefit at the expense of the beneficiaries. For instance, a trustee may mismanage trust assets, fail to make timely distributions, or make unauthorized expenses. Such breaches of fiduciary duty can significantly undermine the integrity and performance of the trust fund and often lead to legal disputes.

Taxation Pitfalls

Inadequate planning for tax implications is another common mistake in trust fund setups. For example, if a trust is not structured properly, it may be subject to high tax rates, which can ultimately reduce the funds available for beneficiaries. Additionally, failure to file appropriate tax returns in accordance with taxation laws can result in severe penalties and possibly litigation.

Conflict and Litigation among Beneficiaries

Unclear or ambiguous trust terms can lead to conflicts among beneficiaries, who may disagree on the interpretation of the trust provisions. Such conflicts can result in costly and time-consuming litigation, which could hurt the trust’s value and the relationships among family members.

Working with an Experienced Long Island Trusts Attorney

Long Island trusts attorneys who possess extensive knowledge and experience in trust fund matters emphasize the critical role of involving experienced legal and financial professionals throughout the process. These professionals understand that thorough planning, precise drafting, and ongoing maintenance are vital for the establishment of a successful trust fund. By proactively identifying and addressing potential issues early on, both grantors and beneficiaries can benefit from a well-structured and effectively managed trust fund.

The complexities of trust law and the ever-evolving legal landscape require the assistance of skilled Long Island trusts attorneys. These professionals possess in-depth familiarity with New York state laws and regulations concerning trusts, enabling them to navigate the intricate legal framework with confidence. By working closely with a knowledgeable attorney, individuals and families can ensure that their trust fund is established in full compliance with applicable laws and maximizes its intended benefits.

Additionally, experienced Long Island trusts attorneys bring practical insights to the table. They possess a deep understanding of the financial intricacies involved in trust fund management, including considerations related to taxes, investments, and asset protection. This comprehensive understanding allows them to customize the trust fund to align with the specific needs and goals of the grantor and beneficiaries.

One of the primary advantages of involving a skilled trusts attorney is their ability to anticipate and mitigate potential challenges. Through a thorough analysis of the grantor’s financial situation, family dynamics, and long-term objectives, the attorney can identify any possible obstacles that may arise during the trust’s lifespan. They can incorporate safeguards and provisions within the trust document to protect the interests of the beneficiaries and ensure the grantor’s wishes are faithfully fulfilled.

Moreover, an experienced Long Island trusts attorney provides ongoing guidance and support throughout the life of the trust. They assist with the administration of the trust, including tasks such as asset management, reporting, and compliance with legal requirements. This ongoing involvement ensures that the trust remains aligned with changing circumstances, regulations, and the evolving needs of the beneficiaries.

At Schlessel Law, PLLC, we leverage our combined experience to provide practical legal solutions to parents seeking to safeguard their children’s future through the establishment of trust funds. We believe that trust funds are not only for the wealthy but also for those who want to provide financial security to their loved ones. We take the time to conduct a financial evaluation of your estate planning goals, introduce alternative options, and assist you in making an informed decision. Contact us today to schedule a consultation at (516) 574-9630.

source https://www.schlessellaw.com/the-biggest-mistake-parents-make-when-setting-up-a-trust-fund-in-long-island/

What is the Letter of Administration in NY?

When a person passes away without a Will in New York, the distribution of their assets is determined by the state’s laws and procedures. To probate a will in New York, obtaining a letter of administration is one of the first steps that an administrator must take. These letters are utilized to designate one of the heirs as the estate’s administrator, granting them the power to collect and distribute the deceased’s assets.

In the event that your deceased family member did not leave a Will, a skilled Long Island estate planning attorney may be able to help you in obtaining letters of administration and guide you through the administration process. At Schlessel Law, PLLC, our team of experienced New York probate lawyers may be able to provide valuable assistance and support in probating an estate in New York when there is no Will. Call us at (516) 574-9630 to schedule a consultation.

What is a Letter of Administration?

When someone passes away without leaving a will, the Letters of Administration are issued to designate an administrator for their estate. It is issued by the Surrogate’s Court after the appropriate petition has been filed and approved. With the Letters of Administration, an heir can be designated as the administrator of the estate, which grants them the authority to collect and distribute the deceased person’s assets. Once appointed, the administrator can act on behalf of the deceased person’s estate in various settings, such as managing movable and immovable properties and overseeing estate business with financial institutions, government agencies, hospitals, and other places.

What are the Types of Letters of Administration?

Each estate is unique, and the letters of administration required to permit their distribution vary accordingly. As an administrator, it’s important to be aware of the different types of letters that may be needed in various situations. 

Ancillary Letters of Administration

When an individual from another state passes away with property in New York, any party who has received Letters of Administration from that state must take specific legal steps to allow their authority to be recognized in New York State. The administrator is required to submit a formal petition for Ancillary Letters of Administration to the New York Surrogate’s Court in the county where the property is located.

A New York ancillary administration proceeding will be conducted by the court to review the validity of the Letters of Administration obtained from another state. This process involves providing the court with a copy of the out-of-state Letters of Administration, along with a certified copy of the death certificate, a list of the decedent’s New York assets, and any other relevant documents.

Once the court has verified the validity of the out-of-state Letters of Administration, it will issue Ancillary Letters of Administration, allowing the administrator to manage and distribute the decedent’s assets. These assets may include real estate, personal property, and any other property owned by the decedent in New York.

Limited Letters of Administration

The Surrogate’s Court also issues Limited Letters of Administration, which grant authority to an individual to carry out particular and restricted duties. These may include initiating legal action, examining estate assets, or conducting a discovery and turnover proceeding. 

The Court bestows only the authority that is necessary for completing the assigned task upon the recipient of Limited Letters of Administration. For instance, the individual may be authorized to commence a lawsuit but not to resolve it or distribute the funds to the estate’s heirs without seeking additional court approval.

The Surrogates Court will approve Limited Letters only when it is deemed beneficial for the Estate. It typically takes several weeks to several months to complete the procedure.

Temporary Letters of Administration

Temporary Letters of Administration have a six-month validity and are granted when there is a foreseeable delay in obtaining full Letters of Administration but immediate action is necessary to safeguard the Estate’s interests. This may occur in situations such as:

• when obtaining jurisdiction over all necessary parties is time-consuming
• when obtaining waivers and consent from all parties is not possible
• when trying to probate a lost will’s copy
• when the nominated executor renounces the position or is unsuitable due to incompetence

Additionally, Temporary Letters of Administration may be issued in instances where an individual is absent, meaning they have disappeared or are alleged to be deceased but still have property in the state.

Who are Eligible to Apply for Letters of Administration in New York?

In New York, there is a rule that determines who is eligible to file for a letter of administration. Generally, the closest distributee (i.e. family member) of the decedent is responsible for filing. This means that the spouse of the Decedent has a higher priority than their children when it comes to filing for administration. However, if the Decedent’s spouse is deceased, the children have equal rights to file. In the event that the distributee entitled to the priority right chooses not to oversee the estate, they have the option to execute a renunciation and waiver. Similarly, if multiple distributees have equal rights (such as the Decedent’s son and daughter), they must sign waivers.  Signing a waiver renouncing their right to administration does not imply that they are renouncing their portion of the inheritance from the deceased person’s estate.

If you need assistance with filing for letters of administration, it’s important to seek the guidance of a skilled probate lawyer in New York. An experienced probate attorney may be able to explain the legal requirements for filing for letters of administration and ensure that all necessary paperwork and documentation are completed correctly.

How to Apply for Letters of Administration?

In order to become the administrator of an estate, you will need to submit an application to the Surrogate’s Court, which will need to include several documents, including the Petition for Letter of Administration. Additional documentation such as the decedent’s death certificate, Affidavit of Sole Heirship, and Affidavit of Due Diligence may also be necessary.

Once all of the necessary documents have been submitted, it typically takes between 3 and 6 weeks to receive a letter of administration in New York. However, if someone contests your right to administer the estate, the process may take several years. In recent times, budget cuts and delays have resulted in slightly longer waiting times.

It’s worth noting that there is a possibility that the court may refuse your application and appoint a public administrator to manage the estate due to circumstances beyond your control.. At Schlessel Law, PLLC, our team of Long Island probate lawyers may be able to help you understand the eligibility criteria, the documents that need to be submitted, and the process involved in applying for letters of administration. Call us today to learn more about how we can help.

What Happens After Letters of Administration are Granted in New York?

The Letters of Administration granted in New York authorize you to act as a representative of an estate and assume the responsibilities involved in administering it. As an appointed administrator by the Surrogate’s Court, you will be able to undertake various tasks, such as obtaining a tax ID number for the estate from the federal government, opening an estate bank account, requesting information from institutions holding the decedent’s assets, transferring assets from the decedent’s name to that of the estate, paying the decedent’s debts, collecting their claims, marshaling the estate assets, and distributing them to beneficiaries after obtaining proper waivers or providing an accounting.

Without New York Letters of Administration, you would not be able to perform these tasks as banks would not provide information or transfer funds, the county recorder would not record property deeds, and buyers would not purchase properties from you. It is advisable to obtain multiple certified copies of the Letters of Administration as each bank and government agency may require an original. Additionally, the court can issue a Certificate of Appointment of Administrator, printed on watermarked blue paper, which resembles official documents like death certificates, birth certificates, or marriage certificates and may be necessary for certain institutions.

Working With A New York Probate Lawyer

Obtaining letters of administration can be a complex process that involves various issues, including proving kinship and searching for unknown heirs. A skilled probate lawyer in New York can guide you through the process and provide legal advice on the required documents and forms to be filed, ensuring compliance with legal requirements. At Schlessel Law, PLLC, our team of experienced Long Island probate lawyers, led by estate planning attorney Seth Schlessel, can assist you with any legal disputes or issues that may arise during the administration process. Contact us today at (516) 574-9630 to schedule a consultation.

source https://www.schlessellaw.com/what-is-the-letter-of-administration-in-ny/

How Does New York State Gift Tax Work?

Gift taxes are a financial obligation imposed on a person’s right to transfer property to another person without receiving fair market value in return. Giving someone a gift that exceeds a specific value may require a person to have to pay taxes. New York state does not require residents to pay a gift tax at the state level, however, there are federal gift taxes and other limitations that you must be aware of when trying to give assets to beneficiaries in New York. 

Working with a qualified Long Island estate planning attorney may help make sure that you are following legal requirements to avoid costly penalties. At Schlessel Law, PLLC, our team of legal professionals, led by top-rated attorney Seth Schlessel, leverages their extensive knowledge of the law to assist Long Island residents in protecting their assets while adhering to the law. To learn more, contact us today at (516) 574-9630 to schedule a consultation.

Gift Tax Exclusions and Lifetime Exemptions in New York

The gift tax is imposed on any transfer of property in which the person receiving the assets or property does so without receiving cash or equivalent value in exchange.

Even though New York does not require residents to pay a gift tax on assets and property given away to beneficiaries, the federal government does impose the tax on gifts once they exceed a specific amount. This amount is determined annually and can increase depending on the economy but only at increments of $1,000. For 2022, the amount was $16,000; for 2023, the annual federal gift tax exemption is $17,000.

When giving away amounts, only the amount above the annual exclusion is taxed. For example, you can give a sibling $20,000 and the taxable amount would be $3,000 above the $17,000 exclusion. The exclusion amount applies for the whole year, meaning the amount you give away doesn’t have to be a lump sum. If you give away $2,000 a month for the tax year, you will only be taxed for the $7,000 above the $17,000. You will have to file a gift tax return for the amount that is above the annual exclusion.

Gifting above the annual exclusion doesn’t make you automatically liable to pay taxes. There is also a lifetime gift and estate exemption that applies to each taxpayer. The lifetime exemption limit for 2023 has been raised to $12.92 million from $12.06 million in 2022. In the example above, you can file a gift tax return for the taxable amount and you will still not have any taxes due because of the lifetime exemption.

If a person exceeds the annual exclusion, they would need to file a Form 706 and report the gift to the IRS. However, if you and your spouse are both US citizens, you can enjoy an unlimited marital exemption and would not have to worry about the annual exclusion amount. You may also be able to utilize the combined exemption if you and your spouse would like to give away assets you own together, referred to as gift splitting. You and your spouse can give away up to $34,000 as is the exemption for 2023. This applies to same-sex couples who are legally married but not to registered domestic partners or civil union partners. 

If your spouse is not an American citizen, you would have to file a gift tax return individually. A citizen spouse can give a non-US citizen spouse up to $175,000 in 2023. Anything above that amount would be considered taxable under the gift tax exclusion.

While most Americans wouldn’t have to deal with the federal gift tax, it is not overly difficult to calculate for those who do have to pay them. Gift tax rates are calculated using margins with the maximum rate reaching 40%. Only those who exceed the lifetime gift and estate exemptions will have to pay the gift tax.

For example, if a person wants to give $50,000 after depleting their lifetime exemption, their gift will be taxed along the following margins.

Federal Gift Tax Rates
Taxable Amount Above Annual Exclusion	Applicable Gift Tax Rate
$0 – $10,000	18%
Above $10,000 but below $20,000	20%
Above $20,000 but below $40,000	22%
Above $40,000 but below $60,000	24%
Above $60,000 but below $80,000	26%
Above $80,000 but below $100,000	28%
Above $100,000 but below $150,000	30%
Above $150,000 but below $250,000	32%
Above $250,000 but below $500,000	34%
Above $500,000 but below $750,000	37%
Above $750,000 but below $1,000,000	39%
$1,000,000+	40%

The breakdown for the calculation on the taxes would be as follows:

• $10,000 – 18% = $1,800
• $10,000 – 20% = $2,000
• $20,000 – 22% = $4,400
• $10,000 – 24% = $2,400

The total gift tax imposed on the $50,000 gift would be $10,600.

There are notable exceptions to the gift tax rule. Not all gifts are subject to the gift tax and payments made for medical expenses, educational expenses, and donations to political or charitable organizations will not be subject to the gift tax. The gift tax would also not apply to gifts made to spouses who are also US citizens.

If you are unsure whether your gift would be subject to taxes, consulting with an experienced financial advisor or an estate planning attorney would be helpful in ensuring that you are aware of your tax obligations. Having the help of a lawyer who is well-versed in tax law and how the exemptions work will help you avoid costly mistakes down the line.

The New York 3-Year Clawback Rule

The state of New York does not impose a gift tax, however, it does have a 3-year clawback rule for estate tax purposes. 

When a person passes away, the state will include the last three years of gifts the person gave away from their estate and include the gifts for the last three years in the calculation for the person’s estate taxes. If a person gave away $1,000,000 two years before they passed away, the amount will be included in the overall computation of their estate for estate taxes.

It is important to note that the lifetime exemption for gift and estate taxes would also apply to the amount calculated under the 3-year clawback rule. If the person has not exceeded the lifetime extension throughout their life and the value of their estate isn’t likely to reach the $12.92 million exemption, they would not have to pay any estate taxes on the federal level. 

New York does have an estate tax at the state level. In 2022, estates valued at less than $6.11 million were not subject to estate taxes and in 2023, the limit was raised to $6.58 million. Just like the gift tax, the estate tax in New York also applies in margins. However, high-net-worth New Yorkers should be aware of the New York estate tax cliff.

New York Estate Tax Cliff

While estates valued at less than $6.58 million would not be subject to the estate tax due to the exemption, estates exceeding the exemption by more than 5% or estates valued at more than $6,909,000 (as of 2023) are entirely taxable. 

Only those falling under the 5% margin would have their estate taxed on the excess above the $6.58 million exemption. For example, if a person’s estate is worth $6.75 million, the taxable estate would only be $170,000. If the estate is valued at $7 million, the whole estate would be considered taxable.

If a person would try to utilize the lifetime exemption to lessen their taxable estate when it comes to estate taxes, availing of this method would require the person to outlive their gift by three years to avoid it being subjected to the clawback rule.

For couples in New York who can avail of the estate tax exclusion for spouses, the amount that would pass on to the surviving spouse would still be subject to estate taxes at the time of the second spouse’s death and their beneficiaries would be receiving an amount that is significantly less due to the cliff. 

This may require the establishment of a credit shelter trust which would only apply to married couples whose estate would likely fall off the tax “cliff”. When a spouse passes away, their estate plan will direct an amount equal to the New York estate tax exemption ($6.58 million in 2023). Any amount above the exemption can either pass through another trust or directly to their beneficiaries. 

This allows the surviving spouse and the deceased spouse’s beneficiaries to access the assets but will not subject them to estate taxes when the surviving spouse eventually passes away as the assets would belong to the trust and not directly owned by the surviving spouse. If your spouse is not a US citizen, a different method may be applicable for you. An experienced trusts attorney can shed more light on whether a credit shelter trust would be helpful in your situation. 

It is also viable to donate the assets to be able to get your estate’s value below the threshold. However, this should only be done with the help of an experienced attorney who is knowledgeable about the laws and other options available.

If you think that you will fall off of the estate tax “cliff”, it is important to seek the help of an experienced estate planning attorney who would be able to help you explore your options for reducing your tax obligations. High-net-worth individuals are at significant risk of losing a sizable amount of their assets and property when they pass away due to New York’s estate tax rules. 

Seth Schlessel, a skilled Long Island estate planning and trusts attorney, has dedicated his practice to helping families ensure that their hard-earned assets are protected. At Schlessel Law, PLLC, our team of estate planning attorneys create tailored plans that address each client’s individual needs and estate planning goals. Contact us today at (516) 574-9630 to learn more about our estate planning and trusts services. 

How an Estate Planning Attorney Can Help

Regardless of the size of your estate, planning your taxes is a part of securing your legacy for your loved ones. While most people would not have to worry about exceeding the lifetime exemption, it is still important to safeguard what happens to your estate and ensure that it will be handled and distributed according to your wishes.

There are different estate planning tools available that a qualified estate planning attorney can utilize in optimizing your estate for tax purposes. A significant portion of an estate planning attorney’s job is to help clients understand the impact of existing legislation on their estate and how estate planning tools can be used to respond to this impact. 

Depending on your financial situation, your attorney may be able to devise an estate plan that takes into account New York’s laws on exemptions and exclusions and provide you with options that would prevent any adverse impacts on your estate. It is important to remember that even those with existing estate plans would have to update their plans to reflect current legislation and their current milestones in life. 

Getting the help of a qualified Long Island estate planning attorney can help you reduce the hassle and skillfully navigate the legal processes involved in securing your estate. At Schlessel Law, PLLC, top-rated estate planning attorney Seth Schlessel and his team of legal professionals provides quality estate planning services. Our team diligently works to provide a tailored plan that accommodates our clients’ needs and financial situation with the aim of fulfilling their estate planning goals. We may be able to assist you in planning your estate to protect your assets and avoid being subjected to hefty estate taxes.

To learn more about how we can help you, contact us today at (516) 574-9630.

source https://www.schlessellaw.com/how-does-new-york-state-gift-tax-work/

What Is the Difference Between an Executor vs. an Administrator?

A person can wear many hats when it comes to estate planning. Depending on your role, you can be expected to perform specific duties and may even be penalized for nonperformance of those duties. Two such roles are that of an Executor and an Administrator. While a single person can and sometimes does perform both duties, in some instances, the two roles can be very different.

If you have been tasked with performing as either the Executor or the Administrator of an estate, it is in your best interest to learn how best to perform your duties. An experienced estate planning attorney can help you differentiate between the two and assist you in your responsibilities. Top-rated Long Island estate planning lawyer Seth Schlessel of Schlessel Law, PLLC, has the necessary skills and legal knowledge to guide you through the duties of being an Executor or an Administrator. Call Schlessel Law, PLLC today at (516) 574-9630 to schedule a free consultation.

Definitions and How They Are Appointed

An Executor can be a person, a bank, or a trust company named in a deceased person’s Will who is assigned the responsibility of seeing the provisions of the Will to fruition. More than one Executor can be assigned, especially in cases of a larger estate. 

When a person dies without a Will or if the decedent’s Will did not name an Executor for their estate, the court will assign an Administrator to take care of the decedent’s affairs.

Both estate Executors and Administrators are entitled to payment depending on the size of the estate. When the Executor of an estate is the decedent’s friend or family member, it is not uncommon to see Executors waive their right to their commission. However, banks or trust companies will understandably seek compensation for their services and sometimes decline to serve their duty unless the estate is large enough to meet the bank or trust company’s commission requirements. 

While an Executor is assigned through the Will, the appointment of an Administrator can be a more complicated process. The Surrogate’s Court will need to be provided with a Kinship Affidavit which the court can use to determine kin who can take on the role of Administrator. Family members of the decedent can also file to become an Administrator provided that they submit all the necessary documents establishing kinship and are approved by the court. 

The Surrogate’s Court will give out official Letters of Administration to qualified heirs of the decedent and appoint them with the authority to collect and give out assets in the decedent’s estate according to the law.

If the estate has less than $50,000 of personal property, a Voluntary Administration process may be filed. If the next of kin of the decedent cannot be established or the remaining relations are distant, the county’s Public Administrator will be assigned to take on the task of being the estate’s Administrator.

The equivalent of Letters of Administration for an Executor would be a Letters Testamentary document. Letters Testamentary gives an Executor the authority to act on behalf of the decedent’s estate. It is important to note that Executors cannot be compelled into carrying out the functions of an Executor even by the court while kin of the deceased may petition the court to act as the estate’s Administrator if there is no Will.

The basic requirements for those who would like to act in the capacity of an Executor or an Administrator are as follows:

• At least 18 years of age
• Of sound mind – not declared incapacitated by a court
• With no felony convictions

New York probate court may also deny the assignment of a potential Executor, regardless if they have been named in the decedent’s Will, if they are found to be unqualified. An Executor can be disqualified if they have a history of substance abuse, dishonesty, or financial mismanagement. The court may also deny the appointment of an executor who is unable to read and write in English.

Duties and Responsibilities

Both an Executor and an Administrator have a fiduciary responsibility to the estate. This means that they have a duty to keep the best interests of the estate at all times, even when it means putting the estate above their own best interest.

In some cases, the Surrogate’s Court may require that the Administrator issue a bond. Executors, being appointed by the decedent, are often exempted from this bond as they are usually vetted by the decedent. The bond is meant to act as insurance that provides security to the estate in case an appointed Administrator does not take care of the estate. The bond will be used to reimburse any losses the estate incurs as a result of any mismanagement by an appointed Administrator. Compared to an Administrator’s bond, an Executor assigned through a Will is expected to perform their duties keeping in mind the goodwill they had with the decedent.

This is not to say that Executors may be free to do as they please due to the lack of the bond. Beneficiaries who have a reasonable belief that an Executor or Administrator is not acting according to the best interests of the estate may file a complaint against the fiduciary with the Surrogate’s Court.

A key difference also exists between Executors and Administrators concerning which standard they are expected to perform under. Executors are required to settle the estate according to the wishes of the decedent, as dictated by the Will while Administrators, including those assigned by the Surrogate’s Court, must settle the estate according to New York’s intestacy laws.

Executors and Administrators can both seek the assistance of a Long Island probate attorney to help them perform their duties. The attorney’s lawyer fees can be charged to the estate. The responsibilities of an estate’s fiduciary during probate are to:

• Create an inventory and appraise the assets of the decedent’s estate
• Pay the taxes and bills of the estate
• Validate any claims made by creditors and pay any debts owed by the estate
• Transfer property to beneficiaries and heirs according to the Will or New York’s intestacy laws.

Being an Executor or Administrator of an estate is no easy task. It requires considerable time and effort to perform the fiduciary duties involved. Estate fiduciaries are also open to strict scrutiny and are liable to be challenged in court if the beneficiaries find due cause to file a complaint. 

If you have decided to take on the management of a loved one’s estate, either by being named as the Executor through a Will or by petitioning or being appointed by the court, having the help of an experienced Long Island probate attorney can be beneficial.

Seth Schlessel, a skilled Long Island probate attorney, has assisted both Executors and Administrators alike in the process of probate and in performing their fiduciary duties. Our team of Long Island probate lawyers at Schlessel Law, PLLC, provides quality legal counsel and can also aid you in collecting the necessary documents to manage the estate. To schedule a free consultation with top-rated Long Island probate attorney Seth Schlessel, call Schlessel Law, PLLC today at (516) 574-9630.

source https://www.schlessellaw.com/what-is-the-difference-between-an-executor-vs-an-administrator/

Advantages and Disadvantages of Creating a Living Trust

Estate planning involves the effective use of the legal tools available to create a comprehensive estate plan that allows a person to leave a lasting legacy. Trusts are an important part of estate planning which allows individuals to manage their assets effectively. A well-designed trust can allow you to keep your assets safe for your chosen beneficiaries.

However, it is important to remember that a tool is only effective if it solves and addresses your personal concerns and goals. Getting the help of an experienced Long Island trusts attorney who can evaluate your financial situation can be beneficial in determining whether you should include a trust in your estate plan. Top-rated Long Island estate planning lawyer Seth Schlessel is here to help. Contact Schlessel Law, PLLC today at (516) 574-9630 to schedule a complimentary consultation.

What is a Living Trust?

A living trust is a kind of trust that allows a grantor to use the assets in the trust while they are alive. Depending on the terms of the trust, the grantor may be able to continue using the assets placed in the trust and can add more assets into the trust throughout their life. The grantor’s beneficiaries can receive the assets in the trust once the grantor has passed away.

A living trust is meant to own the grantor’s assets throughout their lifetime and to house as many assets as possible. While most trusts have another person acting as trustee instead of the grantor, it’s not uncommon for living trusts to have a grantor-trustee to allow full control over the trust’s assets. A successor trustee is also assigned to take over the trust once the grantor, and initial trustee, passes away. The successor trustee is the one responsible for overseeing the transfer of the trust’s assets to the beneficiaries.

A living trust can either be revocable or irrevocable.

Revocable Living Trust

A revocable trust and a living trust can often be used interchangeably to refer to a trust which can be changed after it is created. Having a revocable trust allows a grantor to add or remove beneficiaries and modify the terms of the trust, the assets included in it, as well as the way the assets are managed.

Irrevocable Living Trust

Compared to a revocable trust, the terms of an irrevocable trust cannot be changed once it is created, hence the name. Once the trust is signed, the consent of all beneficiaries or the approval of a court is required to be able to change the terms of the trust. A grantor for an irrevocable trust cannot act in the capacity of trustee.

Whether you should include a revocable or irrevocable trust in your estate plan depends on the purpose you want the trust to have. It is important to weigh the pros and cons of each option before deciding which kind of trust you want to establish. Experienced Long Island trusts attorney Seth Schlessel of Schlessel Law, PLLC may be able to help you understand which kind of trust best addresses your estate planning goals and walk you through the process of creating your estate plan. Call us today at (516) 574-9630 to schedule a free consultation with top-rated Long Island estate planning attorney Seth Schlessel.

What Are the Advantages of a Revocable Living Trust?

Avoiding probate

One of the most important advantages a living trust can have is avoiding probate. Probate is the process of transferring a decedent’s property to their heirs and beneficiaries. When a trust is created, the ownership of the assets put inside the trust gets transferred from the grantor’s name into the trust. Given that the assets are under the trust’s name, the transfer of the assets can be expedited and, in some cases, probate may be avoided entirely for the assets included in the trust. A trust also allows you to avoid multiple probate cases in different states.

Financial control

Trusts allow you to manage your assets in the long-term and afford you more control over the timeframe of the distribution of your assets. While a will can also be used to manage your estate after your death, the distribution of your assets is typically initiated once probate is concluded. You can also continue to provide for your loved ones’ needs with the use of a trust and even donate assets to your favorite charities at regular intervals. Even while you are still alive, your trust can help in managing your assets in multiple states using only one document.

Protection from incapacity

A living trust can also provide you protection when you are declared incapacitated. You may be able to avoid the necessity for conservatorship or guardianship proceedings with your trustee acting as a fiduciary over the assets you have in your trust. While a durable power of attorney may be subjected to additional legal scrutiny, your trust can ensure that your assets are protected for you and your beneficiaries.

Privacy

The terms of a living trust can allow the records of your estate to remain between you, your trustee, and your beneficiaries. When a will goes into probate, its contents become a matter of public record. Trusts are also less likely to and are more difficult to contest than a will and can better provide you with peace of mind concerning the management of your estate.

What Should You Look Out for When Creating a Revocable Living Trust?

The cost of creating and updating a trust

Trusts can be expensive to draft and a person must seriously consider whether the benefits of creating a trust will outweigh the disadvantages. A trust is not court-supervised and the creation of one often requires legal assistance. Given that a revocable trust can be updated over the course of the grantor’s lifetime, edits to the trust’s terms can pile up. Transferring and deeding assets into the ownership of the trust also adds additional costs. 

You may also need to create a “pour-over” will that can distribute any property remaining in your name into the trust. A “pour-over” will can help prevent any assets you have that are not in the trust from being subjected to New York’s intestacy laws. However, a “pour-over” will is still subject to probate.

However, it can be useful to keep in mind that assets not in a trust would be subject to probate. Even though New York has not yet applied the Uniform Probate Code, a decedent’s estate can still be required to pay a fee while the estate is in probate.

Does not provide tax advantages

A living trust can help you avoid probate but cannot help you avoid estate taxes. The New York estate tax rate applies to estates valued at over $6.11 million as of 2022. While most individuals don’t have to worry about paying estate taxes, the fact remains that a person’s tax obligation cannot be lessened by creating a living trust. If the assets placed in the living trust earn income, it should continue to be reported in the grantor’s income tax return under the “grantor trust” income tax rules.

Limited Asset Protection capacity

Assets placed in a living trust can still be accessed by creditors. If your revocable trust remains in your control as a grantor-trustee, any asset placed in the trust can be counted as your own. Creditors can file a claim on those assets and you may be required to liquidate property in the trust if the claims are held valid in court. A living trust may not be a good option for asset protection purposes in this regard. 

A revocable living trust can provide some protection against Medicaid estate recovery but would not allow a person eligibility for long-term care as the assets in a revocable trust are still accessible to the grantor. Getting the help of an experienced Medicaid planning attorney may be beneficial if you are looking into creating a trust for Medicaid purposes.

How Can I Determine the Right Kind of Trust for Me?

The right kind of trust for you is one that addresses your specific estate planning needs. On one hand, for individuals with minor children or children with special needs, establishing a living trust can help provide additional options to help ensure their ongoing care without needing to go through guardianship. On the other hand, individuals with high-risk professions such as lawyers and doctors may want to explore other trust options to take advantage of their asset protection benefits.

Trusts are not a one-size-fits-all solution. Getting the help of a qualified Long Island trusts attorney who can take careful stock of your financial situation and provide options according to your estate planning goals is crucial.

Our experienced Long Island estate planning attorneys at Schlessel Law, PLLC have dedicated their careers to providing Long Island families with quality legal advice in all matters of estate planning and probate law. We may be able to assist in creating a trust document that reflects your and your family’s needs and goals and allow you to leave a lasting legacy for your beneficiaries. Call us today at (516) 574-9630 to schedule a free consultation.

source https://www.schlessellaw.com/advantages-and-disadvantages-of-creating-a-living-trust/

Income Tax Rates for Trusts and Estates 2022

Trusts are an estate planning tool that allows people to set aside their assets for a specific purpose. Depending on the kind and purpose of the trust, these assets may be managed or distributed in accordance with the grantor’s wishes. A trust can hold money to pay for your children’s college education, or to care for a loved one with special needs. You might also put a property in a trust to ensure that you and your family will maintain its ownership.

A trust is both a legal and a financial entity subject to taxes. While determining other kinds of personal taxes may be straightforward, taxation on trusts can be complicated. Seeking the help of an experienced Long Island trusts attorney may help you gain more insight into how trusts are taxed. 

At Schlessel Law PLLC, we provide quality estate planning services to help Long Island residents better plan for their future. Our team of experienced Long Island trusts attorneys can help you understand the finer points of trust taxation in New York as well as help you set up a trust that will suit your needs. Contact us today at (516) 574-9630 or fill out our online form to schedule a free consultation.

How Do New York Trusts Work?

Trusts are generally created in the same way as a will, through a legal, written document.  A grantor puts their money and property in the trust to be overseen and managed by a trustee. A trustee can either be a trusted individual or the grantor themselves. The person, people, or entity who receives money or property from the trust is called a beneficiary. 

Usually, a sum of money called the ‘principal’ can be put into a bank account or investment account in the trust’s name. The trustee will control this account on behalf of the grantor. Any interest earned on the account is considered the ‘income’ of the trust. The trustee must manage the trust and give out the trust assets to the beneficiaries according to how the trust document dictates.

When it comes to tax status, there are three types of trusts:

• Simple trust – The trust holds assets and distributes all of the income it makes from the assets to the beneficiaries. No part of the principal funds is distributed and the trust cannot make donations to charities.
• Complex trust – Any trust that does not typically fall under a simple trust is classified as ‘complex’. A complex trust must do at least one of the following activities within a year:
  • Retain some income and not distribute all to its beneficiaries. 
  • Distribute some or all of its principal to its beneficiaries
  • Donate some funds to charities
• Grantor trust – Any asset or property in the trust is owned by the grantor who created the trust. 

Any income the grantor trust generates is taxed at the grantor’s income tax rate rather than on the trust itself. As tax rates are generally more favorable for individuals, compared to trusts, grantor trusts offer a certain level of tax protection. For simple and complex trusts, taxes are directly paid on all income, assets, and tax events.

Taxes on trusts apply on federal, state, and local (when applicable) levels. For this article, we will be addressing the 2022 income tax rates for trusts and estates at the federal and estate levels. In New York State, only New York City and Yonkers have a local income tax. To learn more about income tax rates for estates and trusts and how it applies to you, contact us today at (516) 574-9630 to schedule a free consultation. Our experienced Long Island estate planning attorneys at Schlessel Law PLLC may be able to help. 

2022 Federal Tax Rates for Ordinary Trusts and Estates Income

Assets held in a trust for 12 months or less (referred to as short-term capital gains) and non-qualified dividends are taxed as ordinary income. Non-qualified dividends referred to dividends that do not meet IRS requirements to qualify for a lower tax bracket. 

The federal government imposes taxes on both trust and estate income at four different levels:

• 10% for earnings between $0 – $2,750
• 24% for earnings between $2,751 – $9,850
• 35% for earnings between $9,851 – $13,450
• 37% for earnings above $13,451

If a trust earned $20,000 in income in 2022, it would have to pay taxes amounting to the following computation:

• 10% of $2,750 = $275
• 24% of $7,099 = $1,703.76
• 35% of $3,599 = $1,259.65
• 37% of $6,549 = $2,423.13 
• Total taxes due = $5,661.54

Conversely, if an estate only earned $1,000, it would only need to pay $100 as it did not gain income above $2,750 which would warrant taxation at the next level. 

In New York, the estate tax exemption is $6.11 million in 2022. This means that only those with estates worth higher than $6.11 million would need to pay estate taxes.

Changes from 2021

These tax rates are adjusted for inflation as determined yearly and reported for reference by the Internal Revenue Service (IRS). The tax rates remain unchanged from 2019 but the brackets increased as follows compared to the rates in 2021:

Rate	Bracket in 2021	Bracket in 2022
10%	Less than $2,650	Less than $2,750
24%	Over $2,650 but not over $9,550	Over $2,750 but not over  $9,850
35%	Over $9,550 but not over $13,050	Over $9,850 but not over $13,450
37%	Over $13,050	Over $13,450

2022 Federal Rates for Long-Term Capital Gains Taxes on Trusts

Qualified dividends and capital gains on assets held in a trust for longer than a year are typically taxed at lower rates. These rates are referred to as long-term capital gains rates.

For income generated by both trusts and estates in 2022, the long-term capital gains brackets are as follows:

• 10%: $0 – $2,800
• 15%: $2,801 – $13,700
• 20: $13,701 and higher

Trusts typically generate most of their income through investments. However, this is not the case for everyone. Some trusts like living trusts are used to manage real estate property. Should real estate properties put in a trust generate income through rent, the income will be considered ordinary income and not capital gains.

What Are the Primary Tax Deductions for Trusts?

Gifts and Contributions to the Trust

When contributions are made into a trust, the general rule is that they are not generally subject to income taxes. This is to avoid double taxation. Trusts only pay income taxes on the money it generates and the assets they hold.

In the case of beneficiaries, they must pay taxes on distributions they receive from the trust, especially if the distribution came from income the trust earned in the current tax year. However, if a beneficiary gets distributions the trust makes from the original principal, the beneficiary would not have to pay taxes. It is important to note that the trust’s principal has already been taxed and imposing a tax on the beneficiary would be considered double taxation.

However, any money that the trust earns and distributes in the same tax year is not taxed.

In some cases, beneficiaries can avoid paying taxes if they do not meet the lifetime gift tax exemption. In 2022, the lifetime gift tax exemption is set at $12.06 million.

Tax Preparation and Trustee Management Fees

Trusts may deduct some money from its income to cover management and tax preparation fees as long as they are reasonable and only come in proportion to its taxable income. 

Donations to Charity

Charity donations made in cash are deductible. However, the rule remains that the trust cannot deduct a value in donations more than the income it made.

Getting the Help of an Experienced Long Island Trusts Attorney

Our team of skilled attorneys at Schlessel Law PLLC provides quality estate planning advice. Owing to our years of experience, we may be able to help you fulfill your estate planning goals and shape the legacy you want to leave behind. Our estate planning professionals are here to determine the best kind of trust that would match your needs.

Top-rated Long Island trusts attorney Seth Schlessel understands the importance of having an estate plan reflect your needs and the needs of your family. We will work closely with you and help you navigate the legal processes in creating your trust. 

Contact us today at (516) 574-9630 to schedule a complimentary consultation with Long Island estate planning attorney Seth Schlessel.

source https://www.schlessellaw.com/income-tax-rates-for-trusts-and-estates-2022/