The mere mention of the word “probate” usually instills fear in people, conjuring up images of estates dragging on for years and incurring enormous expense. Seminars and books promoting living trusts are pervasive and they foster the misconception that probate is always an evil to be avoided. Living trusts are touted as devices which avoid estates taxes and protect assets from long term health care costs.< /p>
The truth is that living trusts do not generally avoid taxes, nor do they preserve assets. The only type of trusts which can serve this dual function are irrevocable trusts. Establishing a living trust can accomplish the purpose of avoiding probate, if you are successful in transferring each and every of your assets into the trust. If you forget or are unable to transfer an asset into the trust, probate will still be required. Moreover, certain assets, such as items of personal property, furnishings, jewelry, and works of art cannot be placed into a living trust. If you own a cooperative apartment, you will need to obtain the permission of the coop board in order to transfer the apartment, which permission is commonly denied. Lastly, funding a living trust can be an arduous process. The deeds to your real property will need to be changed, and all your bank account and brokerage accounts will have to be closed and re-opened in the name of the trust. Such trusts have not become as commonplace in New York as they have in other states. As a result, banks and other institutions are not familiar with these trusts and may make the process of transferring assets into your trust a difficult one.
While probate can be a long and costly process in some states, that is not the case in New York. As long as the executor and attorney for the estate perform the work promptly, and there is no contest by a disgruntled family member, probate can be accomplished within weeks. Most of the delay encountered in the administration of an estate is caused by the need to transfer assets into the beneficiaries’ names, and by tax issues, neither of which can be avoided by having a living trust.
While a living trust is not appropriate for everyone, it does work well in certain instances. If you own real property in more than one state, creating a living trust for that property is probably advisable, so that a second probate proceeding is avoided. This is especially true if you own real property in a state, such as Florida, where probate is a lengthy and expensive process. If you are or become a resident of another state where probate is difficult, you may wish to create a living trust for all of your assets.
In short, if one is interested in settling an estate quickly, care must be taken in selecting a responsible Executor and experienced attorney who can handle matters expeditiously and efficiently.