A trust is a legal arrangement where an individual, called a trustee, holds legal title to property for another person - the beneficiary. A beneficiary can act as the trustee of the living trust keeping full control over all property held in trust.
A ‘living trust’ (also called an ‘inter vivos’ trust) is essentially a trust you can prepare while you are alive, rather than one that is prepared after your death and under the term of your will.
By preparing a living trust you can spare your family the expense and complicated procedures of probate courts after you die. But is a living really necessary?
In the state of New York, the Uniform Probate Code that simplifies the whole probate proceeding is not in use. Therefore, it may a good idea to prepare a living trust while you’re alive so that your family can avoid the complicated procedures.
Yes, you certainly need a will. Technically, a will acts as a backup plan for any property that doesn’t make its way to your trust. To simplify, if you attain a property and forget to add it to your trust before you die, that property won’t pass under the terms of the trust. You can name someone in your will to inherit the property, which you haven't added in your trust.
However, if you don’t leave a will before you die, any property that isn’t conveyed to your relatives by the provisions of your trust or by other means, will go to your closest relatives as per New York state intestacy law.
It completely depends on the kind of trust you prepare. If you prepare a basic living trust just to avoid the complicated probate procedures, it has no effect on federal estate tax. However, more complicated living trusts like the ‘AB trust’ can lower the federal estate tax bill for for those people who have a lot of valuable assets .
N.B.: Federal estate tax affects estates worth more than $5 million.
In order to prepare a living trust in the state of New York, you need to: