Some area residents assume that they do not need a New York estate plan because they have no special requests, just a desire to pass on their inheritance to their children. They often wrongly assume that the "default rules" would work just as well as anything that a professional could create. Yet, the rules that the state will apply to inheritances are often much different than what one might suspect. For one thing, it takes specific, careful effort to ensure that large taxes and potential creditors are kept from the inheritance. In addition, without planning, there is a chance that your inheritance may leave the bloodline once you are gone. Unique strategies are often required to ensure that the assets you have worked a lifetime building stay with your children and grandchildren.
A New York estate planning lawyer can explain alternative options like inheritance trusts, heritage trusts, and dynasty trusts which all seek to keep an inheritance in a family long after you (and even your children) move on. An article in the Napa Valley Register recently discussed one of the options in more detail, the dynasty trust. This trust is often particularly helpful for those who want to ensure that their children do not lose their inheritance because of problematic creditors, a lawsuit, or to an ex-spouse in a divorce.
The general idea is that the grantor leaves an inheritance to children in the form of this trust. In that way, the inheritance is not the specific property of the child but is instead a unique legal entity from which the child benefits. The separation provides more protection against creditors. In addition, it is easier for your child to claim the trust as separate non-marital property out of the reach of a spouse in divorce proceedings.
A dynasty trust also takes advantage of tax rules which often mean that no additional estate taxes will have to be paid on your death or even the death of your descendants. Of course there are usually rules against having the trust last indefinitely, with laws often requiring that a trust be completely distributed within 90 years of your death. The details of this possible limitation can be shared by trust creation professionals.
A New York elder law estate planning attorney will be able to explain how the dynasty trust or similar devices may be utilized in your specific situation. Whatever option ultimately is best for you, it is important to remember that legal tools like trusts are crucial planning instruments for all residents--regardless of their overall wealth and family dynamics. Virtually everyone stands to gain by conducting their own asset planning, instead of relying on the expensive probate process and intestacy rules.
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