probate - Trust and Estate Planning Law Office

5 Different Types of Trusts That Can Be Created in New York

There are many different ways a person can set up an estate plan to protect and prepare for the future of their assets after their death. One way that this is done is through the creation of a trust. A trust is a legal arrangement that allows a third party, a trustee, to hold and manage assets on behalf of the beneficiaries until they are able to inherit them. Its purpose is to ensure that a person's assets are protected and utilized in a way they deem fit. There are various types of trusts that serve for different purposes. Therefore, it's important to understand the different types of trusts in order to know which will suit you best.

What are the different types of trusts?

1.) Irrevocable Trust

An Irrevocable Trust is a type of trust that, once executed, cannot be changed or revoked without consent of all beneficiaries or a court approval. Essentially, this means once your assets are in the trust, you no longer have full control over them as well as the freedom to make any revisions you want. However, a benefit of this type of trust is that assets in the trust will not be subject to state or federal estate taxes. In addition, assets are also protected from creditors and legal judgment which avoids lawsuits and false claims.

2.) Revocable Trust

A Revocable Trust, also known as a living trust, is a type of trust that allows you to modify or change anything at any time you see fit, without needing the consent of any beneficiaries. With a revocable trust you have full and complete control over your assets, how you want them distributed and if you want to add or revoke any. It is also commonly used for those who want to avoid the probate process, which can take months to years. However, assets in this trust are subject to state and federal estate taxes. In addition, assets are not protected from lawsuits and creditors.

3.) Special Needs Trust

A Special Needs Trust, also known as a supplemental needs trust, can be established as a living trust and is generally designed for a loved one with a disability. It is commonly used for a dependent such as a child, sibling or parents that are unable to provide for their own financial needs. It is also made to continue caring for a person with special needs without disrupting government entitlement benefits such as SSI or medicaid.

4.) Charitable Trust

A Charity Trust is an irrevocable trust that is made to simultaneously benefit you, your beneficiaries and a Charity of your choosing that is qualified under IRS rules. There are 2 types of charitable trusts:

Charitable Lead Trust - The way a charitable lead trust works is, individuals are allowed to choose charities that will receive interest from the financial gift they have assigned to them for a specified period of time. Once the period has ended, the remaining assets may either go to their family or beneficiaries.

Charitable Remainder Trust - The way a charitable remainder trust works is that you, your family or your beneficiaries can receive interest from a financial gift assigned for a determined period of time. Then, once that period has ended, the remainder of the assets go to the charity of your choosing.

5.) Irrevocable Life Insurance Trust

An Irrevocable life insurance trust is designed to help those who have estates that might exceed federal or New York estate tax exemptions. With this, trustors are allowed to exclude life insurance proceeds from the taxable estate. This then allows beneficiaries to be free from any taxes that may be placed on the trustor's life insurance policy in the estate and to transfer death benefits immediately.

A trust is a very valuable tool when it comes to estate planning. With so many different types available, it can be tricky choosing which one is best for you. If you need an attorney to help determine which trust is best for you, contact the Law Office of Inna Fershteyn at (718) 333-2395.

When is the Best Time to Write a Will?

The thought of writing a will may seem daunting for people as it brings up a topic that no one wants to talk about: death. However, a will is necessary as it will help prevent conflict and trouble for loved ones in the future. It also allows you to decide where you want your assets, property, and more to go to after you have passed. Without it, your assets may go somewhere you don’t want them to.

As the COVID-19 pandemic gradually comes to an end, it was surveyed that 66% of Americans who had serious COVID cases were more likely to have a will. It was also found that 50% of young adults were now more likely to have a will now when compared to pre-pandemic times. After the pandemic, more people now than ever are thinking about their wills- but a life-threatening situation shouldn’t be the only time to think about writing a will. Any time is a good time, especially these five occasions below:

Occasions to write a will:

1. Turning 18

In the U.S, most states will allow those who are 18 and over to legally write a will for the first time. Why not get started and think ahead? It’s never too early to start writing a will. Even if you are just 18, a will is always available for alterations as life changes and progresses.

2. Change in marital status

Whether you get married, divorced, or separated, it comes with significant changes in financial and personal matters. These changes will influence the decisions you will have to write in your will. It is important to ask yourself if you want your spouse (or ex-spouse) to be part of your beneficiaries or not.

3. Change in financial circumstances

Factors such as starting your own business, getting a promotion, or even buying a house can drastically change your estate plan’s situation. Especially when starting a business or buying a house, it is crucial to consider who the succession of the business or inheritance of the house will go to.

4. Having children

As mentioned previously, it is common that those who have children will leave their property and assets to their children. However, people tend to forget that a will can also dictate guardianship for children who are minors if both parents are deceased.

5. Prolonged amount of time

As time goes on, family dynamics and relationships may change which will alter your estate plan as well. It is also possible that the planned executor of your will dies before you do. Even if you do already have a will, it is essential to update it after major life changes. Regardless, if you have been putting off writing up a will, there’s no better time than today.

For a will to be correctly done and valid after death, it is important to go to an attorney. By executing a valid will, the court will not have to probate the will- saving your loved ones time and trouble. If you or a loved one need assistance or more information on estate planning, please contact the Law Office of Inna Fershteyn at (718) 333-2395.

Responsibilities of an Executor Or Administrator

Today we will discuss the basic duties and responsibilities of an executor or an administrator.

But first, what is an executor? An executor is someone who is legally responsible for sorting out the affairs of the deceased individual. The executor must carry out their duties diligently, impartially, and honestly. An executor who fails to do so may be held personally liable by a court of law. Each state has its own requirements as to who can serve as an executor or administrator but generally, the roles are very similar. The position of executor is a paid position and each state provides its own rules for executor compensation. However, because executors are usually close family members, many executors forgo their compensation.

And what is an administrator? An administrator is someone who is appointed by the Surrogate Court to be legally responsible for the decedent’s affairs. The difference between an estate executor and an estate administrator depends on if the deceased left a will, named an executor, or if the named executor declined the appointment. Therefore, if the decedent did not leave a will (dying intestate), does not name an executor in their Will, or a listed executor declines the appointment, the court will choose the administrator of the estate. The administrator must then make sure the estate is settled according to New York intestacy laws which is what an executor does anyways.

Both the Executor and the Administrator are responsible for making sure that debts and taxes are paid and that what remains in the estate is distributed properly to the heirs of the estate, according to the wishes of the decedent. Both executors and an administrator have the same responsibilities to the state and to the deceased’s beneficiaries.

The Executor’s or Administrator’s Responsibilities Include The Following:

Determine If Probate Is Necessary

Probate is the legal procedure an estate goes through after someone passes away. This procedure is how the surrogate court will start the process of distributing the estate to the proper heirs that the decedent designates. Many assets can be transferred to beneficiaries simply by law (and avoid the probate process) such as jointly held assets or assets that have beneficiary designations (ie. life insurance policies). If all of the decedent’s property falls into this category probate may not be necessary. Additionally, the decedent may have transferred all of their property to a revocable (living) trust which similarly does not need to go through probate. If, however, the decedent owned assets outright, meaning they’re simply stated in a will, those assets do not automatically transfer upon their death. Instead, probate will be required and the executor or administrator will need to file a petition with the court to be legally assigned as the executor. It is highly advisable to work with an attorney to probate the estate.

File the Original Will With the Local Surrogate Court

The executor is responsible for locating, reading, and understanding the will to determine who will inherit the decedent’s assets. Generally, only an original will can be submitted to the surrogate court to go through probate. An experienced estate planning attorney can assist with this duty.

Notify Financial Institutions & Government Agencies of the Decedent’s Death

The executor should notify the decedent’s banks, credit card companies, and government agencies like the Social Security Administration of the decedent’s death.

Set up a Bank Account for Incoming Funds and Pay Any Ongoing Bills

The executor has to set up an estate account with a bank so the decedent’s assets can be transferred to it. The account will be used for the ultimate distribution of the assets to any creditors and heirs. The executor should also use this account to pay the decedent’s mortgages, utilities, and other bills that still need to be paid throughout the probate process.

Maintain the Property Until It Can Be Distributed or Sold

The executor has to find, protect and preserve all of the decedent’s assets until they can be distributed. This includes any real property (houses, cars, boats, etc...) owned by the decedent until it is distributed to heirs or sold.

Pay the Estate’s Debts and Taxes

The executor is obligated to pay the decedent’s debts if there are sufficient assets in the estate to cover them. The executor must also file income tax returns starting from January 1st of the current year until the date of the decedent’s death. If the estate is large enough, a Federal estate tax return will need to be filed. Also, if the decedent’s estate exceeds the estate tax exemption in the year of the decedent’s death, state and federal estate taxes may have to be paid.

Distribute Assets

The most common responsibility of the executor or administrator is that they must distribute the decedent’s assets pursuant to the will’s directives. This is after a surrogate court judge has validated the will. If there is no will, state intestacy laws apply and the administrator will carry out almost all of the same responsibilities as an executor.

File an Inventory of the Estate’s Assets With the Court

Once the executor knows all the assets in the estate and distributes them pursuant to the will the executor must file an inventory of the assets with the Surrogate Court.

How can an estate lawyer help

Since each estate varies in size and complexity, an executor’s job may be fairly simple or very challenging to carry out. Responsibilities may very well go beyond the 10 common duties in this list. Consulting with an experienced and knowledgeable estate planning attorney is certainly recommended.

For further estate planning assistance, please contact the Law Office of Inna Fershteyn at (718) 333-2395 to receive the most highly qualified legal advice.

Can Creditors Take My Social Security Checks?

Creditors generally cannot seize Social Security benefits, even if they have sued you and obtained a court judgment against you. However, there are some limited exceptions to this rule for certain types of government debts which are detailed below.

Are Social Security benefits protected by law?

Yes. Creditors cannot garnish or confiscate Social Security benefits, whether they be retirement, disability, survivor's benefits, or SSI, with the exception of certain federal agencies. This safeguard has been codified into law by Congress. This means that conventional creditors, such as credit card companies, medical collectors, and loan businesses, are prohibited from taking Social Security benefits if it is evident that the money they want is Social Security income.

Does it matter if the creditor has sued me in court?

No. Even if the creditor obtains a court judgment against you, these rights apply. You may not be able to pay the judgment with Social Security funds if the court rules against you. As a result, if you are sued for a debt, it is critical that you do not enter into any agreed orders or judgments that require you to pay a debt with your Social Security benefits.

Do these protections exist if the Social Security money is deposited into a bank account?

Yes. Once funds are placed in a bank, they are protected against garnishment or confiscation. The Court, on the other hand, must be able to distinguish between exempt and non-exempt funds.

If the Court cannot tell whether money is Social Security income from your documents and bank statements, the Court will most likely rule that none of the money is exempt. If Social Security income is directly deposited into a bank account, the statement will reflect a deposit from the United States Treasury at about the same time each month. To make it evident that the Social Security Administration is the only source of funds in the account, the direct deposit from the US Treasury should be the only deposit reported on the bank statement each month. This will show creditors and a court that the money in your bank account is protected income.

What if a collection agency threatens to take my Social Security?

By making false assertions, the collection agency may be breaking the Fair Debt Collection Practices Act (a federal law that regulates collection agencies). Only if the creditor or collection agency knows that your only source of income is Social Security would these statements be false. You should seek legal assistance if you believe you have legal claims against the collecting agency.

Can government agencies take my Social Security benefits?

Yes, but only under limited circumstances.

First, SSI (Supplemental Security Income) cannot be taken at all, unless the Social Security Administration is trying to correct incorrect past payments.

Only federal agencies may try to take Social Security benefits. Examples of some things the federal agencies can try to take your Social Security benefits for are:

Federally subsidized student loans.
Other loans owed to, or subsidized by the government.
Food stamp overpayments.

Can the federal agency take my whole Social Security payment?

No, a government agency can only take a portion of your Social Security check each month.

The first $750 per month (or $9000 per year) is not confiscatable. As a result, if your monthly benefits are less than $750, your benefits cannot be taken.

Can I protest the government’s action?

Yes. You have the right to get written notice in advance if the government plans to "offset" (take a portion of) your Social Security income. If you believe you do not owe the money, you have the right to a hearing. You might want to seek legal counsel. Another option is to work out a payment plan with the government entity that is threatening to withhold your Social Security income.

Can I get rid of the government debt in bankruptcy?

Yes, in a lot of circumstances. However, there are certain noteworthy exceptions, such as:

Student debts are normally non-dischargeable, and income taxes can only be forgiven in certain situations.
If the person or entity to whom you owe the money establishes you collected the obligation by false pretenses or fraud, the debt will not be dismissed.

If you need an experienced attorney to review your financial circumstances and the nature of debts to help you decide the best course of action, please contact the Law Office of Inna Fershteyn at (718) 333-2395.

Handling Bank Account Funds in an Estate

How you handle bank accounts, like any other asset owned by a deceased individual, depends on how they were owned. Here are a few scenarios in which funds are handled and how one may go about handling them under certain circumstances.

Solely Owned Bank Accounts

If the deceased individual owned the account in his or her own name and did not identify a payable-on-death beneficiary, the account will certainly be subject to probate. Probate is the legal process that takes place after the death of an individual to make sure that their assets are properly collected and distributed to the appropriate beneficiaries by the appointed executor. If the deceased left behind an estate plan, identifying their beneficiaries is as simple as reading the will; if not, their assets will be distributed according to New York’s intestate succession laws. However, if the total amount of probate assets is low enough to count as a "small estate" under state law, the rightful heirs will be allowed to claim the money using either streamlined probate processes or an affidavit.

Accounts with a Payable-on-death Beneficiary

These are the straightforward ones: because the money is still not part of the deceased person's probate estate, you do not have any control over it as executor.

The money can be claimed by the beneficiary specified by the deceased individual by visiting the bank with a death certificate and identification. The paperwork in which the account owner chose the POD recipient should be kept with the bank.

Jointly Owned Accounts

In most situations, if a deceased individual has a joint account with another individual, the surviving co-owner becomes the account's owner immediately. To be transferred to a survivor, the account does not need to go through probate.

The Right of Survivorship

There are, however, exceptions to this general norm. The "right of survivorship" applies to most accounts that are held in the names of two individuals, but not all. In other words, if one of the co-owners dies, the money immediately passes to the surviving co-owner. (It typically works in the same manner with retirement funds.)

Sometimes it may be obvious that the account has a right of survivorship. Suppose the account is named "Lisa Johnson and William Johnson, JTWROS." (Joint tenants with right of survivorship is the acronym.)

It's likely still a joint tenancy account if the account registration document at the bank only includes two names without mentioning joint tenancy or right of survivorship. In Texas, for example, in order to establish a joint tenancy account, the account owners must sign a separate contract in addition to the bank's registration card.

Disputes About What The Deceased Intended

When two people—say, a married couple—open a joint account, no one will argue that when one of them dies, the assets in the account go to the survivor. When an elderly person adds someone else's name to an existing bank account, the situation may be different.

This is frequently done to avoid probate in the event of the original owner's death. However, the second name is often added only for the sake of convenience—that is, so that the other person may write checks on the account and assist the original owner. Alternatively, the arrangement is meant to provide simple access to the assets to the second person following the original owner's death, so that the funds may be utilized for the burial or other expenditures.

When the original account owner dies, the person whose name was added to the account legally becomes the outright owner of the money. Unless it’s in writing, any previous agreement about how the money should be spent is unenforceable. The money belongs to the new owner, who can spend it on anything he or she wants. If family members are certain that the deceased individual desired a different outcome, they will have a hard time getting the money back from the surviving joint account owner if they go to court.

Bank Accounts Held In Trusts

Many people put their significant assets in a living trust to avoid having to go through probate later. You'll be able to tell if the deceased individual had a bank account in trust based on the account statements, which will reveal who the account was owned by for example, "Lisa Johnson, trustee of the Lisa Johnson Revocable Living Trust dated September 9, 2003.”. The account, like other trust assets, is managed by the successor trustee, who takes over once the original trustee passes away. The funds will be transferred to whoever inherits them under the provisions of the trust deed by the successor trustee.

The Law Office of Inna Fershteyn can assist you in handling bank account funds in an estate. Please contact us at (718) 333-2395 for an experienced and diligent estate attorney who is familiar with the probate and trusts process.