A will and a trust can both say who should receive your property. They do that work in different ways. In New York, many people need one of each — not a choice between the two.
What a will does
A will is a written document that takes effect at death. It can name the person who will settle your estate, say who should receive property that is still in your name, and, if you have minor children, nominate a guardian. After death, the will usually has to be filed in Surrogate’s Court and admitted to probate before the executor named in it can act.
For a will to be used in New York, it generally must be in writing, signed at the end by the person making it (or signed at that person’s direction), and attested by at least two witnesses after the person has declared that the document is his or her will. Adults who are at least eighteen and of sound mind may make a will.
A will is also the usual place to name a guardian for a minor child. A trust, by itself, does not do that work.
What a lifetime trust does
A lifetime trust — sometimes called a living trust — is created while you are alive. It is a written arrangement in which a trustee holds property for the people you name, on the terms you set.
In New York, a lifetime trust must be in writing. It must be executed and acknowledged by the person creating it and, unless that person is the sole trustee, by at least one trustee, in the manner required for recording a deed. In place of that acknowledgment, the instrument may instead be signed in the presence of two witnesses who also sign it.
A trust can be revocable, which means you generally keep the power to change or revoke it, or irrevocable, which means you give up some or all of that control. Those two kinds of trusts are not interchangeable, and they have different consequences for taxes, Medicaid, and creditors. The right choice depends on the purpose of the trust, not on a general preference for one label over the other.
What each document actually controls
The most important practical difference is what each document actually governs. A will controls property that is in your name when you die and that does not pass some other way. A trust controls only the property that has been transferred to it, or that is later added to it, including by a “pour-over” will.
Under New York law, a lifetime trust is effective only as to assets that have actually been transferred to it. Merely listing an asset in the trust document does not complete the transfer. If the house, the bank account, or the brokerage account is still titled in your individual name, a trust sitting in a folder will not automatically avoid probate for that asset.
Why many people use both
That is why a will and a trust are often used together. The trust, once funded, can provide for the management and transfer of the assets it holds, including if you become unable to manage them yourself. The will can catch anything that was left out of the trust, and it remains the place to nominate a guardian.
Other assets may pass outside both documents. A jointly owned account, a house held with a right of survivorship, or a retirement account or life-insurance policy with a beneficiary designation generally goes to the surviving co-owner or the named beneficiary. Those designations should be reviewed so they do not contradict the rest of the plan.
Choosing the right documents
Which documents you need depends on your assets, your family, and your goals. A simple will may be enough for some households. A funded revocable trust may be useful if you want certain assets to pass without a probate proceeding, or if you own property in more than one state. Adding a child’s name to a deed, or skipping documents altogether, can create tax, creditor, and family problems that a will or a trust was meant to avoid.
If you are deciding between a will, a trust, or both, it is worth sitting down with an attorney who can review how your property is titled and what you want to happen. Jordan M. Endler, P.C. in Islandia, New York, helps Long Island clients with this planning. Call (631) 896-2211. He takes calls in the evenings and on weekends.
This article is general information about New York law, not legal advice, and does not create an attorney-client relationship.
Attorney Advertising. Prior results do not guarantee a similar outcome.