Trust & Estate Administration FAQs
What is estate administration?
Estate administration is the process of managing and distributing a deceased person’s assets according to their will or, if there is no will, according to state intestacy laws. This involves collecting assets, paying debts and taxes, and distributing the remaining assets to beneficiaries or heirs.
What is the difference between a will and a trust?
A will is a legal document that outlines how a person’s assets should be distributed after their death. A trust, on the other hand, is a legal arrangement where one party (the trustee) holds and manages assets for the benefit of another party (the beneficiaries). Trusts can be used to manage assets during a person’s lifetime and after their death.
What are the duties of an executor?
The executor, named in a will, is responsible for:
- Collecting and inventorying the deceased’s assets
- Paying debts and taxes owed by the estate
- Distributing the remaining assets to the beneficiaries
- Filing required documents with the probate court
- Ensuring all legal and financial matters are settled
What is probate, and why is it necessary?
Probate is the legal process through which a deceased person’s will is validated, and their assets are distributed. It is necessary to ensure that the will is authentic, that debts and taxes are paid, and that the remaining assets are distributed correctly.
How long does the probate process take in New York?
The probate process in New York can take anywhere from several months to over a year, depending on the complexity of the estate, the clarity of the will, the number of beneficiaries, and whether there are any disputes or challenges to the will.
What are the costs associated with probate in New York?
Costs associated with probate can include:
- Court filing fees
- Executor fees
- Attorney fees
- Appraisal fees for estate assets
- Other administrative costs
The total cost can vary widely based on the size and complexity of the estate.
What happens if someone dies without a will in New York?
If someone dies without a will (intestate), their assets are distributed according to New York State’s intestacy laws. Typically, this means assets will go to the closest relatives, such as a spouse and children, or, if there are none, to other family members in a specific order of priority.
What is a living trust, and how does it work?
A living trust is a trust created during a person’s lifetime where they transfer ownership of their assets into the trust. They can serve as the trustee and manage the assets during their lifetime. Upon their death, the successor trustee distributes the assets according to the terms of the trust, bypassing probate.
How can I avoid probate in New York?
To avoid probate, you can:
- Create a living trust
- Designate beneficiaries on accounts such as life insurance, retirement accounts, and payable-on-death accounts
- Hold property jointly with rights of survivorship
- Use transfer-on-death deeds where available
What are the tax implications of estate and trust administration in New York?
New York imposes an estate tax on estates above a certain threshold ($6.94 million in 2024). Additionally, income generated by the estate or trust after the decedent’s death may be subject to federal and state income taxes. Proper planning can help minimize tax liabilities.
How do I choose an executor or trustee?
Choose someone who is:
- Trustworthy and responsible
- Organized and detail-oriented
- Knowledgeable about financial matters or willing to seek professional advice
- Willing to serve and capable of handling the responsibilities
Can an executor or trustee be compensated for their duties?
Yes, executors and trustees are entitled to reasonable compensation for their services, which may be specified in the will or trust document or determined by state law. Compensation is usually a percentage of the estate’s value or a flat fee.
What is a fiduciary duty, and how does it apply to executors and trustees?
A fiduciary duty is a legal obligation to act in the best interest of another party. Executors and trustees have a fiduciary duty to manage the estate or trust assets prudently and to act solely in the interests of the beneficiaries, avoiding conflicts of interest.
What happens if an executor or trustee breaches their fiduciary duty?
If an executor or trustee breaches their fiduciary duty, they can be held personally liable for any losses incurred by the estate or trust. Beneficiaries can take legal action to remove the executor or trustee and seek compensation for damages.
Can I contest a will, and what are the grounds for contesting it?
Yes, you can contest a will if you have legal standing (e.g., you would have inherited under a previous will or intestacy laws). Grounds for contesting a will include:
- Lack of testamentary capacity
- Undue influence
- Fraud or forgery
- Improper execution
What is a special needs trust, and when should it be used?
A special needs trust is designed to provide for a disabled beneficiary without disqualifying them from government benefits like Medicaid and Supplemental Security Income (SSI). It should be used when you want to ensure a disabled loved one is financially supported while preserving their eligibility for public assistance.
How do I handle digital assets in estate planning?
To handle digital assets:
- Create an inventory of your digital assets and accounts
- Include instructions for accessing and managing these assets in your estate plan
What is the role of a guardian in estate planning?
A guardian is appointed to care for minor children or incapacitated adults if you are unable to do so. In your estate plan, you can nominate a guardian for your minor children to ensure they are cared for according to your wishes.
What are the benefits of charitable trusts in estate planning?
Charitable trusts allow you to support a charity while receiving tax benefits. Types include:
- Charitable Remainder Trusts (CRT): Provide income to you or other beneficiaries for a period, with the remainder going to charity.
- Charitable Lead Trusts (CLT): Provide income to a charity for a period, with the remainder going to your beneficiaries.
How often should I update my estate plan?
You should review and update your estate plan:
- Every 3-5 years
- After major life events: marriage, divorce, birth of a child, death of a beneficiary, significant changes in financial situation, or changes in the law.
- Regular updates ensure your estate plan reflects your current wishes and circumstances.
