Keeping My Family’s Inheritance Private and Flexible

By Joseph Zappia, Co-Chief Investment Officer, LVW Advisors
As someone who has worked hard to build up some assets over the years, one of my biggest priorities is ensuring my loved ones are taken care of after I’m gone. Like many of you, I want the wealth I’ve accumulated to provide for my family’s future wellbeing and financial security.

However, the process of passing on an inheritance isn’t always straightforward. While wills are the most common method, I’ve found that setting up a living trust offers some key advantages that really appeal to me, especially given the high costs of probate here in New York. Here are the three main benefits that made me decide to use a living trust for my estate planning:

1. Avoiding the Probate Hassle and Costs

One of the biggest draws of a living trust is that it allows my assets to get into my beneficiaries’ hands without going through the probate court process. For those unfamiliar, probate is when a court oversees the distribution of assets from a deceased person’s estate.

While court oversight has its purposes, probate can be an incredibly lengthy and expensive process that I wanted to spare my family from, especially with how costly it is in New York. Probate costs in New York typically range from 4% to 7% of the total estate value due to court filing fees, attorney fees, executor commissions, appraisals, and other expenses.

For example, on a $500,000 estate, you can expect around $30,000 in probate costs between filing fees of $1,250, attorney fees of $15,000-$20,000, a 3% executor commission of $15,000, and additional costs. For estates over $1 million, probate fees can easily exceed $50,000 or more. Those are some hefty costs that quickly eat into the inheritance.

With a living trust, my assets will get transferred directly to my beneficiaries according to my instructions, without probate tying things up and incurring all those expenses. My family will avoid the hassle, delays, and significant costs associated with that process in New York.

2. Keeping Things Private

In addition to avoiding the costly New York probate process, another major perk of the living trust is the privacy it affords. When a will goes through probate, it becomes an entirely public record that anyone can access. That means information like the total value of the estate, which specific assets are included, and who the beneficiaries are is out there for anyone to see.

I don’t know about you, but that lack of privacy around my family’s inheritance makes me uncomfortable. I didn’t like the idea of those personal and financial details being open to feuding relatives, opportunists, or really anyone who wants to snoop around. A living trust allows the transfer of assets to happen privately without that public exposure.

3. Flexibility for Life’s Changes

Finally, living trusts (as the name implies) are revocable while you’re still alive. That means I can modify, update or revoke the trust entirely in response to changing circumstances in my life. Maybe I have another child I want to add as a beneficiary, or my financial situation takes a major turn and I need to rework how assets are distributed. Or maybe I simply change my mind about who gets what.

No matter what happens, the flexibility to make changes as needed is extremely valuable. An irrevocable trust locks everything in place, but with a revocable living trust, I can tweak it as my needs and wishes evolve. That ability to adapt the trust provides great peace of mind.

Those are the three primary reasons why I decided a living trust was the right vehicle for passing my inheritance – avoiding the costly New York probate process, maintaining privacy, and staying flexible for life’s changes. It just makes the most sense for ensuring my family can receive what I leave them as seamlessly as possible.

Of course, setting up a living trust requires some legal footwork that is more involved than just drafting a will. But in my opinion, it’s well worth the extra effort for the advantages it provides. If ensuring your loved ones are taken care of is a priority, I’d highly recommend looking into creating a living trust as part of your estate planning. It’s given me tremendous peace of mind about my family’s future financial security.

Source: https://www.supplelaw.com/blog/2021/06/how-much-does-it-cost-to-probate-an-estate-in-new-york/

This material is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or product. Opinions expressed herein do not necessarily reflect the views of LVW Advisors.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.