Legal Question in Wills and Trusts in New York

Re: Irrevocable Trusts

Keep in mind that the nature of an irrevocable trust is such that the grantor cannot revoke the trust by, for example, removing the assets.

It will be up to the named trustees to decide how to invest the trust assets. Indeed, they are obligated to make prudent decisions. They are free to change the way the assets are invested, but again, their decisions must be prudent.

A trust is a separate entity for tax purposes. The trust itself must file what is commonly referred to as "fiducairy returns."

Re: Irrevocable Trusts

I generally agree with John, but as a specialist in these documents, I call your attention to these matters, which should be included in any document you have prepared for you. (1) You can be one of the trustees, as well as the Grantor, and can even be the managing trustee, so you can control day-to-day activities, such a decisions on what assets to invest in, when to buy and sell, and what and when distributions of income and/or principal can be made. (2) I would suggest that you consider adding the parents (or at least the parent who is your child) as potential beneficiaries also, as well as provision for siblings that may come in the future. This will give you some additional flexibility in making decisions on income/principal distributions. (3) You may want to consider having at least one more trustee, and including yourself and your spouse as "discretionary" beneficiaries. This might afford you the flexibility of having income paid to you (a) should you need it, or (b) because of your low tax bracket. (4) A properly drawn trust will also allow income tax flexibility, which is important if there is a minor beneficiary, who might be subject to the "kiddy tax". There are more reasons to have a properly drawn document, but these are the major ones. If you need more information, contact me directly, as I have many NY trust clients.