New York Elder Law Attorney Blog

After discussions with New York elder law attorneys, many individuals seek to protect their assets by creating a trust and assigning a specific family member as the "trustee" of that trust. Most are aware that the trustee will make decisions about the distribution of an estate following the death of the "grantor"--the individual whose assets were placed in the trust. It is important to remember, however, that the trustee is taking on specific legal duties. A trustee is more than a mere title indicating that the individual will help handle affairs; it is an acceptance of very specific responsibilities owed to all beneficiaries.

Unfortunately, with the recent passing of a loved one, stresses are at their highest at the very moment when a trustee is required to fulfill their duties. This often leads to complications between family members.

For example, the Napa Valley Register shared a story about an all too common occurrence involving a dispute with a trustee. A man died with a living trust. He left his estate to be administered by a trustee--one of his five children. Some of the children helped in the organization and distribution of the man's assets, while some did not. Shortly after all of the matters appear settled, one of the children who was not involved began to wonder whether they received a fair percentage. They asked the sibling who was a trustee for an accounting of the distribution, and a protracted disagreement among the family members ensued.

This situation often occurs in our area, as living trusts and the designation of a family member trustee are common components of a New York estate plan. As the children in the above situation show, there remain legal issues of which to be aware following the creation of that trust plan. Trustees are fiduciaries, which means they owe a duty of competence and loyalty to those who seek to benefit from the trust--often a group of siblings. Even if some of those family members initially seem indifferent to the distribution process or are unwilling to help, the trustee must never act in a way that could treat certain beneficiaries unfairly.

Continue reading "Family Trustees Must Be Aware of Their Duties and Requirements" »

by Michael Ettinger, Attorney at Law
The Medicaid Asset Protection Trust (MAPT) is a technique commonly used by elder law attorneys. It consists of an irrevocable trust, usually set up by a parent of parents sixty-five and older. One or more of the adult children are named as "trustees" to manage the trust for the benefit of the "beneficiaries" who remain the parents during their lifetimes. For example, the parents retain the right to the exclusive use and enjoyment of the home and the income from all of the trust assets. The establishment and "funding" of the trust, i.e. retitling the home and the investments in the name of the trust, starts the five year look-back period running. After five years, those assets become exempt and are protected from the costs of long-term care.

Once the MAPT is established, there are certain things the parties can and cannot do. Below are a list of the "Do's and Don'ts" concerning the MAPT.

Do make all transfers to your trust, as advised by the law firm, in a timely manner.
Do use trust assets for repairs or improvements to the home or other property in the trust.
Do use trust assets for payment of real estate taxes and homeowners insurance.
Do take dividends and income on trust assets on at least a quarterly basis.
Do call the law firm when you wish to make a gift from the trust to any of your beneficiaries.
Do call the law firm when a Grantor needs Medicaid benefits or dies.
Do call the law firm when personal or financial circumstances change significantly.
Do call the law firm if you wish to change trustees or break the trust.
Do provide your homeowner's insurance company with the "letter of instruction" and a copy of the trust for real property transferred to the trust.
Do provide your CPA or tax preparer with the "letter of instruction" regarding the trust tax return
and the "letter of instruction" tax deductibility of legal fees.
Do choose your trustee carefully to avoid the expense (and unpleasantness) of changing
the trustee.
Do call the law firm if you want to take out a reverse mortgage on the property in the trust.

Don't use trust assets to pay telephone or utility bills.
Don't use trust assets to pay personal expenses.
Don't use trust assets to purchase an automobile.
Don't take principal or capital gains from trust assets.
Don't transfer IRA's or 401(k)'s to the trust.
Don't allow beneficiaries to return to the trust or the Grantor any gifts made from trust assets.
Don't make additional transfers to the trust without advising the law firm.