Navigating the world of real estate in New York City requires not only a keen eye for investment but also smart asset management. When it comes to securing your financial future and protecting your valuable assets, a trust can be a powerful tool.
In this client alert, we will highlight some of the benefits of owning real estate in a trust.
New York City Specifics
Primary residents of New York City receive a tax abatement on their cooperative or condominium units. This abatement does not extend if the unit is owned by a limited liability company (LLC) or other form of corporation. However, this abatement is available for ownership by a trust if all the beneficiaries, trustees, or life estate holders are the primary resident(s). Individuals who own co-op units and are considering trust ownership should contact their property manager about whether the co-op permits such ownership, and, if so, learn the requirements and fees for trust ownership which may include a guaranty and occupancy agreement.
#1: Trusts Offer Asset Protection.
Trust ownership can, to some degree, offer an additional layer of protection from potential legal claims, creditors, or other unforeseen financial setbacks. Depending on the type of trust, trust assets will often be treated as separate from your personal estate.
#2: Trusts Ensure Privacy And Discretion.
Trusts can be established by confidential agreements among the trustees and beneficiaries, so transferring assets to a trust provides a degree of privacy that other ownership structures may not. Deeds, for example, are public records and show the title owner of a property. Trusts, like other types of entities that may own real estate, offer a layer of privacy since the beneficial owners are not named on the deed, which is a recorded public document. For estate planning purposes, it should be noted that on death, a last will and testament becomes public record. The public probate process that all wills must go through in order to administer an estate requires disclosure of assets and beneficiaries. Trusts, on the other hand, offer a more discreet method of passing those assets on since there is no public disclosure.
#3: Trusts Facilitate Asset Management And Control.
A prevalent misunderstanding about trusts is that they lead to a loss of control over assets leaving only a designated trustee with access and control. This, however, is not always the case with some forms of trust. In some cases, you may retain control over the assets and can even name yourself as a trustee. However, if you are the trustee and generally maintain control over the trust assets, you are less likely to benefit from any asset protection, as the assets are more likely to be considered your personal assets and, therefore, available to your creditors.
#4: Trusts Are Simply A Smart Estate Planning Move.
A well-structured trust can streamline the transfer of your assets to your heirs, ensuring a seamless and efficient transition of your assets to your beneficiaries. Without going through a lengthy probate process, trust assets can be transferred automatically on the terms established in the trust agreement. It may also minimize the potential for estate taxes, helping your beneficiaries preserve the value of their inheritance. It also eliminates any probate will contest.
#5: Trusts Provide Flexibility And Personalization.
An important strength of using trusts lies in their adaptability. When establishing a trust, you have the freedom to tailor it to suit your unique requirements and objectives. For example, trust agreements can dictate how certain assets are dispersed and managed not only during your lifetime but even after death.
So, whether you’re looking to protect your wealth or ensure the privacy of your financial affairs, trusts offer a potential solution. At Coopersmith & Coopersmith, we’re here to help ensure your assets are well-protected, and your financial future is secure. If transferring your assets to a trust sounds like something you might be interested in, please call us at (212) 625-8505.
The foregoing is not intended to be comprehensive nor constitute legal advice. If you would like to discuss your specific circumstances or would like more information, feel free to contact us at (212) 625-8505.