E299 When do Solo Agers Need a Revocable Trust?

Sometimes a revocable trust makes great sense for a solo ager estate plan. Generally, revocable trusts aren’t so great in New York, because they can be hard to fully fund. The main goal of a revocable trust is to avoid probate. Since revocable trusts are hard to fully fund, the goal of avoiding probate is not usually met. Here are a few reasons a revocable trust may nonetheless work for a solo ager.

Distant or disinherited heirs

Solo agers tend to have distant or disinherited heirs. By definition, a solo ager is usually unmarried, without children, or those individuals are not in the picture. Naturally, this puts the solo ager in a situation where their heirs are distance (nieces, nephews, siblings, etc.).

We had a recent client whose solo natural heir was a distant cousin. In this case, a trust makes sense to avoid probate. When the remaining heir is a first cousin, there are extra hurdles during the court process such as: hiring a genealogist to submit a genealogy report, having the Public Administrator (PA) review court dates, and it generally makes probate longer and more difficult.

To be clear, this process not only applies when you leave something to that distant cousin. Rather, the probate process requires you to notify you natural “default” heirs under New York State law, which includes distant cousins. Even if you don’t want to leave anything to the distant heir, the estate is still required to go through this process if the estate is probated.

Similarly, if you have a disinherited family member, they have the opportunity to object to your will or wishes during the probate process. Having a trust still gives them the opportunity to object, but it is not as structured as probate. Under the probate process, the heirs must be served notice of the proposed will distributions, during which they have the right to object. When administering a trust, the heirs are not required to receive notice. Unless the heirs do some digging on their own, they may not actually object.

As mentioned above, you must fully fund your trust in order to avoid these problems. Say you have an apartment, a few bank accounts, and a few brokerage accounts. If, for example, the apartment does not make it into the trust, you still have to go through probate even if the bank and brokerage accounts are in the trust. Even if only one asset goes through probate, you are at risk for a longer probate process (described above) and the potential issues with distant heirs.

In lieu of guardianship

A revocable trust can be useful in lieu of guardianship. Putting your assets into a trust can help avoid and maybe deter the dreaded court-appointed stranger . There are situations where court-appointed strangers/guardians might impose themselves on a solo ager with no advocates. They might get the court to agree that the solo ager is incompetent to manage assets (when in fact, the solo ager is able). Thus, the court-appointed guardian gains control over the solo ager’s assets. The Netflix movie, “I Care a Lot,” is a dramatized version of how something like this could happen.

If all of your assets are in a trust, and the trust is drafted properly, the court will not appoint a stranger or guardian to gain control of your assets. The trust states who will receive your assets, so there is little incentive for a person to try to get appointed as your guardian.

For the goal of avoiding guardianship, partial funding of the trust if ok if you are able to get the majority of your assets into the trust. As long as the assets that don’t make it into the trust are not enough of to lure a court-appointed stranger, then it should be fine. Again, it is a lot of work for someone to convince the court that you are incompetent.

End of life planning (maybe)

When you are terminally ill, you know that the end is near. This makes planning easier, because you know what your assets will be upon your passing. In contrast, planning at a younger age means that bank accounts will change or you may buy and sell houses.

Knowing roughly when you might die makes it less likely that you will miss something during the trust funding process. But, even if you know that exact date and time that you will die, it’s still hard to capture every asset. Also, if you are terminally ill, you may not want to spend your last moments planning your trust.

Solo Ager Book

Again, revocable trusts don’t make a lot of sense for most situations in New York, but they do make sense for solo agers for the reasons listed above. If you want to learn more, check out my book, “The Solo Ager Estate Plan,” on Amazon. Or, if you fill out the form below, we’re happy to send a free copy to you.