Selecting the Appropriate Trustee of Your Trust



When you are selecting a trustee as part of the trust creation process, you need to ensure that you select the right person. The trustee has many different responsibilities and serves a vitally important role. Before you decide who will fulfill this position, you need to understand what trustees are actually responsible for and what their legal obligations are.

The decision on who should serve as your trustee is just one of many important choices that you are going to have to make when you create a trust.  You should talk with a qualified trusts attorney throughout the trust creation process so you can make informed choices about every aspect of creating your trust. Your trust should provide you, your family, and your assets with important protections and making informed choices is an important part of creating the protections.

When selecting trustees, the type of trust that you create can make an impact on the role that your chosen person will play and on when that person begins to take responsibility for actively managing trust assets.

For example, the job of a trustee will differ when you create a revocable living trust, which you may maintain substantial control over while naming a backup trustee to take over in the event of your incapacity, versus when you create an irrevocable living trust which requires you to give up substantial control over trust assets. The person who you put in charge of a special needs trust or a spendthrift trust is also going to have a different, and more active, role to play than the trustee for other types of trusts.

Still, when you create both a revocable trust and an irrevocable trust, the person who you select as a trustee will have a fiduciary duty and could have substantial responsibilities for managing trust assets and following instructions you set forth in your trust document. You want to find someone who you can count on to fulfill the role that the law assigns to trustees and someone who you can trust absolutely to manage your trust assets and act in the best interests of your beneficiaries.

Some of the key characteristics that you should look for when selecting the person to serve as your trustee include the following:

  • Honesty: Above all else, the person who you select to manage your trust should be someone who you believe is honest. The individual you select is going to have a lot of control over assets and over important financial decisions and you want to know beyond a shadow of doubt that the individual is trustworthy and will do the right thing. While it is true the law requires honesty and prohibits conflicts of interest, it can still be a major aggravation to pursue legal action against a trustee who abuses his power or mismanages assets.


  • Financial knowledge: The person who you select is going to have responsibility for managing the assets held within the trust. You want someone who has a good grasp of the management of the type of property and assets that are held within the trust. You need to ensure that the person who you select has good financial knowledge and can keep the assets safe and make smart decisions that could potentially help to increase the value of the assets that are held within the trust.


  • Shared Philosophies: Odds are, if a successor trustee is acting under your trust, it will be to guide the assets left for the benefit of your children. You should select a trustee that shares the same philosophies as you with regard to how you would want the funds used. Do you believe your children should pay their way through college? Make sure your trustee feels the same or understands your position. Do you believe your children should want for nothing and should have everything they ask for? Make sure your trustee would be willing to do the same.


Selecting a trustee is not always an easy task. If no one in the family seems to be an appropriate choice or if the assets left in trust are of a large amount, a professional trustee is always a suitable alternative to consider. This could be a financial institution or an attorney/law firm. Speaking with a qualified attorney will help you make the important decision of selecting a trustee.



Special Needs Fairness Act Approved in New York

Disabled Veteran

A First Party Special Needs Trust is a very powerful tool that allows an individual with a disability to protect a large sum of money from counting against them with regard to qualifying for needs based governmental programs, such as Medicaid and Supplemental Security Income (SSI).  By federal law, a First Party Special Needs Trust can hold the individual’s assets and allow the individual to benefit from the funds without risk of losing their public benefits.  Previously, the federal government has only allowed the individual’s parent, grandparent, guardian, or a court of proper jurisdiction to create the First Party Special Needs Trust.   This created some unnecessarily unfair situations where an individual may not have had a parent, grandparent or guardian at the time when a Special Needs Trust was needed.  A large number of First Party Special Needs Trusts are created upon the death of the parent, when the individual inherits a large sum of money.  Since the parents and grandparents were no longer living, the individual often required a court to create the First Party Special Needs Trust, adding unnecessary delay and expense.

In December 2016, President Obama signed the Special Needs Fairness Act into law and we are happy to report that the New York State Department of Health has issued a General Information System (GIS) message that states “effective immediately, in the case of a certified disabled Medicaid applicant/recipient, districts must not consider as available income or resources the corpus or income of a trust established by such disabled individual when he or she was under 65 years of age, provided the trust otherwise complies with the ‘exception trust’ provisions…”.  This means that the Special Needs Fairness Act allows the individual with a disability to create a First Party Special Needs Trust to hold their assets while still allowing eligibility for Medicaid, SSI, and the like.  The passage of the Act is important as it ends the ends the incorrect and unfair presumption that all individuals with disabilities lack the mental capacity to handle their own affairs.  Many individuals who qualify for a Special Needs Trust handle their personal affairs on their own every single day.  In order to create a First Party Special Needs Trust, the individual must be under the age of 65, certified as an individual with a disability, and have the mental capacity to understand the document they are creating.

The passage of this law allows for more flexibility in allowing individuals with disabilities to live their lives beyond what public benefits provide for.  If you or someone you know would like to learn more about First Party Special Needs Trusts, contact a qualified attorney who is knowledgeable in the area to help guide you.



Why Do I Need a Living Will AND a Health Care Proxy?


One of the more common questions we deal with in the initial interview with many clients is why they need both a living will and a health care proxy.  The answer to this question is quite simple but a background on what each document specifically does is useful.

Medical-Power-of-Attorney-300x200Health Care Proxy

The health care proxy is an important document that every person should have as part of their overall estate planning portfolio.  Under a health care proxy, the person signing (the “Principal”) designates one Health Care Agent and as many successor Health Care Agents as the Principal chooses.  This Health Care Agent will make decisions regarding the Principal’s medical treatment in the event that the Principal is unable to make these decisions on their own, as determined by a physician. The Health Care Agent will not be able to make decisions before this determination by a physician and will not be able to make further decisions if there comes a time when the Principal regains capacity.

Appointing the Health Care Agent allows you to control your medical treatment by: allowing the Health Care Agent to make medical decisions as the Principal would have wanted; allowing the Principal to choose a person who the Principal believes would make the right decisions; and allowing the Principal to avoid conflict and/or confusion amongst the Principal’s family members.  This last point raises an important facet of the Health Care Proxy, only one person may act as a Health Care Agent at a time.  The Health Care Agent will likely be an individual that the Principal is very close with. Because of this, making end of life decisions could be a very difficult choice for the Agent.  This leads to the power of a living will and why a living will should always go hand in hand with a Health Care Proxy.

living-will-document-pen-cheat-sheet (2)
Living Will

The Living Will, when cut to its core purpose, is a simple document.  It is, typically, a written statement of the signee’s health care wishes when they are not able to communicate a decision regarding specific medical situations.  Often, it is a document used to indicate that the signee either wants to stay on life support or be removed from life support when more than one physician determines the signee is in an incurable or irreversible mental or physical condition with no reasonable expectation of recovery.  While New York State does not have a statute that specifically addresses the Living Will, the Court of Appeals (New York’s highest court) has stated that Living Wills are valid as long as they provide clear and convincing evidence of the signee’s wishes and the signee is 18 years of age or older.

Since the Living Will is an express declaration of the signee’s wishes and intentions regarding end of life medical decisions it can relieve a Health Care Agent of having to make the difficult decision of whether or not someone should stay on life support.  The Health Care Agent will simply indicate that the signee has a Living Will and not have the cloud of making such a large decision hang over them.   The signee will also have assurance that their wishes regarding end of life medical treatment will be honored.



Legal, financial issues for people who have chronic diseases or a child with special needs


Estate planning is especially important for those who have a chronic disease or a child with a disability, says lawyer Tim Doolittle, from the Wladis Law Firm in East Syracuse. He gives an overview of Medicare, Medicaid, Social Security, trusts, guardianships and other related matters. More information can be found through these links: on special needs trusts, on supplemental security income and on benefits for adult children with disabilities.




Four Key Reasons You Don’t Want to Die Intestate

Esatte Planning 3.11.17

There are many reasons why an individual should consider some sort of estate plan to avoid dying intestate. Four of the key reasons why you do not want to die intestate include the following:

  • A family fight over assets: If you pass away without a will or some other estate planning document, New York State intestacy law will determine the disposition of your estate. Without specifics, your family could end up fighting over everything from money to the family camp to an engagement ring that has been in the family for years. By writing down your wishes through a will or other estate planning document, you reduce the chances this fighting will happen.
  • Your assets could go to people you would prefer not have your assets: You only get to determine who inherits if you make a plan to transfer assets in a will or through other means. Otherwise, the state law determines who receives your assets. While intestacy law aims to give inheritances to close family, these laws won’t necessarily distribute your assets the way you would have wanted, or in the manner you intended.
  • Your assets may not be used in preferred ways:You have no control over what happens to your wealth if it transfers via intestacy law. For example, you may have wanted your money to be used to pay for a grandchild’s education or for the money to go to charity. You won’t get to have your wishes met if you don’t use trusts, wills, and other tools to ensure your assets are used as you see fit.
  • You cannot protect your assets:If you have a large estate, estate tax may be assessed and wealth will be lost. Money could be lost during the probate process. You don’t want your hard-earned assets to be wasted just because you did not get around to making an estate plan to protect them.

There are also many other reasons why you want to avoid dying intestate by making a comprehensive estate plan. To find out more about the ways in which an experienced attorney can assist you in the planning process, you should reach out for legal help as soon as possible. Do not assume you have lots of time, as even younger people can experience an unexpected illness or injury, making it too late for them to make an estate plan.  At a minimum, the creation of a last will and testament will give you the chance to determine who inherits your assets. However, other tools like trusts can give you much more control, which is especially important if you are trying to reduce estate tax or if you have heirs or beneficiaries with unique needs, such as underaged or disabled heirs.  Sitting down with an attorney will be a great help in clarifying what is the appropriate course of action for you unique situation.


What is a Living Trust and Do You Need One?

Living Trust

A living trust is also known as an inter vivos trust or a revocable trust. It is a trust that is made during your lifetime and involves transferring assets into the trust and naming a trustee to manage those assets. Usually, the trust creator or settlor is the initial trustee and a backup trustee is named. Trust beneficiaries who will inherit the living trust after the death of the settlor are also named.

This type of trust is created by preparing a trust document with the help of your attorney. The process will involve naming a trustee and backup trustee and designating a beneficiary. In order for a living trust to accomplish its goals, you must fund the trust by transferring assets into it. The revocable trust will become the legal owner of the assets transferred into it, instead of you being considered the legal owner of the assets.

Revocable trusts are generally modifiable and revocable, so you have flexibility when you create this kind of trust. You must follow the New York requirements for trust creation in order to ensure you create a valid trust which offers advantages that you desire.

There are many reasons why it may make sense for you to create a living trust. One of the biggest reasons why they are created is to avoid probate. The ABA indicates revocable trusts are one of the two most popular probate avoidance methods; joint tenancy or survivorship is the other.

Avoiding probate means there will be less costs faced by your family members and estate during the probate process. You can save a substantial amount of money by not having to go to court. You can also facilitate the transfer of the assets that you put into the trust in a more timely manner. Probate can stretch on for months, during which time there may be uncertainty about business interests and during which time investments and property may not be managed as carefully as they would by new owners. A revocable trust eliminates this period of uncertainty because trust assets can quickly transfer to new owners.

Living trusts can also help you to make sure that your assets are appropriately cared for in case of incapacity. By naming a backup trustee in your trust document, you vest authority in that backup trustee to take control over trust assets in the event something happens to you. You will not need to worry about your family having to initiate guardianship proceedings while trust assets remain unmanaged.

While all of these reasons are very good reasons to create a living trust, it is important to understand limitations of this type of trust. For example, assets held within a living trust are still considered resources which can be spent on nursing home care, so you may not be able to get Medicaid to pay for coverage until you have spent down assets. The trust assets also are considered part of your taxable estate, which can trigger federal estate taxes and New York estate taxes. If Medicaid planning and/or estate tax planning are part of your goals, speaking with estate planning attorney about the alternatives available is a must.



Special Needs Trusts: Where Can the Funds Be Used

Spevcial Needs2
The creation of a special needs trust is of vital importance if you have a person in your life who is disabled and you want to provide a financial gift to that individual. Money or property that you wish to give should be placed into a trust so as not to cause a loss of access to important government benefits like Medicaid. The money held within the trust is to be managed by a trustee and used for the benefit of the person with the disabling condition.

As a trustee, you need to make certain the money in the trust is used wisely for appropriate purposes and that it is not distributed in ways that count as resources and that cause a loss of benefits access.

Money is put into a special needs trust to provide for the supplemental needs of a disabled person who may be unable to work or manage his or her own money. When a trust creator establishes a special needs trust, the trust creator can provide the trustee with some instruction as to the ways in which the funds are to be used.  In general, however, money in a special needs trust is to be used to enrich and improve the quality of life of the individual who is disabled. Money could be used, for example, to provide for games or a new TV for a disabled person who enjoys playing games or watching shows as a hobby. Money could be used for the disabled person to do activities, to participate in programs, or to take trips.

Because every person’s situation is different, it is important for the trustee to know what particular types of things would most benefit the person with disabilities who the trust was created to provide for. While trustees can have some discretion on spending, they must always make certain they are fulfilling their fiduciary duty to act in the best interests of the person with special needs. A trustee should never use any of the trust assets for his or her own benefit, and should never put his or her own interests above those of the person with special needs who the trust was created to provide for.

A special needs trust exists to ensure money and assets held within the trust aren’t counted as resources and don’t cause a disqualification from important government benefits that are means tested. There are certain restrictions on how the assets in the trust are used, in order to ensure continued benefits eligibility.

For example, money cannot be given directly in cash to a disabled person and gift cards also generally cannot be provided to a person with disabilities, as the money or gift card could be considered a resource and cause benefits disqualification. Paying rent or providing food for a person with a disability is also a no/no because these are considered in-kind benefits equivalent to cash, and a loss of Medicaid, Supplemental Security Income, and other means-tested benefits could occur.  Distributions from a special needs trust need to be contemplated and carried out in the correct manner.  Doing so allows for the individual to receive the full benefit of the supplemental needs trust.

Picture By:




Life insurance policies, employer-sponsored retirement plans, annuities, and retirement accounts.  Odds are, you look at this list and see at least one financial account that you hold.  All of these accounts are generally payable upon the death of the account holder to beneficiaries named via beneficiary designations.  Beneficiaries could also be named on certain brokerage accounts, certificates of deposit, mutual fund account, and bank accounts.

After going through the process of opening the account and making their first beneficiary designations, many forget all about the all important beneficiary form.  Life circumstances can change drastically over the course of the years from the day you open a 401(k) account at age 25 with your first employer and when you start seriously considering your retirement.  While you may have changed the beneficiary designations from your parents to your spouse immediately after your marriage, did you make sure to change the alternate to your children when they were born?

Beneficiary designations are extremely important factor to consider in creating your estate plan.  Take, for instance, a situation where a child stands to inherit qualified plan policies from his recently deceased parents.  This child has a disability and requires governmental assistance to maintain his lifestyle.  His parents knew about the possibility of losing governmental assistance from a windfall of inheritance and smartly informed their estate planning attorney of their son’s disability.  The attorney in turn included a supplemental needs trust in their estate plan to both provide for their child and protect his government benefits.  However, the parents did not follow through on altering the beneficiary designations on the qualified plan that held $200,000 of assets to specifically name the supplemental needs trust for the benefit of their child created in their estate plan.  Instead, the designations listed the child as the beneficiary.  The child then inherited the assets outright in his name, jeopardizing the child’s eligibility for governmental assistance for his disability.

In the event your beneficiary passes away before you and you did not name a secondary beneficiary before the time of your death, the total amount of the account will ordinarily be paid to your estate and the proceeds will need to go through probate.  This means that your estate may be raised to a value where more time, effort, and expenses are required to go through probate, which may lead to a circumstance where the person whom inherits your assets could be receiving the money out of line with your wishes.

A scenario to show how this could take place is where a widowed spouse decides that she will split her assets between her two children or to the child’s own children if the child did not survive her.  She decides to make things equal by bequeathing her $500,000 house to her son and naming her daughter as the beneficiary of her retirement accounts worth $500,000.  The widow informs her lawyer and the lawyer writes her will leaving everything in her estate, which is just her home, to her son.  The beneficiary designations on her retirement accounts indicate her daughter as the primary beneficiary, with no secondary beneficiary.  Unfortunately, the daughter dies suddenly in a freak accident, predeceasing the widow, leaving no beneficiary designated.  With no beneficiary designation, the assets went to the widow’s estate and from there were distributed to her son.  The widow would have preferred that her daughter’s children were provided for but without changing her designations to provide for this, her wishes were not fulfilled.

As you can see, a major part of the process of estate planning is taking your beneficiary designations into account to carry out your estate goals.  To ensure that you reach those goals, make sure your estate planning attorney is fully aware of all of your accounts and assets and work with your financial advisor and attorney to make your estate planning wishes become a reality.




Special Needs Trust: The Basics


Special needs trusts are essential when a person with disabilities has assets to protect and when that person’s parents are considering their estate plan. Whether the person with the disability has funds, receives funds from a personal injury settlement, or receives funds and property as a gift, the money must be managed carefully. Special needs trusts (or Supplemental Needs Trusts as they can be referred to) are the tool to use for asset protection for those with disabilities. When special needs trusts are created, it is important to know what specific type of trust must be used. There are two primary kinds of special needs trusts: first party and third party trusts. The unique situation of each person will dictate which type of special needs trust to use.

Special needs trusts are used to preserve a disabled person’s access to needs based public benefits. These benefits might otherwise be lost when the individual acquires resources over a given threshold. A person who is disabled may be receiving Supplemental Security Income (SSI) on a monthly basis and may have Medicaid coverage to pay for the costs of healthcare and nursing home care. Medicaid and SSI are means-tested and impose limits on resources, so an influx of money such as from an injury settlement or inheritance could result in a loss of benefit access.

A special needs trust makes it possible to avoid this loss of benefits. When appropriately created in accordance with the law and when properly structured and maintained, special needs trusts allow money to be used for the benefit of someone who is disabled without jeopardizing benefits access. The assets held in the trust are not counted as resources, but can be used to supplement and enrich the quality of life of the person who is disabled, beyond what governmental benefits provide for.

If the money or property being put into the trust comes from the person who is disabled, the trust is a first party trust. This situation can occur if the individual receives a windfall inheritance, receives a personal injury settlement, or if they simply have built up assets based on gifts from family members.  A third party trust can hold assets that come from any third party source, like a grandparent, parent, aunt, uncle, neighbor, etc.

A first party special needs trust can be established only by a grandparent, parent, guardian or court. They also can only be established for someone under aged 65. In some situations, courts monitor these trusts. When the person with special needs dies, the state must be named the primary beneficiary of any trust assets left in the trust, in what is called a “pay back” provision.  This is to allow the state to pursue reimbursement for the costs of care during the individual’s life.

A third party special needs trust can be created by anyone who wants to leave money to someone who is disabled. Third party special needs trusts can be funded up to any amount, and the trust can be a beneficiary of a life insurance policy. The trust can be used for virtually any purposes to benefit the person with special needs, except for that the person’s own money cannot be held in the trust.  Often times, parents of a child with disabilities will set up a third party trust as part of their estate plan, to insure any inheritance meant for the child will not affect their public benefits.

Upon the death of the disabled beneficiary of the third party special needs trust, the money and property can transfer to any other relatives or beneficiaries that the trust creator chooses. Because the money and assets in the trust never belonged to the person who was disabled, the state has no ability to require a pay back provision. This is a big benefit, because someone with disabilities can be provided for during his life and the remaining funds can then go to other relatives or friends of the trust creator’s choosing.

Special needs trusts can provide very important protections for someone with disabilities, as long as you know how these trusts work and follow the rules and processes for trust creation. To discuss the impact a special needs trust could have on you and your family, contact the attorneys at the Wladis Law Firm.


Photo Credit: Blackred | Getty Images

Utilizing Testamentary Trusts


Many clients are concerned about the son-in-law and daughter-in-law divorcing their child and walking away with a big chunk of their estate. And why shouldn’t they worry? The divorce rate in America is unfortunately still at a very high level. Parents also worry that someone will target their kids for get-rich-quick schemes, foolish financial investments, or even some well-planned scam. There is the real prospect that your kids could get sued for any sort of civil action and a judgment creditor could walk off with your estate. There is also the situation where a parent isn’t so sure their child could handle inheriting a large amount of money and be left to their own devices.

When you give the inheritance outright to your children after you’re gone, there is nothing you can do to protect those assets or your children. The assets are fair game once control passes from the parent’s estate into the hands of the children. Yet almost every estate plan drafted the traditional way delivers the assets straight into the hands of the children regardless of whether the child is ready for that wealth or not. This is what is commonly referred to as Divide, Dump, and Dissipate. This may conjure images of little Johnny buying that new Maserati instead of smartly investing his money to save up to buy a house.

How can parents make sure that their children do not foolishly waste their inheritance? One option is to provide for a testamentary trust in their Wills. Trusts may make you think of the Rockefellers of the world, but in fact they are a commonly used planning instrument. Say Jane and Joe have 2 kids, ages 21 and 23. Between them, Jane and John have a $1 million estate, with life insurance and retirement accounts included. Hopefully this will continue to grow, but say Jane and John pass away today. With their current estate plan, their two children will each receive $500,000 directly into their bank accounts. Now the children are free to use their inheritance on anything they so choose. The money will also be subject to any divorce proceeding or creditor judgment that may come up in the future.

If the parents provided for a trust to hold the money until the children reached a certain age, say 35 years old, along with an Independent Trustee to make distributions to the children when prudent, the money would be fully creditor protected, which means it would not be subject to divorce judgments or creditor judgments. The Independent Trustee should be a party that shares the parents’ philosophies concerning money management and should be someone that they trust to do the right thing.

Utilizing testamentary trusts is a simple and worthwhile way to ensure that the money you want your children to use in bettering their lives is actually used for that purpose. To discuss this and your other estate planning goals further, contact the attorneys at The Wladis Law Firm.