Can My Niece or Nephew Be the Beneficiary of My Trust?

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You may view it as an honor to be at a certain financial standing where you can majorly include your extended family in your estate plan. With this, you may go as far as setting up a trust fund for your niece or nephew. If they are still of a minor age, however, there may be special considerations you need to make when doing so. Follow along to find out how to legally name your niece or nephew as your beneficiary and how a proficient Putnam County trusts attorney at the Law Office of Andres D. Gil, PLLC can work to ensure you make the proper deliberations.

Can I legally assign my niece or nephew as the beneficiary of my trust?

Simply put, no New York State estate law restricts who or what you set up a trust fund for. What’s more, state law does not impose any inheritance tax on any of your beneficiaries. This means that you may seamlessly designate your niece or nephew as the beneficiary of your trust without consequence. Of course, this is unless the value of your trust assets is above the established threshold of $6.94 million, as of 2024.

What considerations should I make when naming my niece or nephew as my trust beneficiary?

A trust may be considered the preferable estate planning document over a will. One of the main reasons is that your trust assets may not be tied up for months or even years in the New York State surrogate’s court. This may allow your trust beneficiary (i.e., your niece or nephew) to avoid significant court costs and attorney’s fees that cut into their inheritance. This is all while being able to receive your trust assets almost immediately.

However, if you anticipate your niece or nephew still being of a minor age upon your passing, you may not want them to receive your trust assets almost immediately. Rather, you may want to add a provision in which your named trustee (i.e., likely your niece’s or nephew’s parent) withholds these funds until they reach the age of 18 or otherwise a mature age you disclose. You may even go as far as instructing that your niece or nephew earn a college degree before they may be granted access to these funds.

In addition, once your niece or nephew reaches the mature age you disclose, you may set parameters around how much of these funds they are entitled to spend within a certain timeframe, along with what they can spend these funds on. You may also stagger when they receive these funds, instead of a lump-sum inheritance. Overall, these guidelines may work in your niece’s or nephew’s best interest if they have never managed significant assets such as these before.

Arguably the most important step you must remember to take when setting up a trust is hiring a talented Putnam County estate planning attorney. Our team at the Law Office of Andres D. Gil, PLLC is looking forward to working with you.

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