Do Trusts Help for Unequal Inheritance Amounts?

You do not owe us an explanation for why you believe administering uneven amounts of your estate amongst your beneficiaries is a fair and just decision. All that we care about is that you are prepared for the possible content and tax implications that may follow. With this, we may recommend that you utilize the estate planning tool of a trust. Without further ado, please continue reading to learn why using trusts in your estate plan may be better when unequal inheritance amounts are expected, and how an experienced Putnam County trusts attorney at the Law Offices of Andres D. Gil, PLLC, can work to ensure you adopt the best possible strategy. 

Are trusts better when distributing unequal inheritance amounts?

Trusts have many benefits depending on what you are looking to get out of your estate plan, including being an effective tool to safely leave unequal inheritance. This is because if you declare such uneven distributions strictly in your Last Will and Testament document, this may be made public record through the probate process. Inevitably, an heir that received a modest share may grow jealous of other heirs and even contest your estate before the New York State Surrogate’s Court.

Instead, by establishing multiple trusts for your respective heirs, you may better maintain privacy and discretion. Not only this, but you may personalize the trust type for each heir, depending on their needs and possibly required special treatments. For example, you may establish a spendthrift trust for an heir that is particularly bad at money management. Or, a special needs trust is relevant to an heir with a certain disability, who may wish to protect their eligible for public benefits programs (i.e., Social Security).

Are there tax consequences to unequal inheritance amounts in NY?

While unequal inheritance amounts may not automatically trigger federal and state estate taxes, you must understand the possible implications before dividing up your estate amongst your heirs. 

For example, in 2025, your estate may be excluded from New York State taxes (ranging from 3.06 to 16 percent) if it fell below $7.16 million. And with something known as the “cliff effect,” if the value of your estate exceeded 105% of the exemption amount (i.e., $7.52 million in 2025), your entire estate may be subject to taxes rather than just the amount over the exclusion. 

With all that being said, if you only set a small amount aside in a trust for one heir, and the rest of your assets are distributed through your will, you may accidentally tip yourself over the state’s tax exemption. Rest assured, you may not have to worry too much about this unless you are a considerably high-net-worth individual. 

What’s more, dispersing unequivalent types of assets amongst your heirs may create disproportionate drawbacks. For instance, if one heir receives cash while another gets your real estate property, the former may be stuck with long-term tax burdens. 

In conclusion, we suggest you employ the services of a skilled estate planning attorney in Putnam County, from the Law Offices of Andres D. Gil, PLLC, if you want the best possible chances at a positive legal outcome. We look forward to serving you.