A will and a revocable living trust are a good starting point for an estate plan, but families with significant wealth often need more. If your estate includes investments, valuable real estate, family businesses, several homes, or large retirement accounts, planning goes beyond just deciding who gets what. Taxes, how assets are owned, business succession, protecting beneficiaries, liquidity, and family relationships all play a role in whether wealth is preserved after death.
In New York, there is an extra layer of complexity because the state has its own estate tax system, separate from the federal one. If your family has ties to both New York and Florida, questions about where you live and where your property is located add to the planning process. That’s why we encourage affluent families to see a will and living trust as just part of a complete estate plan.
At Bernard Law P.C., we believe estate planning for high-net-worth families in Suffolk County should start with a full review of the family’s finances. A good plan looks at more than just what happens after death. It also considers how assets are owned, how taxes might impact the estate, how wealth will be passed on, and what protections beneficiaries may need after they inherit.
New York Estate Taxes Can Change The Planning Strategy
A revocable living trust can help manage assets and may let certain assets avoid probate if funded correctly. However, setting up a trust does not automatically remove estate tax concerns. This is especially important for New York residents with large estates.
New York Tax Law § 952 imposes an estate tax on qualifying estates and establishes the state’s applicable credit structure. Unlike a simple exemption that protects one amount while taxing only the excess, New York’s system contains what is commonly called an estate tax “cliff.” When an estate exceeds the applicable basic exclusion amount by more than 5 percent, the applicable credit disappears. For a family near that threshold, relatively modest changes in asset values can therefore produce significant tax consequences.
Families with significant wealth might need to look at options like lifetime gifts, irrevocable trusts, marital planning, charitable giving, life insurance, and other strategies. These choices should not be made just because the estate is large. They need to fit with income tax issues, family needs, liquidity, and how much control the client is willing to give up.
New York Tax Law § 955a also governs the calculation of a resident’s New York taxable estate. Understanding what assets may be included and which deductions are available is therefore an important part of planning before a taxable estate exists.
A Revocable Trust Does Not Provide Every Form Of Asset Protection
We regularly encounter the misconception that placing assets into a revocable living trust protects those assets from creditors or estate taxes simply because the word “trust” appears in the document.
With a revocable trust, the person who creates it usually keeps a lot of control over the property. This flexibility is helpful for managing assets, planning for incapacity, and avoiding probate. However, keeping control also means the trust does not offer all the tax and asset protection benefits some people expect.
New York Estates, Powers and Trusts Law § 7-1.17 establishes execution requirements for lifetime trusts, while EPTL § 7-1.18 addresses funding. Those provisions illustrate an important point: establishing the trust document and actually transferring assets into the trust are separate parts of the process. A sophisticated trust that remains unfunded may accomplish very little.
Estate planning for wealthy families may include irrevocable trusts created for specific goals. For example, some trusts can hold life insurance, transfer assets that are growing in value, protect wealth for future generations, or keep certain assets out of the taxable estate. The right approach depends on the family’s goals.
How Beneficiaries Receive Wealth Can Matter As Much As Who Receives It
Basic estate plans frequently focus on percentages. One child receives one-half, another child receives one-half, and the planning discussion ends there.
For substantial estates, we often believe the more important question is what happens after the beneficiary receives the money.
An outright multimillion-dollar inheritance can become vulnerable to poor financial decisions, creditor problems, lawsuits, divorce, or other circumstances. A carefully drafted continuing trust may allow wealth to remain managed for a beneficiary rather than being distributed immediately. The trust can give a trustee authority to make appropriate distributions while preserving remaining assets for the beneficiary and, potentially, future generations.
This does not necessarily mean restricting children from using their inheritance. Good trust planning can provide substantial flexibility while building protections around family wealth. The terms can also be tailored differently for individual beneficiaries. One child may be financially sophisticated, while another may need greater oversight or protection. Treating children fairly does not always require treating them identically.
Business Ownership And Illiquid Assets Require Additional Planning
High-net-worth estates are often wealthy on paper but do not necessarily hold large amounts of cash. A family may own a valuable business, commercial property, investment real estate, or several homes. These assets can create problems when taxes, administrative expenses, or inheritance equalization obligations become due.
Suppose one child operates the family business while another has no involvement in it. Simply leaving each child half of the estate may force the business-owning child to share control with a sibling who has no interest in the company. In other situations, an executor may eventually have to sell property to generate the cash needed to satisfy taxes or distributions.
Business succession planning can address these issues before a crisis occurs. Ownership agreements, trusts, life insurance, buy-sell arrangements, and carefully coordinated estate provisions can help establish who will own the business, who will control it, and how other beneficiaries will be treated.
These questions should be resolved intentionally rather than leaving an executor and surviving children to work them out after death.
New York Revocable Living Trust Frequently Asked Questions
Does A Revocable Living Trust Reduce New York Estate Taxes?
Not by itself. A revocable living trust is generally designed primarily for management, probate avoidance, and continuity during incapacity. Because the creator typically retains control over trust property, the assets may still be included in the taxable estate. Additional tax planning strategies may be appropriate when the estate approaches or exceeds New York estate-tax thresholds.
What Is The New York Estate Tax Cliff?
New York Tax Law § 952 provides a basic exclusion and an applicable estate-tax credit. Once the taxable estate exceeds 105 percent of the applicable exclusion amount, the credit is eliminated. This can make careful planning particularly important for estates near that range because increases in property, investment, or business values can materially change the estate’s tax exposure.
Do High-Net-Worth Families Always Need Irrevocable Trusts?
No. Irrevocable trusts can accomplish important tax, asset-protection, and wealth-transfer objectives, but they also involve significant legal consequences and often require giving up some degree of control. We first determine what the family is trying to accomplish before deciding whether an irrevocable trust is appropriate.
Should Children Receive Large Inheritances Outright?
Not necessarily. Some beneficiaries are fully capable of managing substantial inheritances, while others may benefit from receiving assets through continuing trusts. Trust planning can potentially protect assets from poor financial decisions, creditor problems, divorce, and other risks while still permitting the beneficiary to benefit from the inheritance.
How Does Owning A Business Affect Estate Planning?
Business ownership raises questions that a basic will often does not adequately resolve. Families should consider who will control the company, whether ownership will remain within the family, how nonparticipating children will be treated, and whether sufficient liquidity exists to pay taxes and other obligations without forcing a sale.
Does Moving To Florida Eliminate New York Estate Tax?
Not automatically. Florida does not currently impose a state estate tax, but New York may still treat a person as domiciled in New York depending upon the facts. High-net-worth individuals considering a change of domicile should coordinate residency planning with their estate, tax, property, and financial arrangements.
How Often Should A High-Net-Worth Estate Plan Be Reviewed?
We recommend reviewing the plan regularly and whenever there is a significant change in family circumstances, business ownership, property holdings, tax law, or overall net worth. Rapid appreciation in a business or real estate portfolio can turn an estate that previously had little tax exposure into one requiring more sophisticated planning.
High-Net-Worth Estate Planning With Bernard Law P.C. In Shoreham, New York
For families with significant assets, estate planning involves much more than drafting a will and revocable living trust. Tax exposure, beneficiary protection, business succession, real estate ownership, liquidity, and multigenerational wealth transfer should all be considered as parts of the same plan.
At Bernard Law P.C., we work with individuals and families to develop estate plans based on their actual assets, family circumstances, and long-term goals. Our office is located in Shoreham, New York, and we serve clients throughout Suffolk County, including families with substantial estates and New York residents who also maintain connections to Florida.
If you are concerned that a basic will and living trust may not adequately address your family’s wealth, business interests, tax exposure, or inheritance goals, Bernard Law P.C. can review your current plan and discuss whether additional planning may be appropriate. Contact our Suffolk County estate planning attorney at Bernard Law P.C. by calling (631) 378-2500 to schedule a free consultation.
