Why a Trust Is the Best Option to Avoid Probate
In the ideal situation, when someone passes away, the paperwork and material concerns associated with the deceased’s passing are easy to find, easy to understand, and so seamlessly handled (thanks to excellent preparation) that they fade into the background, allowing the family and other loved ones to celebrate the life of the deceased and grieve their loss in peace.
The whole purpose of estate planning—or at least a significant piece—is concerned with ease. How can money, property, and legacies be transferred to the next generation in a harmonious, stress-free, fair process? To that end, many people strive to avoid burdening their loved ones with the complications and costs involved with probate.
A qualified estate planning attorney can use numerous tools of the trade to keep your money and property out of probate. For example, you can establish joint ownership of bank accounts and real estate titles, designate beneficiaries for life insurance policies and certain accounts, and so on. However, setting up a revocable living trust is often the best, most comprehensive option for avoiding probate. Let us discuss why this is true.
What is a trust?
Often touted as an alternative to a will, a trust is a legal structure that owns your accounts and property or is named as the beneficiary of certain accounts and property (like a retirement account) and is managed by a trusted decision maker, also known as a trustee, on your and your beneficiaries’ behalf. A living trust is established while you are still alive, instead of being created upon death. You can be the trustee for your own living trust until you can no longer manage your financial affairs, or you pass away. At this point, your chosen backup trustee, also known as a successor trustee, assumes the responsibility for managing the trust on your or your beneficiaries’ behalf.
How does a trust help you avoid probate?
The purpose of probate is to transfer property ownership for all accounts and property that are owned in your sole name and that do not have a beneficiary, pay-on-death, or transfer-on-death designation when you pass away. A trust can bypass this process completely because your accounts and property are either transferred to the trust while you are alive, or the trust is named as the beneficiary at your death. Therefore, when you die, there is nothing that needs to be transferred by the probate court (everything is already in your trust or was transferred to the trust automatically at your death). Furthermore, a trust can cover virtually any type of account or property, from real estate to heirlooms to stock to bank accounts. When a trust is structured correctly with the help of an experienced estate planning attorney, your affairs can stay out of probate court entirely. This process not only limits court costs but also maintains the privacy of your financial records while enabling your beneficiaries to enjoy the benefits of the trust without disruption or delay.
Establishing a trust can seem complicated, and the process can cost a bit more initially than preparing a will. However, if you are willing to invest a little more upfront, a trust can be your best option for avoiding probate later.
Working with highly qualified, trusted people is the key to effective planning that minimizes the likelihood of a drawn-out, contentious, expensive process. Find a lawyer who genuinely cares about you and your loved ones and knows how to forge the right strategy for all of you. Call us today at 301.892.2713 or click here to schedule a complimentary Estate Planning Discovery Session to learn more about the next steps for achieving the peace of mind you deserve.
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This article is for educational purposes only and should not be considered legal advice.