Avoiding Probate With Revocable Living Trusts
When you are looking into the subject of estate planning on the Internet you’ll hear frequent mention of probate avoidance, and many laypeople are not aware of exactly what probate is let alone why you’d want to avoid it. So to provide a brief explanation probate is the process that your estate must pass through before your heirs can receive their inheritances unless you take legal steps to facilitate the direct transfer outside of probate.
During this process the probate court oversees the administration of the estate by the executor or personal representative, and if anyone wanted to contest the will or if multiple wills were presented arguments would be heard by the probate court.
As you might imagine this can be time consuming, especially if someone is contesting the will and/or the estate is otherwise large and complex, and this is one reason why people sometimes choose to avoid probate. In addition to the time involved probate can be costly because the court itself charges a fee, there are legal fees, the fee to the executor, expenses incurred to properly liquidate the assets, accountant fees, appraisal fees, realtor expenses, etc. Even more frustrating than the expense is often the time involved in administering an estate. The typical small estate takes 6 to 9 months to complete. More complicated estates, such as large estates, estates with minor beneficiaries, or estates containing real property or many creditors, can take several years, and tens of thousands of dollars in legal fees, to settle. An additional frustration is the frequent requirement that all matters be approved by a court before acted upon. In fact, many courts now actually freeze all estate assets and will not permit their withdrawal without separate court order for each withdrawal. While this provides safety to the heirs of the estate, it also adds dramatically to the time and expense involved in administering the estate. By placing assets into a trust, the probate process and therefore the probate court, and all of the delays and expenses involved with that court, are avoided.
That is a brief explanation of what probate is and why you might want to avoid it. One of the most common ways of doing so is through the creation of a revocable living trust. With these trusts you name yourself as the beneficiary and the trustee during your lifetime so you retain complete control of the assets while you are alive. You then name a successor trustee and remainder beneficiaries who will assume these roles after you pass away. When you do in fact die, the assets in the trust will be distributed to your heirs, or continue to be held in the trust, in accordance with your wishes as stated in the trust agreement and these transactions take place outside of the probate process
