A big goal in estate planning is to make things easier for our loved ones. A comprehensive estate plan can allow your money, property, and legacies be transferred to your intended beneficiaries in a harmonious, stress-free, and fair process so that your loved ones to grieve and deal with their loss in a peaceful manner. Improper planning can result in the headaches, complications, and costs involved with probate.
There are a variety of tools available that can be used to avoid probate, such as establishing joint ownership on bank accounts and real estate titles, designating beneficiaries for life insurance policies and certain accounts, and so on. However, setting up a revocable living trust is quite often the best, most comprehensive option for avoiding probate.
What is a trust?
A trust is a legal structure that owns your accounts and assets or is named as the beneficiary of certain accounts and property, such as a retirement account or life insurance, and is managed by a trusted decision maker, known as a trustee, on your and your beneficiaries’ behalf. A living trust is established while you are alive, in contrast to other types of trusts that could be created upon your death. You can be the trustee for your own living trust until you are no longer able to manage your financial affairs, or you pass away. Upon your incapacity or death, a successor trustee that you have chosen steps up and assumes the responsibility for managing the trust on your or your beneficiaries’ behalf. Upon your death, the trust acts as a substitute for a will.
How does a trust help you avoid probate?
After your death, the purpose of probate is to transfer ownership of your assets and property that are owned in your sole name and that do not have a beneficiary, pay-on-death, or transfer-on-death designation. A trust can bypass the probate 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 since everything is already in your trust or was transferred to the trust automatically at your death. A trust can hold virtually any type of account or property, including real estate, stocks, bank accounts, and heirlooms. With a properly structured trust, your affairs can stay out of probate court entirely. Court costs can be avoided, your financial matters can remain private, and your beneficiaries can enjoy the benefits of the trust without disruption or delay.
Creating a comprehensive trust requires careful planning. The degree of planning and the expertise required in establishing a trust can mean that preparing a trust costs more initially than preparing a will. In the long run, however, trust planning typically proves to be far more cost-effective than a will and the best option for avoiding probate later.
The key to effective planning that minimizes the likelihood of a drawn-out, contentious, expensive process is to work with highly qualified, trusted people. Find a lawyer who genuinely cares about you and your loved ones and who knows how to forge the right strategy for all of you. Give us a call today to learn more about next steps for achieving the peace of mind you deserve.
