Most people are motivated to use “living trusts” because they've heard from a friend or neighbor that its the best way to avoid probate.
A Quick Overview of "Probate"
"Probate" refers to the court process of transferring title of a deceased person's assets to his or her family, and settling their debts with creditors. A deceased person's "probate estate" is comprised of all assets that need to be transferred out of the name of the deceased person, and into the names of his or her beneficiaries. Probate can cost tens-of-thousands of dollars and take a year or longer for a family to get through, so "avoiding probate" is a common estate planning goal.
Each asset placed into a person's living trust, is an asset that is no longer includable in the trust creator’s “probate estate.” When all of a person's assets are placed into their trust, the trust creator's "probate estate" is reduced to ZERO. Probate is then avoided because ownership of all the trust creator's assets have been reallocated to their living trust.
Many Living Trusts Won't Avoid Probate
I know this because I've helped many clients who have come to me with generic living trusts they’ve found on the internet, or that were even prepared by lawyers who don't practice law exclusively in the areas of wills, trusts, and estate planning. What I’ve found is that MOST of these generically prepared living trusts would end up in probate.
For a living trust to work, it should be properly designed for your particular family, taking into account unique characteristics of spouses, children, and any other beneficiaries.
Second, your living trust should be properly drafted to integrate beneficiaries, fiduciaires, providing for minor children, protecting inheritances from the adult-problems your children could have some day, and disability provisions that contemplate your incapacity.
And third, it is important that all of your most valuable assets are analyzed and are compatible with your living trust. Each asset not properly integrated with your living trust represents a “gap” in your plan and is a "countable asset" for purposes of determining a probate estate.
At Family Wills & Trusts, “The Family Way” means ensuring that your estate plan is properly designed, drafted, and compatible with your goal of avoiding probate.
If you want to make sure there are no "gaps" in your estate plan that would leave your family exposed to the unnecessary financial waste, headaches, or stresses of Probate. Request our free information or schedule a personal planning session below to see how your family can benefit from working with us.
