Come Thanksgiving, family business owners have an extra item on their plate, namely whether this…
A revocable living trust serves a range of purposes in the estate planning process but, perhaps, most important among them is ensuring that your beneficiaries need not suffer a court-supervised probate process after your death. After all, losing a loved one is hard enough. There is no need to rub salt in the wound by adding a lengthy legal process to this already painful experience.
Beyond streamlining the process of passing on your assets, a trust also prevents your personal affairs from becoming the subject of public inquiry. This is because your last will becomes a matter of public record when it’s submitted for probate.
These protections only work if your trust contains the items for which it was designed. However obvious this may sound, it is all too easy to overlook essential inclusions as your assets grow.
What goes into a trust?
Once you have completed and signed a trust agreement, you, the trust maker, fund the trust by transferring assets into its ownership. Generally, these include retirement accounts, life insurance, annuities, and, in many cases, real estate.
An experienced estate planning attorney will ensure that you include all relevant property in the trust at the time of signing. Nonetheless, they will only know about changes to your estate if you take pains to inform them. Failure to do so means your beneficiaries might end up in probate despite your best intentions.
How does a trust allow you to avoid probate?
You, the trust maker, will no longer own the assets that have been placed in your trust. Technically, they will be owned by the person or entity you appoint as your trustee for the beneficiary’s benefit (either you or later beneficiaries). Because you do not personally own this property, probate need not play any role in the transfer of ownership to other individuals when you die.
The catch here is that should you forget to include any assets in your trust—a vacation home, for instance, that you purchase late in life—then probate comes back into the picture.
This means that a trust is not enough. Besides, you need to take care to revisit your plan periodically. This is not only time consuming but stressful. Together with an experienced estate planning attorney, you can develop a plan for when updates are needed, thereby ensuring that for all your hard work, you don’t inadvertently force your loved ones to navigate a challenging legal process at the time of your passing.