Why You Want to Avoid Probate with a Trust

Why You Want to Avoid Probate with a TrustA trust is a legal document that states rules to be followed for one’s property held by another party for the beneficiaries. The main idea of writing a trust is to protect assets in your estate, to lessen the estate tax liability and to avoid the probate. A probate, on the other hand, is a formal and legal process that grants recognition to a will. It also appoints the executor who is a personal representative to administer the estate and to distribute the assets to the intended beneficiaries. Most probate proceedings are expensive, and they take anextended period (six months to two years) before they are finalized.Therefore, it’s important to avoid probate with a trust so as to avoid delays that could be associated with the whole process.

A living trust is usually a tool that will allow one to avoid probate once death occurs. A probate makes the transfer of your assets to the death pursuant, in situations that the terms indicated in your will are not explicitly stated or when there was no trust at all. So to enable your property to pass out of the probate process, it’s necessary to draft a trust. Some types of goods, however, get to pass outside the probate even without undergoing the hassle of establishing a living trust. They include the retirement plan or life insurance proceeds which usually pass to the beneficiary by designation but not under your will. Others include real estate and bank accounts which are under joint names, hence have theright of survivorship.

The probate procedure involves long steps which are:

  • First, the local probate court files your will.
  • Your executor then inventories your property.
  • Your property is later appraised.
  • All debts are paid including death taxes.
  • The court finally validates the will.
  • Probate charges including the attorney and executors fees are paid from your estate’s money.
  • The remainder is then distributed to your family members and loved ones.

Although a living trust may avoid probate, actual value may be either lost or retained as a result. Also, a living trust may not entirely avoid probate in various states. The main reason why a living trust helps avoid probate is that once the assets are put in a trust, you are not the owner anymore, but the trustee does own the assets until they are transferred to your beneficiaries. However, a trust alone is not enough; a simple will is required to cover the property that might not be included in the trust.

A living trust, however, is revocable and therefore you can end or amend it anytime. If the assets at the date of death were under the revocable living trust, they must first be transferred to the trust,then administered by a trustee and who might charge fees and finally transferred to the beneficiaries.

To avoidprobate in simple words means that the assets are transferred straightaway to the intended family after thedeath of the grantor without delays. However, death taxes are not avoided as many may believe.

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