Many people assume that trusts are only useful for wealthy people. They are under the impression that trusts are complicated, and last wills are simple. The idea is that the heirs to the estate will receive their inheritances in a timely manner if a last will is used as a vehicle of asset transfer.
In reality, this is not the case. If you were to create a last will to state your final wishes regarding asset transfers, you would name an executor. This is the person who would be charged with the estate administration tasks after your passing.
The executor cannot distribute assets to the inheritors immediately. Before asset distributions can take place, the will must be admitted to probate. This process can be briefly defined as the legal process of estate administration.
During probate there is a proving of the will. The probate court would examine the last will to determine if it is in fact valid. If anyone wanted to contest the will, an argument could be presented before the court during the probate process.
This process is not inherently negative, but it can create certain difficulties for the heirs to the estate. For one, it can be expensive, and money that is spent during probate is money that would have otherwise gone to the heirs.
Secondly, it is a public proceeding. Anybody who wanted to know how you distributed your assets could find out the details by accessing probate records. This can be disturbing in a general sense, but in a more specific sense, ready access to this information could cause acrimony among interested parties.
Lastly, the process of probate is time-consuming. The simplest of cases may be resolved in around nine months to a year, and more complicated cases can take considerably longer.
When you consider the magnitude of all of these legal oriented tasks, you can see why a probate lawyer can be invaluable. You could arrange for the attorney who helped you draw up your will to act as the probate lawyer after you are gone.
When this connection is established, your executor could contact your lawyer after your passing. The executor would then have the legal help that is needed to effectively steer the estate through the probate process.
Probate assets are assets that remain in your direct, sole personal possession at the time of your death. Under some circumstances, assets can be transferred outside of probate, so a probate lawyer would not be required.
Insurance Policy Proceeds
When you take out an insurance policy on your life, you name a beneficiary. After you pass away, the insurance company will pay the beneficiary directly. The probate process does not come into play when insurance policy proceeds are being distributed.
Payable on Death Accounts
Banks and brokerages typically offer payable on death accounts. With a payable on death account, you name a beneficiary. After your passing, assets that remain in the account are passed along to the beneficiary, and this transfer is not subject to the process of probate.
If you are a property owner, you can add a co-owner to the title or deed. This co-owner is formally called a joint tenant.
When property is held in joint tenancy, the surviving joint tenant would assume full ownership of the property after the death of the other joint tenant. The probate court would not be involved.
Revocable Living Trusts
We looked at some probate drawbacks in the first section. If you want to avoid them, you may want to create a revocable living trust. You would benefit from legal assistance if you were to use a living trust. Probate lawyers also help clients create trusts, so you can be sure that everything is done correctly if you engage legal counsel.
With this type of trust you are not surrendering access to the funds while you are living. Because it is revocable, you can rescind or dissolve the trust at any time, and you would once again assume direct ownership of the property in the trust.
You can also act as the trustee and the beneficiary while you are living.
When you create the trust agreement, you name a successor trustee to administer the trust after your passing, and you also name successor beneficiaries. After your death, the successor trustee can distribute assets to the beneficiaries outside of probate.
Learn More About Probate
To learn more about probate, click this link to download our free special report on the subject: Free Probate Report.
To Schedule a Free Consultation
If you are interested in the possibility of working with our firm after learning these facts, please select our “Workshops” tab to RSVP for a free estate planning workshop. At that workshop you will be offered a free one-hour consultation with an attorney: https://collinslawgroup.comseminars/
- Are There Expenses Involved in Administering a Trust? - December 1, 2022
- Is a Will or a Trust Better for Distributing Estate Assets? - November 30, 2022
- How Is Estate Planning Different If You Have Minor Children? - November 28, 2022