The last will is the most commonly understood estate planning document. Many individuals automatically assume they will transfer their assets to their loved ones using such an instrument. They may have heard of other vehicles of asset transfer such as revocable living trusts but assume that these solutions are only useful for people with a high net worth.
The reality is that this is hardly ever the case. Whether a revocable living trust is appropriate for you and your family depends on what you want to happen at certain stages of your life, not how much money you have. Plus, the creation of a revocable living trust is something that everyone should consider because it enables probate avoidance.
Probate is a legal process that takes place under the supervision of the probate or surrogate court. This court provides transparency as the executor or personal representative goes about the business of the estate in accordance with the wishes the deceased stated in their will. But it also provides a venue within which disgruntled parties can challenge the will. If you were to transfer assets via the use of a revocable living trust no such possibility would exist on assets owned by the trust. Plus the disposition of the estate would not be a matter of public record.
Probate is also costly and can consume a significant percentage of the value of your estate. These costs are assets that would otherwise be landing in the pockets of your loved ones. The probate court charges a fee, and the executor is also entitled to payment. And the executor is probably going to have to bring in an array of professionals that all charge for their services, including an attorney, an accountant, and possibly an appraiser or appraisers and an estate liquidation company.
As you might imagine, all of this takes time, and those awaiting bequests will not receive them until the estate has been probated and closed, often as long as 18-24 months after the death.
Probate serves a purpose, but it does come with a number of pitfalls. If you would like to explore the possibility of creating a revocable living trust to avoid probate, simply get in touch with a legacy planning attorney to arrange for a consultation.
Author, President, and Founder
Parman & Easterday