Your Trusty Tool To Avoid Probate


If you’ve been reading along with us, our last couple of articles explained the ins and outs of probate, in-depth. If you need to catch up you can read about the process in Part 1 and Part 2. That’s right! Probate is so cumbersome we needed two parts just to explain it all. After all that effort of going through each step, you’re probably wondering, “So, how do I avoid probate?” The answer is a trust. Trusts are a popular estate planning tool for avoiding probate. Although there are a variety of different types of trust, the most commonly used trust for probate avoidance is a revocable living trust, also called a “living trust.” 

The Handy Dandy Trust Tool

Trusts are a popular estate planning tool for avoiding probate. Although there are a variety of different types of trust, the most commonly used trust for probate avoidance is a revocable living trust, also called a “living trust.”

The primary benefit of a living trust is to pass your assets to your loved ones without any need for court or government intervention and to ensure your assets pass in the smartest way possible to the people you choose. 

A Trust Doesn’t Have to be Complicated

A trust is a simply legal agreement involving three parties. It is a contract between the person who puts the assets into the trust and the person who you choose to manage the assets you place in the trust for the benefit of the person to benefit from the trust. There are many different terms used in the law to define those three parties but let’s keep it simple. When you create a revocable living trust, we help you create the terms of the agreement. During your lifetime you are the trustee. In the trust agreement, you name who will take over the management as a “successor trustee” when you die or become incapacitated. 

It might seem odd to make an agreement with yourself to hold title to assets for yourself to benefit yourself. Yet by doing so, you remove those assets from probate and from having the court involved in your finances and property upon your incapacity or death. With a trust, those assets transfer to your successor trustee, without any court intervention required.

When your successor trustee takes over they become responsible for managing whatever assets you have placed in your trust. Your successor trustee then distributes the trust assets to your beneficiaries, according to the terms you have already spelled out in your trust agreement. Viola, because you had trust have avoided the hassle of going through probate and saved your loved ones from spending significant time, money, and headache in the court system. 

Transferring Assets Into Your Living Trust

For a trust to function properly, you must, must, must transfer the legal title of any assets you want to be held in the trust from your name into the name of the trust. Retitling assets in this way is known as “funding” a trust. 

Funding your trust properly is extremely important because if any assets are not properly funded to the trust, the trust won’t work as those assets are not in the trust. Your family will have to go through the court probate process to get ownership of that property not in the trust. I can’t tell you how often I see people who have a trust created by an attorney but never put their assets in the trust. In light of this, we don’t just do the trust. At Cris Carter Law, we work with you step by step and asset by asset to make sure that your trusts is funded and will work the way you intended. 

But What if Your Life Changes?

No worries. When you create a revocable living trust, you can change the people involved and the terms of your trust as life changes. Your trust continues in effect and you tweak the terms when you want. Because you retain control over the assets held in your trust during your lifetime, you can do whatever you want or need to do as long as you are of sound mind. Thus you have the right to buy, sell, trade, finance, etc. those assets help in your trust. And your revocable living trust has no impact on your income taxes.

Another benefit of a living trust is that the assets you are giving to your loved ones through your trusts are protected from their creditors, spouses, bad influences, bankruptcy, and lawsuits while they are in the trusts. In the old days, your assets in the trust could have those same protections during your lifetime however there have been significant and important changes to the ability of a trust’s assets to offer the same protection to the person creating the trust. That is a matter of state law and there are many variations state to state.

Be sure to ask us about the different trust-based estate planning options we offer to find one that’s best suited for your particular situation. 

Life & Legacy Planning: Do Right By Those You Love Most 

Although a living trust can be an ideal way to pass your wealth and assets to your loved ones, each family’s circumstances are different. In my office, if you don’t need a trust, I am not going to recommend one for you. We will help you decide what the most affordable and reasonable solution is for you and your family—both now and in the future—based on your family dynamics, assets, and desires. 

The best way for you to determine which estate planning strategies are best suited for your situation is to meet with us for a Family Wealth Planning Session, which is the first step in our Life and Legacy Planning process. During the planning process, we’ll take you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you die or if you become incapacitated. 

Sitting down with us will empower you to feel 100% confident that you have the right combination of estate planning solutions to fit your unique asset profile, family dynamics, and budget. We see estate planning as far more than simply planning for your death and passing on your “estate” and assets to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning. Contact us today to get started.

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