The process of probating an estate is notorious for two main reasons: 1) taking several months up to several years to complete and 2) eating up a considerable chunk of the estate in the process. That being the case, one of the primary reasons that some people may choose to set up a living trust rather than a traditional Last Will & Testament is to avoid the probate process and all potential fees and wait times associated with it.
How a Living Trust Operates
Once signed, a living trust operates by housing a grantor’s assets for their benefit while they’re still alive, and distributing said assets to their designated beneficiaries after their passing via a successor trustee. Living trusts can be both revocable and irrevocable; the former can be changed at any point in the grantor’s life. The latter, while cannot be changed, provides ideal asset protection (as long as formed preemptively) since assets in a revocable trust cannot be accessed by creditors.
How a Living Trust Avoids Probate
The reason that most assets in a will need to be probated is because after the testator’s death, they are still in his or her name and need to be identified and collected before they can be distributed to the appropriate heirs. Once the assets are placed into a living trust, however, they are no longer property of the grantor (but that of the trust) and will no longer need to be collected since they will automatically become property of the beneficiaries upon the grantor’s passing. The probate process becomes unnecessary since the appointed successor trustee will now be responsible for overseeing the transfer of the trust’s assets to the beneficiaries instead of the Surrogate’s Court.
When Probate May Be Required
Probate may still be required if you own any assets that were not transferred over to your living trust before your death. If you die intestate, or without a will, those assets will transfer to your closest heir as determined by your state’s intestate succession laws. A safety net for this kind of situation is known as a “pour-over will,” which allows for a decedent’s assets that were not already placed into a trust to be transferred to their living trust after their death.
All in all, if you want to avoid probate to save time and money, creating a living trust is definitely recommended. If you or a loved one are looking to create your own living trust, we advise consulting with a licensed estate planning attorney who can guide you through the process.