When developing an estate plan, I often hear clients say, "I need a trust because I want to avoid that probate thing."
Without going into too much detail in this article, "probate" is a process in which heirs are required to apply to the court to transfer title of assets held by the deceased. Probate can be a time-consuming, expensive, public, and potentially contentious process. A trust is one method utilized to avoid probate and can be a great estate planning tool.
Essentially, a trust is a legal entity established to hold and administer your assets. The most common type of trust is a revocable living trust. As the name may imply, a revocable living trust can be modified or even revoked by the individual setting it up. The trust becomes irrevocable upon death or incapacity and the spouse, kids, or others are named as beneficiaries. In addition to avoiding the probate process, a trust offers a number of advantages:
- Incapacity: A trust is an active entity and assets can continue to provide for you or loved ones upon your incapacity.
- Flexibility: A trust may be used to gift or support you or other beneficiaries under flexible, predefined circumstances, even spanning a number of years.
- Business succession planning: If you own and manage a small business, a living trust can assist in the transition. Your hand-picked successor trustee can carry on the business in your stead without delay.
- Privacy: Unless challenged by an heir, the contents of a trust are generally private.
When compared to a typical will, a revocable trust does involve more front-end estate planning simply because it is an active entity and needs to be managed as such. While it is true that a properly established trust will likely cost more and be more complex than a will, a trust can make the transition at death seamless without court intervention. A will, conversely, requires no active management (other than periodically updating it as appropriate) but will require court administration after death.
Trusts are incredibly flexible and may be tailored to almost any situation. However, estate planning, including whether or not a trust is appropriate, should be personalized to an individual's specific needs and circumstances. Cost, time, family dynamics all play a role in what is important to your estate plan. Proper preparation can save time and money and give loved ones the comfort of knowing your wishes.
For more information about wills, trusts or other estate planning issues, please contact attorney Mike Cass at [email protected].
This article is reproduced from I need a trust...don't I? (Chicz Magazine, March 4, 2015).
The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.
Copyright 2015 Swenson Lervick Syverson Trosvig Jacobson Schultz Cass, PA