Avoiding Probate


Every good decision comes from a good foundation. Others say “You make your luck”. Avoiding probate is no different. There are options you may want to pursue. Revocable living trusts, property vesting and charitable remainder trusts are just some of your options. I recommend you consult an attorney to prepare your estate. I did.

Here is a link to an extensive article on How To Avoid Probate.

The living trust is often marketed as a vehicle that allows you to “avoid probate” upon your death. Probate is the court-supervised process of transferring property at death pursuant to the terms of a will. Many types of property routinely pass outside of the probate process. These include:

  • life insurance or retirement plan proceeds which pass to a named beneficiary rather than your estate
  • real estate or bank or brokerage accounts held in joint names with right of survivorship

While it is true that the property passing under the terms of a living trust upon the death of the maker of the trust will “avoid probate,” it should be noted that there may or may not be actual value in that result. Probate laws are different in every state. In some states there are statutorily mandated court or attorney fees while in others those fees may be minimal. Many states have expedited or simplified court proceedings that are efficient and inexpensive for small or simple estates. A properly drafted will in many states can eliminate some of the steps otherwise required in the probate proceedings. In addition much of the delay and red tape customarily associated with probate is a result of the tax laws and tax filing requirements which cannot be eliminated through a living trust and the avoidance of probate.

A living trust can almost never totally avoid probate and a simple will is needed to “pour over” to the trust any property that has not been transferred to the trust during life.

Property that passes at death through a revocable living trust must first be transferred to the trust, administered by a trustee who may or may not charge fees, and then transferred out of the trust to the beneficiary. These costs and the costs associated with tax filings are often ignored by living trust marketers. There may be other costs as well depending upon the jurisdiction, such as real estate transfer taxes. The comparison of cost between probate and a living trust should be made on a case by case basis.

Disclaimer

Disclaimer of Liability: This information is provided as a public service by the ABA Section of Real Property, Probate and Trust Law. While the information on this site is about legal issues, it is not legal advice or legal representation. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of information contained herein or at other sites to which we link. We assume no responsibility for any information, advice or services provided by any site to which we link.

The most important action you can take is to educate yourself. Hopefully this page will get you started.

Please do not hesitate to call or email with comments or questions,
michael@michaelstephens.net
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