Today we'd like to talk a little bit about how you can avoid probate. When a loved one dies (with or without a will) and there are assets to be distributed through family, in most instances a filing with the local Probate Court needs to be made.
Why avoid probate court?
The probate process can be expensive, complicated, and can take quite a while. Additionally, everything involved in the probate process is public record.
To avoid probate, a person or married couple can put their assets into a living trust.
What is a living trust?
A living trust is seen in the eyes of the law as a separate entity, so after one passes away that entity still exists.
Cost of Probate vs. Cost of a Living Trust
The price of a living trust is obviously going to vary upon your exact situation, but your looking at anywhere from $1,500 to maybe $2,500 or $3,500.
When you're looking at probate you're probably starting at around $4,000 and it’s going to go up from there.
The cost of probate can be double, or triple, or even quadruple the price of setting up a living trust. If there’s a living will you'll avoid all those costs.
With a living will you will have some upfront to establish the living trust and then after you pass away there are several documents that have to be created, but those are relatively easy to create and you’re looking at hundreds of dollars compared to thousands.
The ideal situation is to put everything you have into your living trust. So, your checking account rather than saying “Bob Smith” will say “Bob Smith, Trustee”. The deed to your house rather than saying “Bob Smith" will say “Bob Smith, Trustee”. It’s that simple.
What happens with a living trust when I die?
If you’ve set up a living trust with you and your spouse, upon your passing, you spouse immediately becomes the sole trustee of the trust. Everything operates as it was before.
If the second of you passes away, then the successor trustee is usually going to be one of your children.
If you have minor children and you happen to pass away, your living trust is going to provide for a guardian that’s going to take care of your child. That guardian will be duty bound to preserve your assets for the benefit of your child.
How does a living trust help my family?
A trust is similar to a will in that you will make provisions on where your assets will go.
Are they going to children? Are they going to other family members, perhaps siblings or parents?
Anything that you can take care of in a will you can also take care of in a trust.
Ultimately what's most important is that we take burdens off of our family. That's why we pre-plan for funerals, we write wills, have life insurance and we create trusts. Most people may not think about it, but you want to take the burden of probate off of your family.
Setting Up a Living Trust
If you're considering a living trust and think it may be best for your situation, the best thing is to consult with attorneys. We encourage you to set up a no-obligation meeting to discuss your issues, your exact situation and explore your options.