Some people prefer to minimize the court’s involvement in their financial affairs upon their death. For them, the word “probate” carries a negative connotation.
While probate serves an important legal function, it can also involve delays, administrative expenses and public filings. One of the most effective ways to avoid probate is to use a revocable living trust. It can help individuals avoid probate and simplify the transfer of assets.
Make sure the trust is properly funded
When someone dies, any assets listed solely in their name without a designated beneficiary generally must pass through probate. This can include:
- Real estate
- Bank accounts
- Investment accounts
- Personal property with significant value
The probate process typically involves appointing a personal representative (who may be named in the will), notifying creditors and heirs, paying debts and taxes and eventually distributing the remainder of the assets.
A revocable living trust can help your loved ones avoid all that. It’s simply a legal agreement you create. You transfer ownership of selected assets into the name of the trust, over which you serve as trustee while you’re alive.
After you pass away, you personally no longer own the assets. The trust does. Therefore, there is no need for the assets to pass through probate when you die. Instead, the person you choose as your successor trustee steps in and distributes the assets according to the terms listed in the trust document.
Other advantages of a revocable living trust
While avoiding probate is often the main goal of using a trust, it’s not the only advantage. A trust administration is kept private, meaning the details of your financial affairs are not part of the public record. Furthermore, if you own property in more than one state, a trust can help you avoid ancillary probate proceedings.
A legal representative can help ensure that your revocable trust is legally compliant and meets your goals. Establishing the trust correctly also helps ensure that the assets are properly transferred to the designated beneficiaries.
