Why NOT all living trusts will "work"





By: Stuart Williams | Estate Planning Lawyer



What motivates many people to use a “living trust” is that they’ve heard it will help their family to avoid probate.


A Quick Overview of "Probate"

"Probate" refers to the court process of transferring title of a deceased person's assets to his or her family. A deceased person's "probate estate" is comprised of (the total of) all assets that need to be transferred out of the name of the deceased person, and into the names of his or her beneficiaries. Probate can cost tens-of-thousands of dollars and take a year or longer to get through, so "avoiding probate" is a common estate planning goal.


Each asset placed into a person's living trust, is an asset that is no longer includable in the trust creator’s “probate estate.” When all of the trust creator’s assets are placed into their trust, the trust creator's "probate estate" is reduced to ZERO. Probate is then avoided because ownership of all the trust creator's assets have been reallocated to their living trust.


Many Living Trusts Won't Work to Avoid Probate

I know this because I've helped many clients who have come to me with generic living trusts they’ve found on the internet, or that were even prepared by lawyers who don't practice law exclusively in the areas of wills, trusts, and estate planning. What I’ve found is that MOST of these GENERIC living trusts would end up in probate because they were not created with the necessary care.


For a living trust to accomplish planning goals, first it should be properly designed for your family, taking into account unique characteristics of spouses, children, and any other beneficiaries.


Second, your living trust should be properly drafted to integrate beneficiaries and the special people (fiduciaries) you've chosen with the plan you've created to accomplish your goals.


And third, it is important that your real estate and financial assets are properly integrated with your living trust, and that they are owned in the right way. Each asset not properly integrated with your living trust represents a “gap” in your plan and is a "countable asset" for purposes of determining a probate estate.


At Family Wills & Trusts, “The Family Way” means ensuring that trust-base estate plan is properly designed, properly drafted, and properly integrated with your assets so that probate will be avoided.


We prepare deeds that will transfer your real estate to loved ones when the time is right (or allow them to sell it without court intervention), and we'll draft “transfer letters” to your financial institutions and insurance companies explaining exactly what they must know to make sure your assets are compatible with your living trust.


If you want to make sure there are no "gaps" in your estate plan that would leave your family exposed to the unnecessary financial waste, headaches, or stresses of Probate. Request our free information or schedule a personal planning session below to see how your family can benefit from working with us.