What is Probate and why does everyone want to avoid it?
Probate is a court supervised proceeding for transferring a deceased person’s assets to beneficiaries. If you have an executor named in your will, he or she will file a petition upon your passing to be appointed as your representative. The executor then takes charge of your assets, paying any debts and distributing the remaining assets to your designated beneficiaries. If a person does not have a will, then the state writes your will for you. You don't get to name your beneficiares or pick who will administer the estate. The disadvantages to this are that probate proceedings can take a long time and cost more.
What is a Revocable Living Trust?
A revocable living trust puts your assets into a trust that is administered for your benefit until your passing and then transfers them to your beneficiaries without the need for court involvement. By naming yourself as trustee, you remain in control of your assets during your lifetime. A successor trustee is also named. This individual manages the trust’s assets, should you become unable to do so yourself and also takes over the distribution of your assets upon your passing.
What are the advantages of having a Living Trust?
Like a will, a living trust provides for the management and distribution of your assets upon your passing. However, it is different from a will in that it allows for the immediate transfer of your assets without court involvement thereby allowing your estate to bypass potentially costly and lengthy probate processes. It also includes provisions for the management of your affairs in the case of incapacity. Its advantages are that it allows your beneficiaries to manage your estate privately in a flexible and low-cost manner.
Will I lose any control over my property is I create a Revocable Living Trust?
As trustee of your living trust, you retain complete control of your assets as long as you are mentally competent. There is no effect to your taxes and, because it is revocable, the trust can be modified at any time you wish. Upon incapacity or death, management of the trust the individual(s) you designate as your trustree(s). Upon your passing, the living trust is no longer modifiable and your successor trustee(s) will proceed to carry out your wishes set forth in the trust as directed.
Do I have to transfer all my assets to my Living Trust?
Assets such as insurance policies, retirement accounts and annuities that name beneficiary do not need to be included in your living trust. An estate planning attorney can advise you on which assets need to be included.