Probate and Trust Administration
Probate is the process by which the court gathers a decedent’s assets; pays taxes and claims, and distributes assets to the named beneficiaries. Generally Probate is only necessary when a person dies with assets in his or her own name alone. Assets in a Living Trust, jointly held or with a beneficiary do not have to go through Probate. Probate has a bad reputation and rightfully so! It is expensive. Legal fees are approximately 3% of the probate assets and the personal representative (executor) can also take a fee up to 3%. If there is real estate in more than one state, there can be multiple probates. Additionally, Probate takes at least six months and sometimes more and delays the distribution of the assets to the beneficiary.
Doesn’t Having A Will Avoid Probate?
These are questions that regularly come up in our office. A Will is a legal document that provides for distribution of your Probate estate at your death. Probate assets are those owned by a person in his or her own name alone, with no beneficiary, without being “payable on death”, or “in trust for”, or in a Living Trust. A will must be verified by the Probate Court before it can be enforced and the assets distributed to the heirs. Because Probate is a court proceeding, it is time-consuming and expensive. Additionally, Probate takes at least six months and sometimes more and delays the distribution of the assets to the beneficiary. Probates can occur because of one or more of the following:
- “Let the kids worry about it–I’ll be dead.”
- Poor planning and lack of information.
- Not wanting to deal with unpleasant subjects.
- Waiting to let the surviving spouse “take care of things” (and he/she can’t or doesn’t).
- Fear and misinformation about Living Trusts and other important Estate Planning tools.
- Poor legal advice on how to avoid Probate.
Lawyers no longer keep these tools a “secret” in order to generate Probate fees. Elder Law and estate planning attorneys are trained to provide information on the ways to avoid Probate proceedings and otherwise properly plan your estate.
What’s the difference between a Will and a Trust? Doesn’t having a Will avoid Probate? Why would I want a Living Trust?
These are questions that regularly come up in our office. A Will is a legal document that provides for distribution of your Probate estate at your death. Probate assets are those owned by a person in his or her own name alone, with no beneficiary, without being “payable on death”, or “in trust for”, or in a Living Trust. A Will must be verified by the Probate Court before it can be enforced and the assets distributed to the heirs. Because Probate is a court proceeding, it is time-consuming and expensive. Assets that are jointly held in trust for someone, or in a Living Trust avoid Probate. Beware the pitfalls of joint ownership. It may be difficult to have the property returned on request to its original owner during his or her lifetime. Joint assets may also be subject to the control of the new owner and the new owner’s creditors. Joint ownership between spouses won’t eliminate Probate but will only delay it until the death of the surviving spouse. Joint ownership can also have adverse income and Estate Tax consequences. A Living Trust is an enormously flexible and useful vehicle. Assets of the owner(s) are re-titled into the name of the trust. The original owner(s) becomes his or her own trustee and maintains control of the assets, which are not subject to Probate. To avoid guardianship, the owner appoints a successor trustee to manage the trust property if he or she becomes incapacitated. Among its many benefits, a Living Trust
- Avoids Probate delays and expenses
- Represents opportunity for professional asset management
- Permits distribution over a longer period of time
- Allows prompt transfer of management upon disability
- Avoids guardianship
- Reduces the likelihood of the Will be contested
- Coordinates distribution of assets through one vehicle
- Is especially important with out-of-state real estate
- Provides maximum privacy
- Is inexpensive and easy to set up and maintain
- Prevents court control of inheritance by minors
Upon the death of the creator of the Trust, the family may need to “administer the Trust”. Somewhat like a Probate in that it “wraps up the estate”, there is no court involved, making this procedure less timely and less expensive.
It is always stressful when a loved one dies. Our office works with families on many difficult issues, distribution of wealth being one of them.
We are pleased and prepared to assist you and your family in expeditiously and peacefully administering your trust and estate including any necessary Probate proceeding.
The 67 Things That Must Be Done
We have compiled a list of the 67 things that must be done (and a few mistakes not to make) when there is a death in the family. This has been compiled over the years of experiencing with helping clients. Hopefully, this Free reference information can help make great decisions and avoid mistakes.