Fortunately, there is a traditional alternative to wills and probate. It is called a revocable living trust. It avoids all probate and makes sure your plan won’t be altered by the court or relatives at your death or disability.
Probate is the legal process through which the court makes sure that, when you die, your debts are paid and your property is distributed according to your will. If you don’t have a will, the state has laws that govern how your assets are distributed among your relatives. The probate court can also take control if you become physically or mentally incapacitated.
What’s so bad about probate? Well, probate can be an expensive, time consuming process in which your family has no privacy in that all probate proceedings are public and they also may have very little control.
The solution to avoid probate is to have a living trust. A living trust is a legal document that looks a lot like a will. In fact, it does what most people think a will does–and much more. It says who will inherit from you, but it also spells out how and when your heirs will receive their inheritances. In addition, because there is no probate with a living trust, all expensive court proceedings and delays are eliminated, your privacy is preserved and emotional stress on your family is minimized. A living trust can also reduce/eliminate estate taxes on larger estates, is hard to contest, and even can provide very effective pre-nuptial protection in a multiple marriage situation.
Everyone should consider having a living trust. The chart on the back of this page provides a good comparison for an individual having no will, a will or a living trust.
Advantages of a Living Trust
• Avoids all probate and related costs
• Can reduce or eliminate estate taxes
• Allows quick distribution of assets to beneficiaries
• Preserves privacy – completely confidential
• Allows for professional asset management with selection of corporate trustee
• Very hard to contest
• Lets you keep control, even upon physical or mental incapacity, and after your death
• Prevents a conservatorship if you become incapacitated
• Minimizes emotional stress on your family
• Prevents unintentional disinheriting
• Avoids problems of joint ownership
• Relatively inexpensive, easy to set up and easy to maintain
• Can be changed or cancelled at any time
• Protects minor children from court-imposed conservatorships
• Can protect dependents with special needs
With No Will
At Physical/Mental Incapacity Probate: Court appoints conservator, must keep detailed records and report to court. Court controls your finances and assets, approves all expenses.
Court Costs You pay all court costs, legal fees
At Death Probate: Court orders your debts paid and possessions distributed according to state law, which may not be what you would have wanted.
Court Costs Your estate pays all court costs and legal fees.
Time Often 1-2 years or more before heirs can inherit.
Flexibility & Control None. Your property is controlled and distributed by probate court according to state law.
Privacy None. Probate proceedings are public record. Exposes family to unscrupulous solicitors and greedy heirs.
With a Will
At Physical/Mental Incapacity Probate: Same as with no will.
Court Costs Same as with no will
At Death Probate: After verifying your will, court orders your debts paid and possessions distributed according to your will.
Court Costs Same as with no will, or higher if your will is contested.
Time Same as with no will.
Flexibility & Control Limited. You can change your will at any time, but it can easily be contested. Family has no control over probate costs.
Privacy None. Same as with no will.
With a Living Trust
At Physical/Mental Incapacity No probate. Your successor trustee manages your financial affairs according to your instructions for as long as necessary.
Court Costs None
At Death No probate. Debts are paid and possessions distributed to beneficiaries by successor trustee according to your written instructions.
Court Costs None
Time If the trust does not require delaying distributions to beneficiaries, the trust will customarily be administered much faster than a probate estate.
Privacy Total: You can change your trust at any time, even discontinue it. Your property remains under control of your trust, even if you are incapacitated. Hard to contest.