Estate planning experts warn that the probate process can tie up your property for several months or longer, and the accompanying fees can total up to 5 percent of your estate’s value. Furthermore, if your will goes to probate, it becomes a matter of public record — which means anyone could obtain a copy.
If the value of your estate is not more than $100,000, no probate is required. For larger estates, one way to avoid probate court is by creating a revocable living trust.
How a Revocable Living Trust Works
A revocable living trust, also referred to as a living trust, is an estate-planning tool that holds ownership of your assets until you die.
With this arrangement, your property is transferred to the trust. You, as the appointed trustee, retain control of the assets and have the right to use them as you see fit during your lifetime. At any time, you can undo the arrangement, reclaim specific assets, add more property or designate a different successor trustee.
A living trust will survive your death, as your named successor will step in and take over the asset management. Since ownership of your property remains with the trust, it will not be subject to probate.
Using a Living Trust to Avoid Probate Court
A revocable living trust has several advantages:
- Retain control over your property while you are alive.
- Keep your estate plans a private matter instead of part of the public record.
- Have asset protection in the event you become incapacitated.
- Enjoy peace of mind in knowing your estate will be handled as you prefer.
Trusts are not without drawbacks, however. The disadvantages to avoiding probate court with this estate-planning approach include:
- Establishing a trust requires legal assistance, which can be expensive.
- Transferring property and assets into a trust can be difficult.
- Using trust assets as collateral or making contracts regarding trust property can involve additional hurdles.
Should You Set Up a Revocable Living Trust?
Creating a trust is not the only way to avoid probate court. You could, for example, make certain accounts payable on your death to a designated beneficiary. And if you own shares of stock or business interests, you could use a transfer on death designation to avoid probate.
The bottom line is that, when it comes to estate planning, consulting with a legal professional is virtually always in your best interest. An expert in wills, trusts and asset protection can help you understand your options and determine the best approach to distributing your property.
If you live in northern Utah, contact the Franchise & Business Law Group for assistance. Our legal team has extensive experience creating complex estate plans, and we can ensure your assets are handled according to your wishes.
To discuss whether you should consider the use of a revocable living trust, contact our Salt Lake City, Utah, office and schedule an estate planning consultation today.