What is a Living Trust?
A Living Trust is an estate plan that manages your assets during your lifetime. Your Trust efficiently passes your estate to your chosen beneficiaries after your death. A Living Trust is also called an “Intervivos Trust” or “Revocable Trust.”
Why would you need a Living Trust?
With you as the Trustee, a Living Trust controls and protects your estate, now and after your death.
By law, no one can sign your name. Therefore, if you acquire a disability, your name can only be signed using a previously executed Financial Power of Attorney. After your death, an Executor, approved by the Probate Court, is the only person authorized to sign your name and transfer your assets.
Your Financial Power of Attorney will be revoked by operation of law at your death. Consequently, if you have assets in your name after your death, such as title to real estate or financial institution accounts, a Probate Court judge approves an Executor to administer your estate.
A Last Will and Testament does not avoid Probate. A Will is your wish for an Executor who receives your property after your death.
What legal documents are in a Living Trust?
A complete Living Trust estate plan should include a Trust, a Last Will and Testament (often called a Pour Over Will that acts as a safety net for any assets in your name at your death.) Your Living Trust estate plan should include a Financial Power of Attorney and a Health Care Power of Attorney.
What is Probate?
Probate is a division of the court system that manages the estates of everyone who can either not manage their affairs because of a physical or mental disability or who has died. In theory, Probate protects your assets during your lifetime. The system also supervises the administration and distribution of your estate upon your death.
What is wrong with Probate?
Probate is costly, takes a long time, and because of the number of cases in the system, it is inefficient and burdens families. The Probate system cannot efficiently manage the estates of every person. If you have not made other provisions and acquired a disability, your assets are subject to the control of the Probate court.
Your family must care for you under the direction of the court system. If you die with assets in your name, and the total collective value of your assets exceeds $100,000 – your entire estate is subject to the Probate process.
Probate requires a minimum six-month claims period. The entire process can take an average of 18 months or more to complete
How can Probate be avoided?
Probate is avoided with a properly drafted, executed, and funded Living Trust.
How does a Living Trust avoid Probate?
You transfer your assets from your name to your Living Trust. Your Successor Trustee, often a family member or trusted friend, administers your estate after your death. Your Trustee can also be a beneficiary of the Living Trust. The process is private and efficient and could take only weeks.
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