A living trust is the most straightforward way to avoid probate. Learn how to protect your business.
This world and its systems are cruel. A person who collects all their lives, just to award a safe and financially stable future, is made to pay sky-high fees as a legal requirement and that too, after their demise.
Loved ones become deprived of all the wealth for months or in some cases, years by the court in the circumstances when they are already going through an emotional ordeal due to the loss of a beloved one.
Yes, I am talking about the probate, which must be paid to the government in order to get all the assets and properties proceeded under state law after the death of the property owner.
The process eats up three percent to seven percent of total worth and not only that, it also your personal issue a matter of public. The good news is there is a solution to this which we will be discovering soon enough.
You Are Not Helpless
Due to lack of awareness, most people believe that probate is a reality and there is no way it could be avoided. The parent/ asset-holder sets up a will during his/her lifetime which s/he thinks is the best option available. After a loved one passes away, his/her heirs gladly pay the court and lawyers’ fees and go through time-consuming proceedings in a hope to get, at least, a little back. They assume they are helpless and indeed, they are, unless, as a property owner, you take important actions in your life which will help your children completely avoid the fuss of probate. Yes, probate can be avoided and here is how.
Living Trust to Your Rescue
It is a well-established fact that a living trust is the most straightforward way to avoid probate. A living trust, also known as a revocable trust, is a legal document which allows you to write off your property to the beneficiaries during the lifetime which will be passed on to them after your death. The said document saves your time, money and preserves your privacy by keeping the affair personal.
Step-by-Step Guide to Set Up a Living Trust on Your Own
- Step 1: Write the legal document known as the declaration of trust. Some people may need the help of an attorney to understand the legal language but, with the right amount of research, you can pull it by yourself. The primary step is to name yourself as the trustor since you are the person who is creating the trust.
- Step 2: You, then, record your name as trustee too, assuming you will be managing the trust yourself. If you are creating the trust with someone else, for example, your spouse, you both become co-trustees. This way, you can save all your property on your name so that you do not lose control over them during your lifetime.
- Step 3: Thirdly, you will have to name a person who will be in authority to allocate the property after the departure of the trustee i.e. you. That person is entitled successor trustee. Since the successor trustee has a major responsibility, it is advised to select a mature individual from your very close family.
- Step 4: Next, you will be listing down your heir's, people who will hold your property and assets later. Legally, the term beneficiaries are used for them.
- Step 5: Finally, you are required to name a person who will be managing any left-out property to young beneficiaries and you are done.
How Does a Living Trust Help in Avoiding Probate?
Legally, probate exemption is provided to the assets included in the living trust. They are directly transferred to the beneficiaries under the supervision of the successor trustee and do not require any court approval or proceedings. In most of the cases, the whole issue is resolved in a mere few weeks with the help of simple documentation. The living trust ceases to exist as soon as the property is transferred to the heirs.
A Backup Will Is Essential
Several trustees assume that setting up a living trust is sufficient which is untrue. If due to some reason, you have not included few assets in your living trust, you must have a pour-over will as a backup. The pour-over will allows the transmission of any asset (outside the living trust) into the terms and condition of trust after your death. These assets, which you may have acquired right before your death, are again saved from the hassle and struggle of court because of the will. The highlight is, both the "living trust" and a "pour-over will" can be set up with the same documents, thereby, saving you from extra effort and costs.
It may cost a tad more sweat and tears to set up a living trust rather than a simple will but, the outcome is magnificent. Ultimately, the living trust allows your beneficiaries to benefit the most and suffer the least. If you find the estate planning fraught with legal and emotional issues, it is imperative that you consult an attorney to straighten up your affairs. Nonetheless, if you are capable of managing it on your own with minor professional help, bravo.
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