The process of probate can come into play when you are planning your estate. You may not be aware of the fact that your last will must be admitted to probate if you do in fact use a last will as a vehicle of asset transfer.
This process is in place to provide protections, but in some cases, the rightful heirs to the estate experience certain difficulties.
The process can take close to a year in simple cases. This is a rather long wait, and you would probably want your loved ones to receive their inheritances in a more timely manner.
In addition to the time factor, probate can also be expensive, because there are various different costs that can accumulate during the process.
Revocable Living Trusts
A revocable living trust can facilitate future asset transfers outside of the process of probate. Let’s look at the anatomy of a revocable living trust.
The person who is creating the trust is called the grantor, trustor or settlor of the trust. You convey assets into the trust, and you name a trustee and a beneficiary. The trustee is the individual or entity who administers the trust; the beneficiary can receive monetary distributions from the trust. The distributions would be made in accordance with the wishes that you state in the trust agreement.
While you are alive and capable of handling your own affairs, you can act as the trustee and the beneficiary initially. As result, you retain total control of the actions of the trust. In fact, you can even revoke or rescind the trust entirely, and it would no longer exist. The assets would once again become your direct personal property.
When you create the trust agreement, you name a successor trustee to administer the trust after your passing, and you also name a successor beneficiary. It should be noted that you could name multiple beneficiaries if this is your choice.
The successor trustee can be someone that you know, but it could alternately be a professional fiduciary entity like a trust company or the trust section of a bank.
After your passing, the successor trustee would follow your instructions and distribute assets to the successor beneficiaries. These distributions would not be subject to the probate process.
There is also an incapacity planning advantage. A significant percentage of seniors become unable to handle their own affairs at some point in time.
You could empower your successor trustee to take over the reins if you were to become incapacitated.
Learn More About Revocable Living Trusts
If you would like to learn more about revocable living trusts, download our special report. The report is yours free of charge, and you can obtain under the Reports section of this web site.