In a perfect world, transferring money, property, and legacies from one generation to the next would be seamless. The paperwork and other concerns associated with the death of a loved one would pose minimal stress and family and loved ones could focus instead on the grieving process and remember their deceased loved one in peace.
To achieve this goal, it is important to avoid probate with a good estate plan. A weak or missing estate plan causes stress, time, and money.
This can be a reality, with proper estate planning and making preparation a priority. When you meet with your estate planning attorney, they are likely to discuss the many tools available to help keep your money and property out of probate, so it is distributed with ease to your loved ones.
Some of these tools include:
- Establishing joint ownership of bank accounts and real estate titles
- Designating beneficiaries for life insurance policies and certain accounts
- Establishing a revocable living trust
Of these, the one most likely to make the greatest impact on your estate planning is a revocable living trust. It is the most comprehensive option for avoiding probate.
What is a revocable living trust?
A revocable living trust is a legal document created by an individual, also known as the grantor, settlor, or trustor, that outlines how their assets, accounts, and property should be managed and distributed upon their death.
It allows the grantor to make changes or revoke the trust during their lifetime and can be used to avoid probate.
The trust is managed by a trustee (you can be the trustee) and has beneficiaries designated to receive the assets in the trust upon your death. You can also be a beneficiary.
The trust can include various types of assets such as real estate, bank accounts, investments, and valuable possessions.
Revocable living trusts are a popular estate planning option because of their flexibility and your ability to make changes as circumstances change.
It differs from an irrevocable trust, which cannot be altered once it is created and offers less freedom but has other advantages.
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How does a revocable living trust help you avoid probate?
Probate is a process that provides a means to transfer property ownership for all your accounts and property that you solely own and does not have a named beneficiary and does not have a pay-on-death or transfer-on-death designation.
A revocable living trust can bypass the probate process because you transfer ownership of your accounts and property to the trust while you are still alive or name it as your beneficiary upon your death.
By doing this, the assets in the trust are no longer considered to be part of your estate. As a result, your loved ones can avoid the probate process for those assets.
All your assets that are not already in your trust will be transferred there when you die if you name your trust as your beneficiary.
A trust can cover a wide range of assets, including:
- Accounts of any type
- Property of any type
- Bank accounts
- Heirlooms
- Real estate
This can help to save time and money for the beneficiaries, as well as keep the individual’s personal affairs private.
To avoid probate, it is important to transfer your assets into the trust, also known as “funding the trust.” Your estate planning attorney will help you with this process.
When a revocable living trust is structured correctly, your affairs remain private and your assets are seamlessly transferred to your loved ones, limiting costs and maintaining privacy.
Establishing a trust is just one part of your estate plan. Invest now in establishing a trust to save time, money, and hassle down the line. We can help you establish and fund your trust and answer questions about the estate planning process.
You can schedule a call with us or reach us directly at 855.631.3457 to learn more about how to best plan today to protect those most important to you.