Ideally, when someone passes away, the paperwork and material concerns associated with the deceased’s passing are so seamlessly handled (thanks to excellent preparation) that they fade into the background, allowing the family and other loved ones to grieve and remember the deceased in peace. In fact, the whole business of estate planning—or at least a significant piece of it—is concerned with ease. How can money, property, and legacies be transferred to the next generation in a harmonious, stress-free, fair process? To that end, many people strive to avoid burdening their loved ones with the complications and costs involved with probate. There are numerous tools of the trade that a qualified estate planning attorney can use to keep your money and property out of probate. For example, establishing joint ownership on bank accounts and real estate titles, or designating beneficiaries for life insurance policies and certain accounts, and so on. However, setting up a revocable living trust is quite often the best option for avoiding probate. Let’s discuss why this is true.
What is a Trust?
Often touted as an alternative to a will, a trust is a legal entity that owns your accounts and property or is named as the beneficiary of certain accounts and property (like a retirement account). In order for a trust to be valid in Texas, it needs three things: 1) a Grantor (sometimes called a “trustmaker”), who puts money or property into a trust. 2) a Trustee, a person who manages the assets owned by the trust on behalf of 3) the beneficiary. The beneficiary doesn’t own or manage the assets, but receives the benefit of them.
When you set up a revocable living trust, you are the Grantor. You can name yourself as the trustee, to manage the assets while you are alive and in good health. When the time comes that you can no longer manage your affairs, your chosen backup trustee can step in and continue managing your assets for you.
How Does a Trust Help You Avoid Probate?
The purpose of probate is to make the wishes laid out in your will effective and legal. This process involves the transfer of ownership for all accounts and property that are owned in your sole name and that do not have a beneficiary, pay-on-death, or transfer-on-death designation when you pass away. A trust has the opportunity to bypass probate, or to simplify the probate process. This can be done by either transferring title to your assets (while you are still alive) to your trust, or naming the trust as your beneficiary on non-probate assets (such as retirement accounts). Furthermore, a trust can cover virtually any type of account or property, from real estate to heirlooms to stock to bank accounts. When a trust is structured correctly with the help of an experienced estate planning attorney, your affairs can stay out of probate court entirely. This process not only limits court costs but also maintains the privacy of your financial records while enabling your beneficiaries to enjoy the benefits of the trust without disruption or delay.
Establishing a trust can seem a bit complicated, and the process can cost a bit more initially than preparing a will. However, if you are willing to invest a little more up front, a trust can be your best option for avoiding probate later. The key to effective planning that minimizes the likelihood of a drawn-out, contentious, expensive process is to work with highly qualified, trusted people. Find a lawyer who genuinely cares about you and your loved ones and who knows how to forge the right strategy for all of you. Nielsen Law PLLC provides family focused estate planning and probate services in the Austin, Round Rock, Cedar Park, and the Central Texas area. For more information and to learn about our firm, please contact us. Give us a call today to learn more about next steps for achieving the peace of mind you deserve.