A revocable living trust can be a good alternative to a last will for many people because such a trust will enable asset transfers outside of the process of probate.
What’s the problem with probate you ask? In a general sense you can reduce the pitfalls of probate to three specific areas.
Would you want anyone and everyone to know exactly how you decided to distribute your assets among your heirs? You may not want to leave behind an open book for various different reasons. The probate process is a matter of public record. Therefore, anyone who is interested could find out everything that went on during the probate proceeding.
This is why you see stories about the details of the estate planning efforts of some celebrities. Members of the press simply access the probate records.
Another reason why probate is often avoided is because of the fact that significant costs accumulate during this process. The court that supervises the administration of the estate charges a fee. The executor or executrix is entitled to remuneration for his or her services.
There are those expenses right off the bat, and then the executor is going to engage the services of various different professionals who will certainly charge for their time and expertise. This can include an attorney, an accountant, appraisers, liquidators, etc.
Thirdly, probate does not happen overnight. The exact length of time will vary depending on the complexity of the case in question. There are cases that are held up in probate for years, and it is going to take several months at minimum.
Revocable living trusts enable the transfer of assets to the beneficiaries outside of probate.
Are My Assets Protected?
Asset protection involves positioning your resources in such a way as to keep them out of bounds for those who may be seeking to attach them. This would include debt collectors, litigants and in some cases former spouses.
Because you are taking assets that you personally owned and conveying them into a revocable living trust you may think that they are not considered to be your personal property, and as such they are protected.
In fact, revocable living trusts do not provide asset protection. This is because of the fact that they are revocable and you maintain complete control of the funds while you are alive.
Most people are going to act as the trustee and the beneficiary while they are still living. If you go this route you make all the decisions with regard to how the money is invested and spent.
And, you have every right to revoke the trust entirely and put the money back into your pocket. Because you have the ability to do anything you would like to do with the assets they are not protected.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
- These Tips Can Jumpstart Your Estate Plan - May 23, 2023
- Pet Trust: Ensuring Your Furry Friend’s Future - May 4, 2023
- An Overview of Situational Inheritance Planning - April 18, 2023
