If you have the means, an out-of-state vacation home can enhance your life. You and your family and friends can relax, unwind, and have fun together when you have the opportunity, and you are making a good investment that can yield financial dividends.
At the same time, there is an estate planning consideration, and we will explain the details in this post.
When a will is used as an asset transfer vehicle, it is admitted to probate after the death of the testator. This is a legal process that takes place under the supervision of a court.
During probate, the executor will notify creditors, and they are given a good bit of time to come forward seeking satisfaction. The assets that comprise the estate will be identified and inventoried, and in some cases, appraisals and liquidation of property will be necessary.
The process will typically take eight or nine months to run its course if it is simple and straightforward and there are no complications, and the inheritors have to wait out. They do not receive anything while the estate is being probated by the court.
Probate records are available to the public, so anyone that wants to access them can find out how the resources were transferred. Some relatively significant expenses accumulate during probate as well, and this is another factor that makes probate less than ideal for the heirs to an estate.
One probate process is problematic enough, and if you own property out-of-state that will be transferred through the terms of a will, ancillary probate will be necessary. This is an additional probate proceeding that would take place in the state where the property is located.
A living trust can provide a solution if you own a vacation home in another state, and it is a very effective device even if you are not in this position. When you establish a living trust, you act as the trustee, so you can access the assets every step of the way.
This would be a revocable trust, so you would be able to rescind the trust and take back direct personal possession of the property if you ever choose to do so. When you draw up the trust, you name your heirs as the beneficiaries, and you designate a trustee to succeed you.
With regard to the successor trustee, any adult that is willing to assume the role can technically act as the trustee. However, if you don’t know anyone that would be suitable, trust companies and the trust departments of banks provide trustee services for a fee.
After your death, the trustee would distribute assets to the beneficiaries, and the probate court would not be involved. This includes transfers of property that is located in another state.
In addition to the probate avoidance benefit, there are other advantages that living trusts provide, and one of them is the asset protection. The trust would become irrevocable after your passing, and the principal would be protected from the beneficiary’s creditors.
You do not have to provide lump sum distributions all at once when you have a living trust. If you want to spread out the distributions over time, you can leave those instructions in the trust declaration.
Another benefit is the ability to prepare for possible incapacity. You can empower the successor trustee to administer the trust in the event of your incapacity, or you could name a different disability trustee.
Attend a Complimentary Seminar!
If you want to come away with a far better understanding of the estate planning process, attend one of our upcoming seminars. The sessions are complimentary, so this is a great way to invest a small amount of your spare time.
You can see the dates if you visit our seminar page, and when you identify the session that works for you, follow the simple instructions to register.
Need Help Now?
Our doors are open if you have already decided that you should work with a Glastonbury, Connecticut estate planning lawyer to put a plan in place. You can send us a message to request a consultation appointment, and we can be reached by phone at 860-548-1000.