One of the reasons why it is important to retain the services of an experienced estate planning attorney when you get serious about planning for the future is because of the fact that the typical layperson would have no reason to have an understanding of all the different vehicles of asset transfer that are available. Many people automatically think about the last will when they consider estate planning, but there are a lot of reasons why it may be better to utilize trusts such as a revocable living trust.
Creation of a trust can protect the assets that you intend to pass along to your loved ones from creditors, former spouses, or claimants and you can also include stipulations that are intended to protect the beneficiary from bad decision-making. Certain types of trusts can also help to provide estate tax efficiency. But perhaps the most common reason why people choose to use trusts as their vehicle of asset transfer is because of the fact that this course of action enables the resources to change hands outside of the probate process.
The reasons why you may want to avoid probate are because it can be expensive, it is time-consuming, and it allows for the possibility of someone challenging your wishes before the probate court. Expenses involved in the probate process include court costs, the executor’s compensation, probate attorney fees, and quite possibly accountant fees, appraiser fees, and estate liquidation costs. All this could add up to as much as 5% of the total value of your estate, and sometimes even more.
One thing to consider if you use a trust as your vehicle of asset transfer is that you may acquire assets after creation of the trust or intentionally leave some property out of it for one reason or another. To account for this it is a good idea to include a pour-over will in your estate plan. This document will state your desire to have all of your remaining property “poured over” into the trust after you pass away.