Let’s be honest: Probate is one of those legal words that sound boring --- until you or your loved ones get stuck in it. Then it becomes, expensive slow, and often frustrating.
Probate is the legal process in which the assets of a deceased person (“the decedent”) are identified (“marshalled”), valued (“appraised”), and distributed (‘inherited”). This legal process is supervised by a county court where the decedent lived. It is the way creditors make sure they are paid back, and your remaining assets go to the people who you named, your spouse, or your biological relatives.
The word Probate derives from the Latin probare which means “to prove” or “to test” so probate is the legal process of proving that a Will is valid before the terms of the Will can be acted upon. Probate originated back in medieval England when courts and creditors needed a system to ensure that debts owed by the deceased did not die with them. The government steps in to oversee a deceased’s citizen’s asset distribution – not to help grieving families, but instead typically only to protect others’ financial interests.
The Catch?
All Wills need to be probated before they take effect. It is not automatic. A Last Will and Testament is merely a way to share your final wishes about your assets to a state court (probate court or sometimes called surrogate’s court or orphan’s court). In fact, one way to describe probate a is lawsuit your family files on your behalf after you die – using your own money – just to carry out your last wishes. In other words, even if they have done “every right” by drafting and signing (executing) a Will, your estate still must be processed through a government system, it is not private, and your beneficiaries named in the Will are stuck navigating a legal maze of bureaucracy with fees and arcane rules that can take months or even years to resolve.
A Living Trust can truly be life-changing for your beneficiaries.
A Trust is a legal entity created to hold and mange assets according to terms (or rules/guidelines outlined in the Trust. It is typically referred to as a living trust because unlike a Will is takes effect during your lifetime, when you are incapacitated and also after you pass away.
A common estate planning mistake many people make is not ensuring the Trust you create actually holds your assets. Many attorneys simply do not make sure the funding of the Trust is explained to their clients. If you already have an existing Trust, it is important to keep your asset descriptions (usually Schedule “A”) updated, and if you are unaware of what your Trust holds, you may consider meeting with an attorney to review the terms of your Trust and to confirm your Trust is properly funded. The bottom line is that if you do not transfer assets into your Living Trust, it is an empty shell and it is unlikely to easily avoid probate and will probably not accomplish the goals you had in mind when it was created.
Below is some initial guidance about assets that you may consider transferring to your Trust
- Real Estate – Has a new deed been recorded in the name of your Trust? If not, the property likely remains outside of the trust, defeating its purpose
- Bank Accounts and Certificates of Deposit - Have you opened new bank accounts or CDs in the name of your Trust? If your bank will not allow you to retitle CDs until the maturity date, consider holding them “in trust for” (“ITF”) a beneficiary until the CDs mature and then transfer the funds to your Trust.
- Stocks, Bonds, Mutual Funds, and Brokerage Accounts – If you work with a financial advisor, have you coordinated with them to update the beneficiary designations to the Trust (where permissible)? Consider asking whether holding certain investments directly in the name of the trust is advisable from a tax or management perspective.
- Vehicles (Cars, Boats, RVs, Aircraft – Have you confirmed whether your vehicles can be re-titled in the name of your Trust or allow beneficiary designations?
- Intellectual Property (Patents, Trademarks, Copyrights, Royalties) – IP can generate ongoing income. Therefore, assigning them to your Trust ensure their value is managed and distributed according to your wishes.
- Cryptocurrency/Digital Wallets/Digital Assets – These often fall through the cracks in traditional estate planning. Have you documented access (keys, seed phrases, passwords) and decided whether your trust should own them?
- Savings Bonds – Have you applied to the federal government (via Treasury Direct) to reissue your savings bonds into the name of your Trust? This ensure they are properly recognized as part of the Trust’s assets.
- Life Insurance, Annuities, Retirement Accounts (IRA, 401k, Pension, Roth) – Some retirement accounts do not transfer well without triggering a penalty. Consider talking with the representative assigned to each financial product and assess what method would be the best for your circumstance. This may include naming the Trust as a beneficiary.
A Living trust without funding is like a car without no keys --- schedule review of your Trust and make sure yours can actually go somewhere.
However, estate planning is not just about creating legal documents --- it is about making sure those documents work when your loved ones need them most. A Living trust is one of the powerful estate planning options available to hope avoid probate, reduce legal fees and minimize family conflict. It also works to keep your affairs more private than a traditional Last Will & Testament.
Probate: because nothing says “I love you” like dragging your family through a year of legal paperwork.
When done correctly, a revocable living trust allows your assets to transfer efficiently to your beneficiaries – without needing a court to intervene and manage the process. Many people mistakenly believe that a Last Will and Testament is enough. While a Will is an essential part of an estate plan, it is a public time consuming and often costly legal process. In contrast, a living trust allows your successor trustee to manage and distribute assets seamlessly, with the delays and complications of court supervision.
Avoiding probate is not just about saving time and money, though – it is about leaving behind clarity, respect and peace of mind.
If you are in need of assistance, the attorneys at Collins Family & Elder Law Group can help.
