May 12

Trust the Process

Trust the Process

Probate – it sounds overwhelming, right?  We hear the stress in your voice when you call wanting to know what to do when someone passes away.  When a person has their assets in a trust, those assets avoid the probate process.  Why?  Great question!  Let’s walk through why.

Purpose of a Trust

A trust agreement is a document that is used to transfer your assets to avoid probate. If done correctly, when the trust is set up, all of your assets are placed into the trust.  Does this mean you are no longer own them? Yes! Wait…what?  The trust becomes the owner of your assets. You are the trustee of the trust, but the assets are no longer in your name. If you don’t own it, then you don’t need to go through probate court to transfer it. Trusts are also sometimes created for privacy so information about your assets and where you leave them never become public.

Is this permanent? 

As the owner of the trust, you can revoke, amend, and modify the trust at any time (as long as it is a revocable trust) prior to your death.  After death, the trust becomes irrevocable which means that whatever the trust says is what happens.  Then the named beneficiaries of the trust will then receive the assets of your estate in accordance with what you bequested in the trust.

What can I put in a trust?

EVERYTHING! Just kidding…not really.  Any real estate can be transferred by a deed. Your bank accounts can either be titled in the name of the trust or the trust can be listed as the beneficiary of the trust. Since people go through vehicles like socks, we do not typically put vehicles in a trust based on the amount of paperwork it requires; however, you can even put your vehicles in a trust.  Annuities and life insurance can also become part of the trust. 

Probate

Sometimes there is still a need to go through probate.  I know; I just said that if there is a trust then the court does not get involved.  Here are the ways probate is still needed:

1.    You have something that did not get transferred into the trust.  It could be a bank account with no beneficiary listed or it could be real property that you purchase in your name and forgot to transfer to the trust.

2.    You have do not have a stand-alone trust but you have a will that creates a trust upon your death. If the trust is in the will, then probate cannot be avoided. Only once probate, the trust goes into effect.

We prepare what is called a pour-over will when we create a trust for you.  We sometimes call it an Oopsies Will.  Meaning, “oops! I forgot to put something in the trust so please use this will, which says ‘everything I own goes to my trust,’” and that simplifies the process for those just in case situations.