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Revocable Living Trusts are an increasingly popular way to transfer ownership of assets and avoid the potential nightmare of the Probate Court process. Specifically, a Revocable Living Trust is a set of written instructions in which persons or married couples are able to transfer property to their heirs upon their death without having to involve the Probate Courts. The person creating the Trust is called the “settlor”, “trustor”, “grantor”, or “creator”. The person holding legal title to the Trust property is called the “trustee”, and the person for whose benefit the Trust is created is called the “beneficiary”. Initially, you are the settlor, trustee, and beneficiary of your Trust.
The greatest benefit of a Living Trust is that you avoid the inefficient and expensive Probate Court system, which charges exorbitant Probate fees based on the “gross value” of the estate. Ultimately, it is the estate that is held responsible for the costly executor, attorney, filing and other fees. Furthermore, going through Probate courts can take years to complete. Fortunately, under our expert guidance, all of this can be avoided by creating a Revocable Living Trust as part of your Comprehensive Estate Plan.
An important, but frequently overlooked reason for establishing a Living Trust is to ensure that someone will be designated to handle your financial and legal affairs if serious illness renders you incapable of managing affairs for yourself. If, for example, you became suddenly incapacitated you may need someone to operate your business, buy or sell property, or even withdraw funds from your bank to pay bills. If you have a Comprehensive Estate Plan, your successor trustee can manage your assets until you regain your health.
As a general rule, trusts are much more difficult to contest than a Will. A Will must be validated in the Probate Court and at the initial hearing any interested person may contest the Will. On the other hand, in order to challenge a Trust, an individual must first file a petition, and then provide sufficient evidence as proof. This costly and time consuming process discourages most individuals from challenging a trust without a legitimate reason to.
If you own property in more than one state, separate Probate proceedings must be conducted for each state, which adds to the cost and delays of the Probate process. With a Living Trust, all assets from each separate state are placed into one Trust, thus avoiding the need for multiple Probate proceedings.
Probate proceedings are public. Anybody can gain access to your most personal information in Probate Court. On the other hand, Living Trusts are completely private. No one, except your beneficiaries and heirs, can find out what you own, or who you are leaving it to. This helps eliminate the potential for “scam artists” to prey on recently widowed individuals.
The average Probate proceeding, like most judicial proceedings, typically lasts anywhere from a minimum of twelve months up to several years. With a Living Trust, the property can transfer to your named beneficiaries in a matter of months or less.
Probate costs can be exorbitant, particularly in California. The Probate Court awards executor fees and attorney fees based on a percentage of the gross value of the estate and can be as much as 5% or more.
