Some clients choose to create a revocable living trust as the basis of their estate plan, as opposed to the last will and testament. Trusts are typically used because they allow estates to avoid probate. Many clients wonder which is better – probate or trust administration. Our Los Angeles and Orange County trust administration attorneys can explain some of the differences to help you make that important choice.
Understanding the differences
One of the big differences between the administration of a trust and the probating of an estate is that trust administration is not supervised by the court. This difference basically means that the process is less expensive. The purpose of both processes, nevertheless, is to accomplish the transfer of property from an estate to the intended beneficiaries. As our Los Angeles trust administration attorneys can explain, this goal can be achieved by either process. But, there are advantages to using trusts.
The advantages of trust administration
When property is transferred through a trust, then the administration of the estate can be handled more quickly and at significantly less cost than if the estate had to go through probate. In addition to the speed of the process and the lower cost, trust administration also provides increased privacy because there is no court supervision and trust proceedings are not open to the public as probate must be.
Disadvantages of trust administration
There are disadvantages to the trust administration process that should be considered. For example, the lack of court supervision can be a disadvantage if there are beneficiaries who dispute how property is being distributed or some other actions taken by the trustee. When disputes arise, resolving them can be more complicated because there is no existing court supervision. With probate, the court already has the authority to hear those disputes and resolve them. With a trust, you may need to let your Los Angeles trust administration attorneys handle the matter for you.
Another disadvantage that discourages some clients is the length of time it takes to resolve creditor claims. With the probate of an estate, creditors have only about four months to file their claims against an estate when that estate is being probated. However, with trusts, creditors are given a year form the date of the debtor’s death to file their claims. That means it will take much longer to get those debts paid before the trust property can be distributed to beneficiaries.
The differences in cost between trust administration and probate
The fees and expenses for trust administration and probate are very different. Essentially, it costs less to administer a trust than it does to go through probate, primarily because of court intervention. The probate fees include compensation for the executor and for any attorneys that may have been retained by the executor. These particular fees are set by state statute and are required to be paid. One big difference with trust administration is that the fees for the trustee and any retained attorneys are not set by statute. Most likely the fees will be based on the amount of time required to administer the trust. Also, there are no court filing fees or expenses related to probate referees and their appraisal of any property.
Choosing your trustee to handle your trust administration
The trustee serves a crucial role in trust administration. For that reason, choosing the right trustee is extremely important. The way a trust operates, the trustee will be given authority over your financial affairs and personal matters, under the terms of the trust. Therefore, you should choose a trustee who you believe is trustworthy, competent and knowledgeable about the types of issues a trustee would need to handle.
Trust administration requires a responsible trustee to keep the process moving in the right direction. One question that clients often ask is whether they can appoint their trust lawyer as their trustee. There are a few ethical considerations, including conflicts of interest and fiduciary duty which should be thought through. Here is some good information that may help you make this particular decision.
Download a FREE estate planning worksheet today! If you have questions regarding estate planning, trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us in Los Angeles at (310) 337-7696, and in Orange County at (562) 346-3209.
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