In our previous blog post, we explained some of the ways that the full process of probate can be avoided through the utilization of some shortcuts when a will is used as the asset transfer vehicle.
Why would someone want to avoid this process? As we stated in that entry, it is time-consuming, and the heirs do not receive their inheritances while the estate is being probated by the court. Significant costs can accumulate as well, and these expenditures ultimately reduce the value of the estate before it is transferred to the heirs.
There is also the opening that was presented by disgruntled parties that may want to challenge the will. Another major drawback is the loss of privacy, because probate records are available to anyone that wants to know how the assets were passed along to the heirs.
Revocable Living Trust
For many people, the ideal probate avoidance tool is the revocable living trust. When you establish this type of trust, you would be called the grantor. As the grantor of the trust, you can serve as the trustee and the beneficiary while you are alive, so there is no loss of control.
You would name your heirs as the successor beneficiaries, and you would also empower a trustee to succeed you after your passing. The successor trustee could be an individual that you know personally, but you would also have the option of using a corporate trustee such as a trust company or the trust department of a bank.
When you are gone, the successor trustee would follow directions that you leave behind in the trust declaration and distribute assets to the beneficiaries in accordance with your wishes. These distributions would not be subject to the process of probate.
In addition to this benefit, there are several others that can be very appealing to a wide range of people. Unfortunately, a significant percentage of elders become unable to make sound decisions at some point in time. To account for this, you could empower a disability trustee to administer the trust in the event of your incapacity.
If you have someone on your inheritance list that is not good at handling money, you could include a spendthrift provision. This would protect the principal from the beneficiary’s creditors, and you could instruct the trustee to distribute limited assets to the beneficiary over an extended period of time.
Another major positive is the fact that the estate administration process is streamlined when you use a revocable living trust as the centerpiece of your estate plan. When it is properly constructed and funded, all or most of the assets that comprise the estate will be contained within the trust.
There is a way to account for assets that are part of the estate that have never been conveyed into the trust in the state of California. We will take a look at this device in our next post, which is the conclusion to this three-part series.
Download Our Estate Planning Worksheet
Since you are on this website, you must be looking for information about estate planning, and you have certainly landed in the right place. This blog is continually updated with useful information, and we have other written resources that you can tap into free of charge.
One of them is our carefully prepared estate planning worksheet. If you take the time to go through it, you will gain a renewed perspective that will help you understand the process more thoroughly. To get your copy, visit our worksheet download page and follow the simple instructions.
Schedule a Consultation!
After you have digested enough information, you will invariably come to the conclusion that personalized attention is the key to a perfectly constructed estate plan.
Every case is different, and there are many tools in the estate planning toolkit. When you work with our firm, we will gain an understanding of your unique situation and explain your options. If you decide to move forward, we can custom craft a plan that is ideal for you and your family.
You can set the wheels in motion right now if you send us a message to request a consultation appointment, and we can be reached by phone at 310-337-7696.
Cesar has received his Masters of Science in Integrated Design, Business and Technology from the University of Southern California.
