Probate isn’t anyone’s idea of a good time. It’s slow, expensive, and becomes part of the public record. The good news? You can avoid probate entirely by using a trust.
Trusts make it straightforward to pass on your assets without dragging your loved ones through the legal process. (Skipping probate is a huge factor in the trust vs. will debate.) Here’s how trusts help you skip probate and why they’re worth considering.
What Is Probate and Why Avoid It?
Probate is the legal process of sorting out someone’s estate after they die. The court validates the will, pays debts, and distributes assets to beneficiaries. While this process serves a purpose, it comes with significant drawbacks:
- It’s Slow: Probate typically takes 1-2 years to complete.
- It’s Expensive: Court fees and attorney fees typically cost 3-7% of the estate’s value.
- It’s Public: Anyone can access probate records to see your financial details.
If these challenges sound like something you’d rather avoid, a trust offers an effective alternative. Use our probate cost calculator to see exactly what your family might face in probate fees.
A trust is a legal entity that holds and manages assets according to your instructions. You transfer ownership of assets to the trust, and a trustee follows your directions for managing and distributing them. Because the trust owns the assets rather than you personally, they bypass probate and transfer directly to beneficiaries upon your death.
Here’s how the process works:
- Create the Trust: Establish a trust document that outlines the rules for managing your assets.
- Transfer Your Assets: Move your property—such as your house, bank accounts, or investments—into the trust.
- Name a Trustee: Designate someone reliable to manage the trust (initially, this is typically you).
- Avoid Probate: When you die, the successor trustee transfers assets directly to beneficiaries without court involvement.
Types of Trusts That Keep Probate Away
Two main types of trusts help avoid probate: revocable and irrevocable. Both bypass the probate process, but they offer different features.
Revocable Trusts (Living Trusts)
- Flexibility: You can modify or cancel them during your lifetime.
- Control: You maintain control of the assets as the initial trustee.
- Probate-Free: Beneficiaries receive assets without going through probate.
Irrevocable Trusts
- Permanent: Once created, they cannot be easily changed. (Note: revocable trusts become irrevocable automatically when the grantor dies.)
- Additional Benefits: Provide protection from creditors and can reduce estate taxes.
- Probate-Free: Like revocable trusts, they avoid probate entirely.
What Can You Put in a Trust?
Most types of assets can be transferred into a trust. Common examples include:
- Real Estate: Eliminates the lengthy process of transferring property through probate.
- Bank Accounts: Ensures beneficiaries have immediate access to funds.
- Investments: Allows seamless management of stocks and bonds.
- Personal Valuables: Jewelry, art, and family heirlooms can all be included.
Important note: Assets not transferred into the trust remain part of your probate estate. Proper funding of the trust is essential to realize its probate-avoidance benefits.
Why Skipping Probate Is a Big Win
Using a trust to avoid probate offers significant advantages beyond just saving time and money. The key benefits include:
- Privacy: Trust distributions remain confidential, protecting your family’s financial information from public view.
- Speed: Beneficiaries receive their inheritance immediately rather than waiting months or years for probate completion.
- Cost Savings: Eliminate probate fees that typically cost thousands of dollars.
- Continuity: If you become incapacitated, your successor trustee can manage the trust seamlessly without court intervention.
Take Action to Avoid Probate
Bypassing probate with a trust protects your family from unnecessary time, expense, and stress. Whether you’re beginning your estate planning journey or ready to create a comprehensive plan, establishing a trust provides significant benefits.
Modern platforms like SimplyTrust make creating a living trust more accessible and affordable than traditional methods. The peace of mind that comes from knowing your family will avoid probate makes the process worthwhile. Learn more about probate and how to avoid it in our comprehensive guides.
