Does Having a Trust Prevent a Future Probate?
A key reason many want a revocable living trust is to avoid probate, the often cumbersome and sometime expensive legal process to retitle a deceased’s assets. I once heard probate described as “a lawsuit, against yourself, for the benefit of those who want your stuff.” Many are told that having a trust avoids probate. While having a trust can help you avoid probate, simply having a trust does not ensure you will avoid probate. It may surprise you to know that we have six probates open at this moment in cases where the deceased had a revocable living trust.
Why didn’t the trust prevent a probate? The most common answer is that the deceased had assets that were not funded in the trust. Funding a trust typically refers to one of two things: The asset is titled in the trust’s name or the trust is an asset beneficiary and will pass to the trust upon death.
Real property (a home, rental property, etc.) is the most common trust funding issue we see. Maybe the deceased never retitled property owned in another state into the trust. Maybe the deceased purchased the house years after creating the trust and simply failed to purchase the house in the name of the trust. Or maybe the deceased refinanced the property and didn’t realize that the lender removed the property from the trust during the refinance.
Financial assets can also cause a probate. We have had several cases where the deceased had a brokerage account in their own name—rather than the trust—with no beneficiary designation. Bonds held in the safe deposit box are another common probate cause.
Sadly, some people are under the mistaken impression that the trust process ends once you’ve created it. But if you pass away and your trust is not properly funded, you will create additional expense and difficulties for your loved ones.
We provide complimentary funding assistance to our client care members upon request, and hourly or flat fee support to others as requested.