When most people plan to distribute their property at death, they think of a simple last will and testament. At death, the will goes through a legal process known as probate. The probate process is public, with the executor’s actions reviewed by the probate court. In most cases, the process takes several months; problems can turn the timeline into years of expensive legal battles among heirs. Probate can incur significant legal fees for “administrative costs.” And the only end-of-life issue addressed by the will is “distribution of property.”
A Living Trust Is Private
A living trust is drafted and administered privately, usually within the family. At first, the settlor often serves as his own trustee, retaining full control of the property. At the settlor’s death, disability, or resignation, the appointed successor trustee takes over as trustee.
Assets and Administration Stay “In the Family”
While most probates require immediate liquidation of assets and distribution of the proceeds, living trust assets can be retained by the trust if it is financially prudent to do so. Potential problems such as spendthrift heirs and anticipated bickering among siblings can be addressed by provisions of the trust.
Distribution Takes Minutes, Not Months
A successor trustee can assume control immediately in an emergency. While the probate process requires banks to put an immediate hold on an individual’s bank accounts at death, bank accounts in the name of the trust require only proper documentation of the successor trustee’s appointment and the signing of a signature card. Thus funds will be immediately available for funeral and other expenses.
Save Thousands of Dollars in Administrative Fees
Living trusts aren’t just for the very rich. For example, a modest $100,000 estate in Indiana going through traditional probate incurred $35,000 in “administrative fees,” leaving $65,000 for distribution to heirs eight months later. Another $100,000 estate (same state, same extended family) titled in a living trust passed in its entirety to the single heir the same day.
Most Living Trusts are a Package Deal
The living trust package usually includes several documents: the living trust, a “pour-over” will leaving non-titled assets to the trust, a durable power of attorney, healthcare directive and appointment of healthcare representative, as well as a Living Will with end-of-life instructions. The living trust package allows you to prepare for disability as well as death.
Because living trusts include more extensive documentation and bring no future probate administrative revenue potential, they are more expensive up-front than a simple will. However, most people feel that the ultimate savings in time and money make living trusts a worthwhile investment.
Want to Learn More about the Benefits of a Living Trust?
Long Island–based elder law attorney Andrew Lamkin can help you consider every option to best provide for your family when planning your estate. You can receive a free consultation by calling the Law Office of Andrew Lamkin, P.C., at 516-605-0625, or by completing our Contact Form.