Many people have heard of trusts as they apply to the field of estate planning without realizing why they are not just something that the wealthy can benefit from. When you use a last will to direct assets to your family members after your passing, the estate must be probated before it can be closed. There are a number of reasons why people choose to avoid probate, and we will look at a few of them here and highlight a widely used alternative.
Probate is a public proceeding that takes place under the auspices of the probate or surrogate court that is local to you. Because of this the administration of your estate becomes a matter of public record, and many people would rather keep their final affairs out of the sight of prying eyes. In addition, if anyone wanted to challenge the will they would present their arguments before the probate court. So if you do not want to provide this opening you may want to utilize a method of asset transfer that enables probate avoidance.
In addition to the reasons cited above, probate is also costly and time consuming. It can take anywhere from close to a year to several years in complicated cases and the heirs to the estate must wait until the process has run its course before they can receive their inheritances. Costs associated with probate can consume anywhere from perhaps 3% to as much as 10% of the overall value of the estate.
The way that many people avoid probate is through the creation of revocable living trusts. With these vehicles you retain full control of the assets while you are living, but upon your death they are distributed to your heirs according to the stipulations that you include in the trust agreement. The transfer of assets occurs outside of the process of probate so it takes place in a fast and efficient manner with no risks of any challenges to your final wishes.