Probate & Trust Administration

Will or No Will = Probate

The death of a loved one is a very emotional and devastating time for the family.  If your loved one had chosen the estate plan option of a simple Will then the family will have to go through the probate process.  If your loved one never put a plan in place then the family will have to go through the probate process as well.  A big misconception that people have is that if there is a Will in place that they will not have to go through the probate process.  This is simply untrue.  Your Will simply acts as a set of instructions to the probate court on what you want done with your assets when you pass away.  The purpose of probate is to change ownership of the assets in the name of the decedent to the name of the beneficiaries.  The probate process makes sure your property and possessions are given to the correct people, and any taxes or debts of the estate are paid.  Most people hire an attorney to help them through this process, which can be lengthy, time consuming, and expensive.

If avoiding probate for your family is something that is important to you, then you may want to set up a beneficiaries on your accounts or set up a Revocable Trust.

What Assets are Subject to Probate? 

• Assets owned in your individual name
• Assets that fail to list beneficiaries- This is a common occurrence where people fail to list beneficiaries on retirement accounts, investment accounts, and life insurance.
• Assets/property owned as tenants in common- This is where you own an asset jointly but where your interest passes to your heirs upon death, rather than to the other co-owner.
• Non -Titled Property/Personal Property- Furniture, appliances, home furnishings, jewelry,  clothing, etc.
• An inheritance where the beneficiary named has died- this is common when people fail to update their wills, beneficiary designations, and estate plans after a loved one has passed away.

What Assets are Not Subject to Probate?

With a little pre-planning, anyone can make sure the following items can avoid the probate process:

• Beneficiary named items- Anything that has a beneficiary already named in the document does not have to go through probate. Examples of this are retirement accounts, life insurance policies and annuities.
• Probate held jointly with survivors rights- this is where you own property in joint names where is one person passes away the ownership defers to the other owner, therefore there is no need to go through the probate process.
• POD and TOD items- this is sometimes a common set up for some bank accounts. Upon the death of the owner the asset is “transferred on death” or “payable on death” to the named beneficiary.
• Revocable Trust- Everything is owned by the revocable trust and not the person who died, so these items don’t need to be handled by through the probate process.  This is where the trust administration process occurs.
• Trust Administration.

In the Revocable Trust you have already decided who will manage your affairs for you after you have passed away.  The successor trustee you have named will be able to pay your bills and distribute your assets to your beneficiaries without having to go through the probate process.  This saves the estate from the cost of probate, as well as the lengthy time delay, typically 1-2 years, or more, and the difficulties of dealing with the court system.

While establishing a Trust is more expensive initially, the savings it allows you in the event a disability occurs, and upon your death, make it an extremely cost effective way to plan for your family overall.