The court-controlled process of administering your estate upon your death before distributing assets to your beneficiaries is not always smooth sailing. It can be expensive due to court costs, possible executor fees, appraisal and valuation costs, etc. Generally, the larger your estate, the more expensive probate can be.
Additionally, probate can be time-consuming, often taking several months or years to complete. During this time, your assets may be tied up and inaccessible to your beneficiaries. It is also a public process, meaning third parties can access details about your estate, assets and beneficiaries.
Fortunately, most or all of your estate does not have to go through probate. You can implement various estate planning strategies to avoid this court process, including the creation of at least one trust.
A trust is a separate legal entity
When you create a trust and fund it by transferring your assets to it, the trust assets are no longer considered part of your estate when you die. They legally belong to the trust and will be distributed to the beneficiaries per your instructions without going through probate. Trusts also offer other benefits beyond avoiding probate, such as privacy, more flexibility on how your assets are distributed and protection from creditors or other third parties.
Make informed estate planning decisions
You can choose from various types of trusts, including revocable living trusts, irrevocable trusts and testamentary trusts. Each type has its advantages and disadvantages, so it’s crucial to familiarize yourself with how they work before committing to any particular approach.
With all of this said, you’ll want to keep in mind that trusts are not the only estate planning tools available if you are looking to avoid probate. Learning more about your options and the potential implications to your estate can help you make the right decisions and avoid costly mistakes along the way.