How Does A Trust Help Me Avoid Probate?
Trusts are often described as legal vehicles to “avoid probate.” But what does that mean exactly? And why should anyone want to avoid probate in the first place?
What Is Probate?
Let’s start by defining probate. This refers to the process of administering a deceased person’s estate. A probate estate includes any assets that were owned by the decedent in their own name at the time of death. Many assets, such as those held as joint tenants with a spouse, are non-probate assets.
For small probate estates, typically those with less than $75,000 in assets, Florida law offers a simplified probate process. But larger probate estates need to go through formal, court-supervised administration. This means the court must appoint a personal representative to oversee the estate, gather assets, pay any legitimate debts and expenses, and make any final distributions to the estate’s beneficiaries. This process can take several months and incur a significant amount of administrative expenses.
How a Trust Can Bypass Probate
This is where a revocable trust can be used to “avoid probate.” Basically, if you create and fund a revocable trust during your lifetime, any assets in that trust are excluded from your probate estate. Upon your death, the successor trustee named in the trust simply carries on and administers the trust according to your instructions. Since the trust is by definition not part of the probate estate, the trustee does not require any court appointment or ongoing supervision.
To explain it another way, probate is only necessary when there are assets that need to be transferred from the deceased to their beneficiaries. But if the assets are already in a trust, no such transfer is necessary, as the trust remains the lawful owner, albeit possibly under a different trustee.
Creating a Trust Is Not Enough
So if you decide to create a revocable trust, does that mean your heirs will not need to open or administer a probate estate? Not necessarily. For one thing, it is not enough to simply create a trust. You actually need to fund it with assets. If you have a bank account, for example, you need to transfer title from yourself to the trustee (even if you are also the trustee). The same goes for any other property you own, such as your house or car.
Any assets that remain outside of your trust may still be considered part of your probate estate. For this reason, it is common practice to sign a “pour over” will that directs your probate estate to transfer any remaining assets to your trustee. This means it may still be necessary to open a probate estate for the purposes of completing this transfer after your death.
If you have additional questions about trusts and need legal advice from a qualified Pompano Beach estate & trust litigation attorney, contact Mark R. Manceri today today to schedule a consultation.