I frequently meet with clients and explain to them the purposes of trusts, and how they can avoid probate. Well, why would someone want to avoid probate, and what is it exactly?
When an individual dies, his or her estate needs to be settled. Usually, family members will be named executors or administrators of this estate. They will obtain death certificates, and file them with a probate court, along with an application, and some other documents, to be named executor or administrator (depending on whether there is a will or not). The Court will then allow the will, and then everyone can rely on its authenticity. The executor can then settle the estate, paying out funds according to the wishes of the decedant as it is laid out in the will, or according to the Intestacy Law of Massachusetts if there is no will.
Why would someone want to avoid probate? With a simple living trust, you can appoint yourself as “manager” (the trustee) of your own property while you are alive. In your trust, you can name a successor trustee when you die. That successor trustee will take over as “manager” of your property. Instead of going to probate court and being named executor, your trustee will simply have to present a death certificate and a trustee certificate to institutions that trust property has been put into, such as bank accounts. They will be able to access your property within one week, as opposed to months, if the property had to go through the court system, and probate. Trusts are a bit more expensive to prepare when you are living, but the time and money they save after you die makes them well worth it to your heirs, thereby protecting your legacy for your heirs.
Living trusts and probate avoidance serve to protect your privacy. Instead of having your estate filed with a probate court were it would be public record, the trust can be kept private between the beneficiaries even after death. The main trust document never has to be recorded, or made a public record.
Finally, trusts also can help with asset protection. I say help, because they are still vulnerable to some extent. However, if done properly, it would be difficult for creditors to gain access to assets placed in trust because of the privacy discussed earlier. They might not find out the property ever exists.
In short, one would want to avoid probate with a living trust to save significant time and money. Skipping the court process saves my clients this time and money. It also protects thier privacy, and makes it harder for creditors to touch the trust property.
