There are several reasons why a person may create a trust as part of their estate planning documents. In terms of probate avoidance, some of the reasons are as follows:
Privacy: The benefit of avoiding probate is maintaining privacy. Probate is a public matter. Anyone and everyone will be able to see who you chose as executor, your beneficiaries, and an inventory of your estate.
Time efficiency: It is more efficient and quicker transfer of the decedent’s assets to their beneficiaries without a probate court’s oversight. Often an asset can be transferred to the beneficiaries of a trust within a few weeks as opposed to months under probate.
No permission to sell assets: A judge generally has to oversee the sale of real property in a probate administration. This takes longer as well.
Probate court is expensive: Probate court is not cheap. An attorney (and the executor/administrator) gets paid for the administration of the estate. Court fees also tend to be at least a few hundred dollars over the course of the estate administration.
Multiple Probate Courts if real property in multiple states: One might have to go through probate in multiple states if you have assets in separate states are in the mix.
Outright Distributions: Sometimes it’s inappropriate to allow a full inheritance to a beneficiary at the time of death. A trust can dictate when and if a beneficiary will receive the assets. Some may consider this approach as “ruling from the grave.” However, a compelling explanation I’ve heard in defense of putting “strings” on a distribution is, “I want to make sure this wealth goes purely for your benefit and I don’t want to risk anyone else having access to it.”
Emotional Appeal: Beneficiaries don’t have to worry about probate court while grieving over loss. Toward the end of a probate administration, the number one thing I hear from administrators and executors is, “I just want this to be done.”
Spousal Election: A surviving spouse might several rights under the terms of a will. This is very important when there is a blended family (i.e., you want to take care of your current spouse, but also want to take care of kids from a previous marriage).
Obligatory Disclaimer: Nothing contained in this post constitutes legal advice. Nothing herein should be construed as or relied upon as legal advice. Everyone’s situation is different. Consult an experienced attorney, financial advisor, or tax expert before making any decisions.
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