If you hold on to your property throughout your life and arrange for its distribution through the terms of a last will, the heirs to the estate will have a significant waiting period on their hands.
The estate administration process takes place under the supervision of the probate court. After your passing, the executor or personal representative would be required to admit the will to probate.
This process is quite time-consuming. In a best case scenario, the assets may be distributed in perhaps eight months to a year. This is quite a time lag, and it can present difficulties for some people.
The time consumption is part of the equation, but probate can also be quite expensive. There are legal fees, court costs, accounting expenses, the executor’s remuneration, appraisal charges, and liquidation fees that can erode the value of the estate.
Revocable Living Trusts
Now that we have explained some things about last wills and probate, we can look at revocable living trusts. When you create this type of trust, you are the grantor, and you can act as the trustee and the beneficiary while you are alive.
In the trust agreement, you leave behind instructions, and you name a successor trustee. You also name successor beneficiaries.
After your death, the trustee is legally compelled to follow your instructions. Assets will be distributed to the beneficiaries in accordance with your wishes, and these distributions would not be subject to the probate process.
A revocable living trust can be very useful for people who want to avoid probate, but it is not a cure-all. You have the right of revocation, and you have access to the assets that have been conveyed into the trust throughout your life, so you are responsible for income that is earned by assets that have been conveyed into the trust.
You must claim this income on your personal tax return. The trust itself may also file a statement, but this is not necessary if the grantor of the trust is also acting as the initial trustee.
Living Trust Report
To learn more about living trusts, download our special report. The report is being offered on a complimentary basis at the present time, and you can visit this page to access your copy: Living Trust Report.
Attend a Free Living Trust Seminar
We are offering free Living Trust seminars on January 15, 17, 21 and 24. To learn more about these free seminars and to register, follow this link: Free Seminars and Workshops.