Even if you’re not entirely sure what the process entails, it’s likely that you’ve at least heard the term probate and may even know that it’s something that many people take steps to avoid. According to the American Bar Association, probate is “the formal legal process that gives recognition to a will and appoints the executor or personal representative who will administer the estate.” The probate process is notoriously complex, lengthy and costly. What’s more, probate records are public which means that anyone can gain access to information related to the value of assets and an overall estate.
Many people who have taken the time to draft a will are surprised to learn that their estate must still go through probate. For individuals who wish to avoid the probate process, and the many headaches which often accompany it, an attorney who handles estate planning matters can assist.
Both a living or revocable trust or an irrevocable trust can be used to avoid probate. In both cases, assets and property are put into a trust. However, while an individual retains control over a living trust and has the ability to manage and buy or sell assets as he or she sees fit; once established, changes cannot be made to an irrevocable trust.
When assets are left to a trust, an individual names one or more beneficiaries and names a trustee who has a fiduciary duty to manage the trust’s assets and distribute assets per an individual’s instructions. In addition to using a trust to pass assets and property directly to beneficiaries, an individual can also avoid probate by designating beneficiaries for life insurance policies and retirement accounts. Additionally, any accounts or real estate that is held jointly with a spouse will pass directly to a husband or wife.
Source: American Bar Association, “The Probate Process,” Jan. 7, 2015