Have you ever wondered why some estates with a living trust still need to be probated? Isn’t the purpose of having a living revocable trust to avoid probate?
These are great questions which I'm going to answer for you right now.
So, what is a living trust?
A simple answer is that living trust, a/k/a revocable living trust, is an estate planning vehicle, similar to a Will, which is used to pass along assets after your death.
Many people choose a living trust over a Will because it is a probate avoidance vehicle.
However, there IS a catch, which is a living trust only avoids probate for any assets owned by the trust.
Assets that are never transferred into the trust during your life may still need to be probated after you die depending on the ownership and beneficiary status of each asset.
So, although in theory, a living trust does avoid probate, it will only avoid probate for those assets owned by the trust.
Unfortunately, many folks who go to the trouble of establishing a living trust do not actually retitle any of their assets into the trust, which defeats the entire purpose of the trust in the first place!
Make sure if you do choose to use a living trust as a part of your estate plan, that your estate planning lawyer guides and assists you in the transfer of your assets into your trust. And that you actually do transfer your assets into your trust.
The Bottom Line is this: Whether a living trust avoids probate depends if your trust actually owns your assets.
If you want to learn more about the pros and cons of living trusts, download our free book: Wise Women Protect Their Assets, by visiting www.PinkLawyerBook.com Chapter 6 covers living trusts in lots more detail.