Probate & Living Trust Information

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Everyone has a will or plan, whether created or by default.  Even if you have not made out a will or a trust, you still have a plan - a plan dictated by the laws of the state where you reside upon your death.  Making a will is not a way to avoid "probate", the court procedure that changes the legal ownership of your property after your death.  Probate makes sure it is your last valid will, appoints the executor named in your will and supervises the executor's work.  You can do several things now that can help your executor and family later.   

Q: I am in possession of a will that distributes the decedent's estate to me; is this all I need?

A: No.  The will must be admitted to probate and the estate of the decedent must be "probated." 

Q: What does "probate" actually mean?

A: Generally, probate is a court proceeding that administers the estate of an individual.

Q: What is the purpose of "estate administration"?

A: Generally, there are five purposes, many of which have subsets to them:

1. To determine that the decedent has passed away.  
2. To establish the validity of the will.
3. To identify the heirs and devisees of the decedent. 
4. To settle any claims that creditors may have against the estate of the decedent.
5. To distribute the property.

Q: Who is the Public Administrator?

A: Generally speaking, a public administrator is a person or entity appointed by the State to act when there is no will or relatives.  

Q: What is the difference between "Testate" and "Intestate"?

A: When one is said to have passed away "Testate," it means he or she passed away leaving a will.  If one is said to have passed away "intestate," it means he or she passed away without a will.  

Q: What is the difference between an executor and an administrator?

A: An "executor" carries out the directions and requests set forth in the decedents will.  An "administrator" is appointed by the court to manage the estate of a decedent who passed away intestate.  

Q: What are the steps to a normal uncontested probate?

A: Generally speaking, they are as follows:

1. Death of the decedent.
2. The will is delivered to the executor or Court Clerk.
3. A petition is filed for the Probate of Will or Letters of Administration.  
4. A hearing is held on the petition.
5. Letters of Administration are issued by the Court.
6. Notice to creditors is given.
7. Inventory and appraisement of the estate is made by an independent probate appraiser. 
8. File Federal estate tax return.  Return states "No Tax Due" or specifies an amount due.
9. Final accounting and petition for distribution.
10. Final decree of distribution.
11. Discharge of personal representative.

Estate planners often recommend "Living Trusts" as a viable option when contemplating the manner in which to hold title to real property. 

A living trust is a legal arrangement that allows you to transfer ownership of your assets into a trust during your lifetime. Its primary purpose is to ensure the smooth and efficient distribution of those assets after your death, often bypassing the lengthy probate process.

As the grantor of the trust, you maintain control over its terms and assets during your lifetime. Upon your death, the successor trustee—the person you appoint—will be responsible for managing and distributing the assets according to your instructions.

Living trusts can be either revocable or irrevocable, depending on whether you want the flexibility to modify or revoke the trust during your lifetime. 

 A living trust is an essential estate planning document designed to serve two primary purposes:

1. It specifies who will manage your assets during your lifetime, including scenarios where you become incapacitated, and after your death.
2. It outlines who will inherit your assets after your passing and under what conditions.

• Grantor: The person who creates the trust and transfers assets into it.
• Trustee: The individual responsible for managing the trust's assets according to the grantor's instructions.
• Beneficiaries: The individuals or entities entitled to receive assets from the trust.

Revocable Living Trust

• As the grantor, you can modify or terminate a revocable living trust at any time during your lifetime.
• You typically serve as the trustee while you're alive, with a successor trustee taking over after your death.
• From a tax perspective, the trust's income is generally reported on your personal tax return.

Irrevocable Living Trust

• Once created, an irrevocable trust cannot be modified or terminated without legal intervention.
• You typically cannot serve as the trustee of an irrevocable trust.
• While this may seem restrictive, irrevocable trusts often come with significant tax advantages, as the assets are no longer considered part of your taxable estate.

Unlike a will, a living trust becomes effective immediately upon creation and can help your estate bypass the probate process after your death. By transferring assets to the trust during your lifetime, the need for court supervision in distributing your estate is typically eliminated.

Given the complexity and significance of creating a living trust, it’s wise to consult with an estate planning attorney to ensure your trust is properly structured and aligned with your goals.

Q: What types of assets can be placed in a living trust?

A: A living trust can hold a wide range of assets, including real estate, bank accounts, investments, vehicles, and other valuable property. However, certain assets—such as retirement accounts and life insurance policies—usually remain outside the trust. Instead, these assets can designate the trust as a beneficiary, ensuring they are distributed according to the trust's terms after your passing.

Q: What are the advantages of using a Living Trust?

A: Some of the advantages include avoiding probate, providing for your loss of capacity, controlling the distribution of your property and keeping your affairs private.

Q: Why use a trust instead of a will?

A: A trust offers several advantages over a will. It can help avoid probate, protect assets, and make it easier to manage your personal property if you become incapacitated.

Please always consult with an attorney for legal advice as this is not intended to be legal guidance.  Information deemed reliable but not guaranteed.  Source:  clta.org