Using a Trust to Secure Inheritance Assets and Avoid Probate

Using a Trust to Secure Inheritance Assets and Avoid Probate

Establishing a trust is an estate planning strategy that allows individuals to avoid probate. Upon death, all property transferred into the trust can be distributed to heirs and beneficiaries according to directives provided within a last will and testament.

Protecting assets through a trust offers several advantages, but this strategy is not suited for everyone. Trusts are normally used when estate values exceed $100k. Estates valued below that amount can engage in other estate planning strategies that offer similar benefits to trusts without the associated costs.

Probate is the process used within the U.S. to settle decedent estates. The process can be wearisome because it opens the doors for heirs to contest the Will. Even if entitled heirs agree with directives of the Will, probate can extend for several months while the estate administrator handles required duties.

During the probate process inheritance property can depreciate in value. If the estate does not have sufficient funds to pay outstanding debts the court can order estate assets sold to satisfy creditors.

When Wills are filed through probate court they become a matter of public record. Anyone who wishes to view decedents' Wills and death certificates can do so. Probate liquidators often scour court records to locate real estate or valuable property. They can contact estate administrators to inquire about buying probated assets.

With a trust, the last will remains private. Additionally, property protected by trusts is often exempt from inheritance and estate taxes. Setting up a trust is not a difficult process, but does require services of an attorney or estate planner.

There are several types of trusts, but the most common include: revocable, irrevocable, testamentary, and irrevocable life insurance trusts. The latter is reserved for estates valued over $2 million.

In most cases, trusts can be established in a day. However, careful planning must be given to irrevocable trusts because once in place they cannot be changed. Estate planners can offer guidance as to the best type of trust and provide worksheets to help individuals gather required information.

The first step requires locating a family law lawyer, probate attorney, or estate planner. It can be beneficial to obtain referrals from family or friends. Banks and credit unions sometimes offer estate planning services or can offer referrals.

Transferring estate assets into a trust involves recording property details. This can include providing an inventory list of owned assets; property appraisals; and titles for real estate and automobiles.

Estate planning can be quite personal so it is best to consult with 3 or 4 professionals to get a feel for their personality. It's important to feel comfortable in their presence and confident in their abilities. After all, you need to make important decisions that can affect loved ones after your death. It's best to work with someone you like and trust.

Establishing a trust might not be the best estate planning strategy for estates valued below $100,000. Instead, consult with a lawyer to discuss state probate laws and develop strategies to keep certain assets from having to undergo the probate process.

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