Probate is a court supervised legal process that occurs after someone passes away. Generally, when this happens they leave behind assets and liabilities; e.g., last month’s bills haven’t been paid (liabilities) and decedent (person who has died) leaves behind a car and other property that they own (assets). The liabilities and other claims against the estate must be resolved and assets must be distributed. If the decedent left behind a will, then it must be validated to ensure that property is distributed in a manner consistent with the decedent’s wishes.
Probate is often expensive and typically ties assets up for at least seven months and sometimes years. The cost and delay that probate creates can be limited or avoided by keeping assets out of probate altogether.
Assets can be kept out of probate by creating revocable living trusts, irrevocable trusts and by making Inter-Vivos gifts (gifts during life). By transferring property into a trust or to another person during life, the property is never included in the decedent’s estate and avoids probate.
LIVING TRUSTS
A revocable living trust (living trust) is sometimes referred to as a will substitute. It is a document that instructs who you want to leave your assets to, who will manage your assets and how they will be managed should you become unable to manage them. A living trust appoints you as trustor, trustee, and beneficiary. As trustor, you can amend or revoke the trust. As trustee, it is your job to manage the assets in the trust, much like you do now, e.g., you might buy and sell stock, or sell your old car and buy a new one. As beneficiary, you get to enjoy the property in the trust during life.
IRREVOCABLE TRUSTS
While a living trust allow you to maintain a lot of control over your assets during life, irrevocable trusts have some tax benefits but cannot be amended like living trusts.
While these are some basic ways to keep your assets out of probate, you should contact your attorney to find out what method works best for your situation. For further information, please contact VC Law Group at info@thevclawgroup.com or 858.519.7333 to discuss your estate planning options and to achieve your goals.