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Saturday, November 27, 2021

Does a Revocable Trust Help Avoid Probate?

A revocable trust, also commonly known as a living trust, is an estate planning tool with a variety of potential benefits. To establish a revocable trust, the testator, the creator of the trust, designates a trustee and transfers ownership of certain assets to the trust. The trustee is then responsible for managing the trust for the benefit of the beneficiaries. Among the many benefits that a revocable trust may offer, some may wonder if one such benefit is the ability to avoid probate as it is infamously an expensive and time intensive process.

Does a Revocable Trust Help Avoid Probate?

Yes, a revocable trust can help your estate avoid probate in whole or in part. The key to being successful in achieving this benefit offered by a revocable trust, however, is that it be properly set up and funded. Setting up a revocable trust will not in and of itself help a person’s estate avoid probate. Properly funding the trust is of critical importance to accomplish this.

Funding a trust is the process of transferring ownership of assets from the trust settlor’s name to the revocable trust. Different asset types will require a different procedure in order for ownership to be effectively transferred to the revocable trust. For instance, with real property such as the settlor’s house, a new deed on the property must be executed and show the name of the settlor’s revocable trust. The deed will also need to be notarized as well as recorded in the county where the property is located.

Stocks and bonds, on the other hand, will require other measures to be taken in order for ownership to be transferred to the revocable trust. Usually, you can do this by contacting your stockbroker or the institution that was tasked with purchasing these assets. The stockbroker or other agent can then execute the requisite transfer forms in order to transfer ownership of the holdings to the revocable trust.

Any assets transferred into the revocable trust are effectively transferred outside of the probate estate and, therefore, avoid going through probate. Instead, assets held in the trust pass directly to the listed beneficiaries according to the terms set forth in the trust document. Any assets that remain in the probate estate at the time of the testator’s death will pass through court monitored probate proceedings.

In addition to revocable trusts, there are other ways that you can help your assets avoid probate. For instance, retitling assets so that they are held in joint tenancy with rights of survivorship will allow the decedent’s interests in real property to pass directly to the property’s co-owner. Additionally, making certain financial accounts, such as bank accounts, have a payable on death designation will allow ownership of such accounts to pass directly to the designated person upon the death of the account holder. Listing beneficiaries on life insurance policies and retirement accounts will also allow for direct transfer after the death of the policy or account holder’s death.

Estate Planning Attorney

For more estate planning tips, talk to the team at Monk Law. We are here to help. Contact Monk Law today.


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