How Living Trusts Avoid Probate
Here are the basics on avoiding probate with living trusts.
Most people want to leave as much of their money to their children, or other heirs, as possible and want to avoid a big chunk of that money going to probate lawyers. That's where living trusts come in they can help in avoiding probate and probate fees.
Probate involves inventorying and appraising the property, paying debts and taxes, and distributing the remainder of the property according to the will. When you make a living trust, your surviving family members can transfer your property quickly and easily, without probate. More of the property you leave goes to the people you want to inherit it.
A basic living trust allows property to avoid probate and to quickly and efficiently pass to the beneficiaries you name, without the hassles and expense of probate court proceedings. A married couple can use one basic living trust to handle both co-owned property and separate property.
Creating a Trust
To create a basic living trust, you make a document called a declaration of trust, which is similar to a will. You name yourself as trustee the person in charge of the trust property. If you and your spouse create a trust together, you will be co-trustees.
Then you transfer ownership of some or all of your property to yourself in your capacity as trustee. For example, you might sign a deed transferring your house from yourself to yourself "as trustee of the Jane Smith Revocable Living Trust dated July 12, 2010." Because you're the trustee, you don't give up any control over the property you put in trust.
In the declaration of trust document, you name the people or organizations you want to inherit trust property after your death. You can change those choices if you wish; you can also revoke the trust at any time.
When you make a living trust, you should also make a back-up will. Doing so will ensure that any property not transferred to the trust will go to the people or organizations you want to receive it. If you don't make a will, any property not included in your trust will be distributed according to the laws of your state usually to the nearest relatives.
After You Die
When you die, the person you named in the trust document to take over called the successor trustee transfers ownership of trust property to the people you want to get it. In most cases, the successor trustee can handle the whole thing in a few weeks with some simple paperwork. No probate court proceedings are required.
Do You Need a Lawyer to Create a Trust?
Making a living trust takes about the same amount of time and is only a little more complicated than making a will. If your circumstances aren't complicated and you are willing to invest a few hours of your time using an estate planning book or software, you may end up with a better result than you would achieve with many lawyers. For more information, see Nolo's article Making a Living Trust: Are Lawyers Optional?
Next Steps
To create your own living trust, use one of Nolo's living trust products:
- Make Your Own Living Trust, by Denis Clifford (book)
- Nolo's Online Living Trust (online program)
- Living Trust Maker (software)
Each of these products gives you everything you need to make your own living trust, with plenty of help and legal information along the way. And to see everything Nolo has to offer when it comes to creating a living trust and planning your estate, visit our Wills, Trusts & Estates Center.