Avoiding the Expense and Delay of Probate
One of the most important reason is that through the proper use of a Living Trust most or all of the expense and delay of probate is avoided. During proceedings, an executor (a person appointed in a Will) or a court-appointed administrator is authorized to collect, appraise, and distribute the assets of the deceased. Normally, the proper use of a Living Trust entirely eliminates or dramatically lessens the expenses of probate, since the disposition of all of your property has been planned in advance by you and takes place automatically upon your death.
Many people desire to avoid having their property be subject to probate proceedings. Although in some situations the probate process has been abused, there are valid reasons for allowing your property to be handled through probate after your death. It provides a process by which the improper distribution of your assets is guarded against by the probate court. Having your property distributed through a probate process also puts a definite limit on the length of time that a creditor can file a claim against your estate.
The drawbacks of probate are that it can substantially delay the distribution of your property while the probate process continues. The probate of an estate can take, generally, from four to 18 months, and sometimes much longer. Additionally, probate costs can be very significant. Court costs, appraisal fees, lawyer’s fees, and accounting bills can all cut deeply into the amount of property and funds that Will eventually be distributed to your beneficiaries. However, for small estates (generally, under $100,000.00) most states have simplified probate procedures that can be handled without lawyers and can substantially reduce these costs. The probate process itself is complex and will, in almost all cases, require the use of an attorney. The proper use of a Living Trust can allow all or most of your property to pass directly to your chosen beneficiaries immediately upon your death, thus bypassing the probate process entirely. For many, this reason alone justifies the use of a Living Trust.
Avoiding Having the State Decide Who Will Receive Your Property
There are, however, numerous other valuable attributes of a Living Trust. Perhaps the next most important reason to have a Living Trust is to insure that it is you who decides how your estate is distributed on your death and to be assured that those loved ones whom you wish to share in your bounty actually receive your gifts.
What happens to your property and possessions if you do not have a valid and legal method by which to have your property distributed to your chosen beneficiaries (those persons or organizations to whom you decide to leave property) upon your death? Law books are filled with many unfortunate cases in which, because of the lack of a valid Living Trust or Will, the true desires and wishes of a person as to who should inherit their property have been frustrated. If there is no valid Living Trust or Will to use for direction, a probate judge must give a person’s property to either the spouse, children, or the closest blood relatives of the deceased person. This result is required, even in situations when it is perfectly clear that the deceased person did not, under any circumstances, want those relatives to inherit the property.
Without such a valid Living Trust or Will before him or her, a judge must rely on a legislative scheme which has been devised to make for an orderly distribution of property in all cases where there is no valid Living Trust or Will. This scheme is present as law, in one form or another, in all 50 states and is generally referred to as intestate distribution.
The terms of state intestate distribution plans are very complex in most states. In general, a person’s spouse is first in line to receive the property when there is no Living Trust or Will at death. Most states provide that the spouse and children will either share the entire estate or the surviving spouse will take it all in the hopes that the spouse will share it with the children. Generally, the spouse will receive one-half and the children will receive one-half. In many states, if a person dies without a valid Living Trust or Will and is survived by a spouse but not by any children, the spouse will inherit the entire estate and the surviving parents, brother, sisters, and any other blood relatives to the deceased will be entitled to nothing.
If there is no surviving spouse or children, the heirs, or blood relatives of the deceased will receive the estate. If there is someone or several persons within the next closest relationship level (for example, parents or siblings) who are alive on the death of the person, then these relatives will receive all of the person’s property or share it equally with all others alive who are in a similar relationship level. Once a level of blood relationship is found in which there is at least one living person, all persons who are more distantly related inherit nothing.