This is a question frequently asked of any lawyer who handles probate and estate planning matters. The correct, and frustrating answer to that question is, “It all depends.”
A trust can be a tool used to seamlessly transfer your property, such as your house, financial accounts, and other property to your beneficiaries if you have a trust agreement that clearly directs who the trustee will be, the items have all been transferred into the trust, and there are no items with a legal title that must re-titled into the trust so that it can then pass to your beneficiaries.
The pitfall that many clients fail to avoid is realizing that even if they have a wonderfully written trust document, but fail to transfer items into their trust, they actually do not have a trust at all. It is called a “dry trust,” and it isn’t worth the paper it is printed on.
A second avoidable pitfall is when a client has a trust instrument and has a few assets held in the name of the trust, but not all. In that situation, probate can still be required to transfer assets into to trust so that it can be transferred back out to the beneficiaries.
Unfortunately, some of the most contested and costly probate matters have been caused by trust agreements with poor-wills and assets left in the individual’s name.
When a client begins a conversation about having a trust established, I have found it very helpful to first ask the client to explain why they want a trust. What do they want the trust to do for them? Many times as the client and I discuss what their objective is, we can then determine if a trust is the way to meet that objective.
Lastly, I always try to help my clients understand that probate is not necessarily an evil process. Many, many times as an individual ages, they pass ownership to family members to help them manage those assets or to facilitate the elderly individual to live a more comfortable life. For example, an elderly parent will frequently sell their home, add an adult child to their bank accounts, and designate beneficiaries for their retirement accounts when they move into a senior living community in such cases, neither a probate nor a trust are really required.
Each family and each individual’s goals and situations are unique. There is no “one size fits all” estate planning tool. Speaking with an experienced attorney about your own situation, assets, goals, and family structure can be an economical and productive way to plan for your family’s future.