Understanding the Role of Living Trusts in Avoiding Probate

What is a Living Trust?

One of the primary objectives of an estate plan is to enable you to transfer your wealth and estate to your beneficiaries without many legal hurdles. Several estate planning tools exist, and the one you choose depends on many factors, such as the size of your estate and personal planning needs.

A living trust is one of several tools. It is a legal document you create outlining how your assets, accounts, and property should be managed upon your demise. It is often also known as a revocable trust and allows you to make changes during your lifetime and sometimes may help to avoid probate. However, there are many different types of trusts and a living trust is not the best tool for everyone. Sometimes trusts are found in a Will and do not take effect until the Will is probated and sometimes trusts are funded with life insurance proceeds. Lawyers from a family law and estate planning law firm in San Antonio can guide you.

The flexibility of living trusts often makes them a preferred estate planning tool because they allow the grantor to update their estate plan as their circumstances change. Due to the precise instructions, a living trust makes it possible to avoid probate, but only if all your assets belong to the trust. Many people with living trusts still have some property outside the trust that is subject to probate at their death.

There are other benefits besides avoiding probate, such as the use of trusts to avoid estate taxes for very large estates or to protect property from future liabilities. Nevertheless, in many cases, because the probate process in Texas can be very streamlined and relatively inexpensive with a well-written will, a living trust is not always the best estate planning tool. A good estate planning attorney will look at your entire situation before making a recommendation on which tool would best suit your needs. Beware of attorneys who recommend a living trust to you without asking some questions and learning of your needs first.

What is the Probate Process?

Probate is a court-ordered process that directs how a decedent’s property or estate will be distributed to their beneficiaries. Trust attorneys in San Antonio say the process can be lengthy, typically involving the following steps:

Determining the validity of the Will or if there is no Will, determining the identity of all legal heirs
Choosing an executor or administrator to manage the estate pending the distribution
Making an Inventory of the estate assets
Settling debts and taxes
Distributing the remaining property to the heirs as indicated in the Will or according to the state’s intestacy laws if a Will doesn’t exist.

Simple probate can take a few months to complete, while more complicated cases can take years. In addition, probate can be expensive, involving court costs, legal fees, and executor charges, which can reduce the estate’s overall value for the heirs, particularly if the Will is found to be defective. However, an estate planning attorney who is looking out for your best interests can advise you on whether a trust is the right tool for you and whether, in Texas, it might be less expensive to go through probate than to create and maintain a trust.

Probate may also become a matter of public record, exposing your private family matters to others in case of disputes. You can avoid all these challenges by planning your estate using a living trust with the help of knowledgeable trust lawyers in San Antonio.

How Can a Living Trust Help You Avoid Probate?

If you have a Will, the court-ordered distribution of your assets may be according to your wishes, primarily if the Will is uncontested.

However, a Will doesn’t protect your estate from the probate process. That’s where a living trust comes in to protect your beneficiaries from probate. It provides a strategic way around probate, allowing for the seamless distribution of your assets, and is particularly useful if you own property in several different states. States vary greatly on the complexity of their probate laws as well as their tax laws, and one state cannot control what happens to property in another state. Nevertheless, anyone who creates a trust should also have a Will to handle any property that is not titled in the ownership of the trust.

Some of the benefits of a living trust in avoiding probate include the following:

Immediate Estate Distribution

A living trust allows immediate estate distribution to the beneficiaries soon after the grantor’s death, bypassing the need for probate. The successor trustee can distribute the estate based on the terms of the trust, reducing the delays associated with the probate process.

Legally, you no longer own the assets in a living trust, meaning the courts have nothing to control when you die, provided that you have recorded deeds during your lifetime to transfer all your real estate into the name of the trust and have re-named all of your accounts and investments. While the concept is simple, it is the foundation upon which your beneficiaries are protected from probate upon your demise, and in practice it is not always easy to transfer all of your property into the trust. While you may still be both the trustee and beneficiary, and use the property during your lifetime as you wish, there are sometimes complications concerning the trust ownership. Further, if there is a husband and wife who create a trust together, once the first one dies, the second one may no longer be permitted to make changes in the trust terms.

Privacy Protection

Living trusts are estate planning tools that enable beneficiaries to maintain the privacy of their financial and family affairs. The law doesn’t require trust documents to be filed publicly, keeping beneficiaries away from unwanted attention and inquiries from the public. This can be both a good thing or a bad thing. If the trustee refuses to share a copy of the trust with the beneficiaries, they may have to file a lawsuit to find out what the trust actually says. It can also be a problem if the trust documents are not kept in a safe location where the successor trustee can find the documents after the initial trustee dies because there might be no other copy or record of what the trust provides.

Flexibility and Control

Living trusts enable you to retain control of your assets during your lifetime. You can update, review, or revoke various terms of the trust as your circumstances change. This flexibility and control ensure that your estate plan remains adaptable and aligned with your wishes.

San Antonio trust attorneys explain that if you become incapacitated, the trustee takes over the management of your trust on your behalf.

Without the trust, a court proceeding would be required to appoint a guardian to manage your assets, a process that can be costly due to court fees and is also not private. Guardianships take away certain rights from the incapacitated person and the guardian is required to pay for an annual bond and make annual accountings and have annual audits. Often there are costly family disputes over who should be the guardian.

Asset Protection

A living trust adds extra protection to your estate against various legal challenges. Since the terms are established when the trust is created, legal disputes are less likely to occur. A trust increases the chance that your beneficiaries will get what you planned for them to get.

A living trust can also protect assets you own in multiple states, which could be subject to ancillary probate proceedings in the respective state. Thus, a living trust ensures a more efficient and coordinated distribution of your assets across various jurisdictions.

However, it’s crucial to note that establishing a trust doesn’t usually protect your estate from creditors, especially if it is a revocable trust. The assets are subject to your creditors in the same way as if you owned them in your name. Consult skilled estate planning lawyers in San Antonio on the most suitable approach to protect your estate from future creditor claims. No trust can protect your assets from debts you have already incurred.

Avoid Probate by Establishing a Living Trust with the Help of a Trust Lawyer

When evaluating your estate planning options, consider those that can adequately shield your beneficiaries from the lengthy, costly, and sometimes complicated probate process. Skilled trust lawyers in San Antonio can provide legal counsel to help you create a well-structured trust to shield your assets and ensure your wishes are executed to provide for your beneficiaries.

The trust attorneys at Laura D. Heard Law Firm Inc. can evaluate your estate planning needs and guide you accordingly. We can provide personalized service to meet your specific needs and goals as you navigate the complexities of estate planning while avoiding probate.