Why a Living Trust? (Part 1)
The Living Trust is a famed estate planning vehicle. It has long been thought of as a “rich person’s” estate plan tool, but that is absolutely not true in today’s world! There are multiple reasons why you may, or may not, choose to create a living trust for yourself and your family. Although I am not a proponent of the living trust for every client, this article covers the reasons why you would want to consider one.
Before we begin this analysis, you have to understand what happens when someone dies; besides the obvious, of course.
When someone passes away, his loved ones often have to go to Court to get his assets re-titled to his heirs. This is called “probate”. Probate is often long and costly. It is often emotional and difficult. Court is open during the weekdays during regular business hours only, when you would otherwise be at work, on vacation, caring for your children, or doing anything else normal.
The process is as follows:
- The heirs file a petition with the Court.These documents on file with the Court are public documents which anyone can read at any time.
- The Court issues letters which authorize the changing of title for various assets (think bank accounts, brokerage accounts, the deed to the house, etc.).
- The heirs then give notice to any known or unknown creditors and waits out the statutory period.
- During probate, bills and accounts are frozen.
- Often, the assistance of an attorney is either needed or wanted – which adds to the expense of a loved one passing.
- It is a pain in the you-know-what.
How do we avoid this awful process, you may ask? A living trust is a quintessential tool that avoids this Court process at death, since the assets are already titled in the name of the Trust and are therefore immediately accessible to the trust-maker’s designated successor. Moreover, changing ownership of the assets in the trust is as easy as filling out paperwork.
Read about how this process can be done differently in our next blog post! (Our web designer tells us that shorter blogs are better...)
Kira M. Rubel
*Licensed in CA and WA
The Harbor Law Group (formerly, Law Office of Kira M. Rubel)