I often meet people who wonder if they need a revocable trust if they don’t own a house or other real estate. The thought is that a trust is useful for avoiding probate if you own a home because a home requires someone to sign a deed to transfer title. If you are dead, then someone else — an administrator or executor — would need to be approved by a probate court to sign a deed to transfer your home.
How a Trust Works at Death
A trust appoints someone to sign a deed after you pass. The person in charge of a trust with this authority is called a trustee. A trustee does not have to be approved by a probate court before the can act on your behalf.
The question remains: If I don’t own a home, do I need a trust? The answer may lie in the other benefits of owning a trust.
The Privacy Advantage of a Trust
A Trust is private. A will, on the other hand, is filed with the probate court. A will becomes public record. Anyone can request a copy of any will filed with the probate court by paying the cost for the copies. It is not uncommon for a person, especially in the south, to wish to keep their business private. We often do not share what we have, how we are doing financially, or what we plan to do with what we might leave behind.
Protecting Your Beneficiaries From Unwanted Family
I hear people tell me that their estate is simple. They simply are not close with family members and wish to leave their assets only to a spouse and one or two others. Then after the client and their spouse pass away, relatives seem to appear from nowhere asking about the estate or demanding documents or even taking items from the decedent’s (the person who died’s) personal property. The other beneficiaries, who are named after the spouse, must change locks, find a lawyer and establish boundaries quickly to preserve the estate. Privacy is valuable.
Not only do the other beneficiaries have to defend against family who suddenly appear, they also must advertise in a public newspaper to notify any creditors that the estate has been opened. Think of someone climbing to the top of a hill with a megaphone and yelling out: “Hey, if the dead guy owed you money, now is the time to come and make a claim! All claims welcome! Don’t miss this chance to have your claim paid! We’ve got money, come and get it!”
The Probate Process Puts Your Estate on Public Display
When you do not have a will at all, you are required to publish a second notice at the beginning of the process. Again, it is like climbing to the top of a hill with a megaphone and yelling: “I’ve applied to be in charge of the dead guy’s estate. If you don’t like that, you need to object now! Now’s your chance to be in charge instead so figure out if this job is a job you or someone else should have and file your objection now!”
Not only is the probate process public in that the will, if there is one, is filed with the probate court, but you have to publish in the newspaper to attract any debts that might be owed and, if the decedent did not have a will, then you have the extra publication announcing to the world that you are applying for the job of administrator and letting anyone reading the notice know that they need to object if they don’t want you to serve or if they would rather serve in your place.
The Cost of Troublemakers in Probate
Being an estate administrator or executor is often a paid position. Sometimes people want the pay from that position. Sometimes people who object are the kinds of people who simply like making trouble. Think for a moment about the types of people the original clients (now deceased) probably did not spend time with…
Yes, they probably chose not to spend time with those people who like attention, who like to cause trouble, who always thing they are right. Yet, by failing to plan at all or by choosing a will as their planning tool, they are setting their beneficiaries up for a fight or maybe more than one fight.
A $2 Objection Can Cost Your Heirs $50,000
Why would anyone want that future for the beneficiaries of their estate? Troublemakers can become very expensive. In one recent estate we’ve assisted with, one beneficiary’s objection resulted in $50,000 in attorney’s fees, which impacted all the other beneficiaries. That was $50,000 that went to attorneys and not to the beneficiaries of the will. In probate court, objections related to estates only require two ($2.00) dollars, a #2 pencil, and a piece of notebook paper. You can write an objection on a piece of notebook paper and pay the $2.00 and the court will often hold a hearing.
How a Trust Shields Your Estate
Imagine a trust. A trust is private. No one gets copies unless someone sues the trust. A trust is like a gated estate with security. Only invited guests come in and go out. Your wishes are carried out by a trustee you chose and approved. There is no public announcement that your Trustee is now going to begin doing their job. There is no published announcement asking for objections to your Trustee. There are no hearings unless a formal lawsuit is filed after someone pays the filing fee of often a few hundred dollars.
Your debts are paid by your trust without a public notice. The credit cards are paid, the last medical bills are paid the funeral bill is paid. All payments are often complete before someone going through the probate process has the petition ready to file. Quietly, privately, your estate is prepared to be distributed to its beneficiaries.
Is a Revocable Trust Right for You?
In a world with troublemakers, meddlers, busy-bodies some of whom are greedy, grabby and opportunistic, might it be best to hold and distribute your estate from within the privacy of your inner circle using a trust?
We think so. If you can imagine that there may be people who would cause trouble, object, grab personal property or seek some of your money upon your death, maybe it’s time to consider a revocable trust as a safer, more private alternative for the distribution of your wealth after death.
If you need help, book a call to schedule a time to speak to us more about your wish for yourself and your loved ones.
