What Type of Trust Avoids Probate?
Through estate planning, you can prevent your assets from going through the probate process after you pass away. You may use one or more methods to accomplish this, and one is living trust, which allows you to control assets while you’re in good health.
LKP focuses on how we can help our clients reach their objectives, like avoiding probate. Our primary role is to educate you, so you’re aware of available options, their risks and benefits, and you can make well-informed decisions. Call us today at 702-333-1711 if you have questions about probate and how a trust can avoid it.
What is a Trust?
A trust is an arrangement that allows the trustee (usually a third party) to hold and manage assets on behalf of a beneficiary or beneficiaries. Trusts can be created in many ways to reach different goals.
There are three parties to a trust:
- The settlor: Also called a grantor or trustor, is the one creating the trust and establishing its terms
- Trustee: The person, trust company, bank, or an attorney responsible for the trust assets and holds their legal title. The trustee administers the trust and its assets
- Beneficiary: The person or entity (a nonprofit) benefitting from the trust assets the trustee holds. There can be multiple beneficiaries, including one or more who gain from the trust during their lives. After they pass away, the remainder beneficiaries can get the benefit of the trust
You can make a trust as simple or complicated (within practical and legal limits) as you wish.
What is a Living Trust?
Living trusts are planning tools that allow people to avoid the state’s complex probate process. No matter your age or health, if you’re interested in estate planning, a living trust is worth considering.
It’s a document allowing for the management and distribution of trust assets during your life and after your death.
- During your life, you’ll need to transfer your property to the living trust
- A living trust is revocable. You can also end or change it during your life
- You may move assets in and out of the trust as your needs or wants change
- Some or all of what you own could go to the trust. It can include real estate, bank accounts, investments, personal property, and bank accounts
You can name yourself as the trustee, so you control your assets until you would rather have someone else do it, you become incapacitated, or you pass away. This “successor trustee” will be in charge of the trust and handle the assets according to the trust’s instructions.
What is Probate?
Probate is the court-supervised process determining how your debts, financial obligations, and assets will be handled after death. If you have a will, it will need to be validated. Assets remaining after your debts, taxes, and estate fees are paid will be distributed according to your will (if you have one) or state law (if you do not). Generally, Nevada probate is needed if you own more than $25,000 in assets or real estate.
Some assets can pass to others outside probate, whether you have a living will or not. This can be due to:
- A contract with a beneficiary or a payable-on-death designation. This can be life insurance, bank or investment accounts, 401ks, and pensions
- The operation of law to a joint asset owner
Depending on your estate, probate may be costly. The larger and more complex your estate, the higher the costs and the longer the process. Routine probate may take several months, but it may take about a year before assets are distributed.
How Does a Living Trust Prevent Probate?
The fact there can be successor trustees, and remainder beneficiaries makes probate avoidance possible. A successor trustee can take over after your death, and property goes from the trust to your beneficiaries.
Probate isn’t just about distributing assets. It also includes paying the debts the deceased leaves behind. Generally, after you pass away, living trust assets are subject to your lawful obligations. If you owned a home, put it into the trust, and it transferred to your daughter after your death, your creditors could demand payment from your daughter up to the house’s value.
Having ownership transferred through a trust makes it harder for creditors to track down new owners because probate is a public process, while trust documents can remain private, but it’s not impossible.
Contact a Estate Planning Lawyer to Handle Your Living Will in Las Vegas
LKP are highly experienced estate planning lawyers helping clients throughout Nevada. A living will has many benefits, including probate avoidance, and it may or may not be right for you. If you have questions about them or want one created, contact us for a free consultation. Call us at 702-333-1711 or use our online contact form to speak to a Las Vegas, Nevada, estate planning attorney experienced in preparing estate plans and legal documents.
Attorney Kennedy Lee practices in all aspects of trust and estate law. He views all legal issues from multiple angles (e.g. from litigation to administration point of view) to provide a higher quality of service to our client.
