Our last article made it clear as to you why you should avoid putting your family through the probate process. This article will explain how to do it.
First, a brief recap. When you die, any and all assets that are titled in your name at the time of your death must go through probate. Probate is a legal process for transferring title of a dead person’s assets to their heirs. This is legally required, and there is no way around it after the person has died. Before a person dies, they can transfer title to their heirs, or they can create an estate plan that does this seamlessly. And there are good reasons to do so.
Probate is inconvenient, expensive, and time consuming. You must understand that right now, as you are thinking that you are too busy to prioritize creating an estate plan, you must remember that your family is also busy with their own priorities. Consulting with an attorney, and doing the necessary “homework” to create an estate plan might seem like something you just don’t need to prioritize. But remember, if you die without an estate plan, your family will be stuck going to court. And they too weren’t planning on adding that into their schedule, or their budget.
There are many reasons to avoid putting your family through probate. One is the lack of privacy regarding your estate and your assets. Next, is the attention of creditors and scammers that may be attracted to the newspaper publications regarding your estate.
Then there is the cost of paying for a probate court case. Whether your family advances some of the legal costs or not, ultimately, the legal expenses of the probate case will be billed and deducted from the estate you leave behind. So, if you think you can’t afford an estate plan right now, just remember that you will ultimately pay for the probate process anyway. And it will be much more than the cost of an effective estate plan.
Avoiding the probate process starts with creating a living family trust
When I am advising families about estate planning, at a minimum every family needs a foundational plan: a will, a medical directive, and a power of attorney giving their spouse or other person the legal authority to handle affairs if they become incapacitated. This is a basic, what we call “foundational plan,” because at least you are the one giving orders, and not the state. If you lack even a simple plan like this (will, medical directive, power of attorney), then when you die or become incapacitated, the state or a judge will be the one making those decisions.
So having a foundational plan in place is much better than not having one. Everyone needs a basic, foundational plan, at a minimum. But it won’t keep your family out of court when it comes time to distribute your assets. A living trust is the missing piece that keeps your estate from having to go through probate court.
If you would like to avoid having your estate go through probate, you should contact us to schedule a Family Wealth Planning session.
Our Family Wealth Planning sessions are specifically designed to ensure you and your family get the planning and documents you actually need, rather than just a one-size fits all solution that may or may not actually keep your family out of court or out of conflict when something happens to you. We have a limited number of sessions every month, so contact us here to determine our next availability.
How does a living trust avoid probate?
One of the many benefits of creating an estate plan that uses a trust is that this type of plan can avoid probate entirely. A trust-based estate plan goes further than the basic, foundational plan that uses a will.
A will must be filed in the district court, with the court clerk, and immediately becomes public record. That means that the entire world will be able to read your will, know what property you left behind, and who you chose to leave it to, and who you chose to leave out. Many details of your inner family relationships will be disclosed as part of the process of carrying out your instructions in the will. A judge will be reading, interpreting your will, and making rulings regarding the asset distribution under your will.
With a trust, on the other hand, this entire process is private. Your family won’t have to go to court. Everything can be handled privately, in an office, and not in a court room. Here is a brief explanation of what makes that possible.
First, understand the basics of how a trust works. A trust is an agreement. It is an agreement between the 1) creator of the trust (the grantor or trustor) and 2) the trustee. The agreement is simple:
The trustee agrees to hold title to the trust’s assets and distribute those assets according to the terms of the trust.
That’s it. That’s what a trust is and does.
Now, in the beginning, the grantor/trustor and the trustee are the same person. But after the grantor dies, a successor takes over the role of trustee, to distribute the assets to the grantor’s heirs or beneficiaries.
Therefore, if the trustee is holding title at the time of death of the grantor, the successor trustee simply steps in. This problem is solved even if the original grantor was also the trustee. Because if that original grantor/trustor/trustee dies, then the successor trustee will be able to continue holding title to the trust assets.
The big issue, therefore, is ensuring that the grantor’s assets were titled into the name of the trust.
A living trust will not fully avoid probate in Oklahoma if certain procedures are not followed.
Many people who have trusts will still have assets that must go through probate. This is not uncommon, and it happens all the time, even though it shouldn’t.
When you hire a lawyer to prepare an estate plan, you are hiring a lawyer to achieve a larger goal. You are not just hiring a law office to print some documents for you. You are paying for professional legal services to prevent something very specific: your family having to go through court and having to publicize your estate’s assets and distribution.
If the estate plan does not accomplish this goal, then it failed.
So why do so many estate plans that use trusts still fail? There are several reasons. The most obvious is that the lawyer created the trust (the document) but didn’t explain or stress the importance of immediately placing assets inside the trust. Therefore, the client walks away with a document that doesn’t do anything.
A trust only avoids probate if the assets are held in the trust. If the assets are still outside the trust at the time of death, the assets must go through probate court. Therefore, it is critical that the estate planning process involves creating an asset inventory, and then follow through with a process of funding the trust with the family assets. All of this should be done as part of the estate planning process. Which means the process of creating an estate plan that avoids probate will necessarily take more than a single meeting or two.
Another reason why trust-based estate plans fail is because the trust is never updated. Throughout a person’s life, many things will change. Where they live, the assets they own, the businesses they own, buy or sell. Real estate is purchased and sold. Family members pass. Many changes will occur in the years after your trust is created. Therefore, it is very important that lawyers and clients regularly meet and confer to keep the trust and the estate plan updated.
Oklahoma City Estate Planning Attorney Travis Charles Smith
We do things a little different. We don’t just sell documents, we create comprehensive estate plans that avoid probate and won’t fail your family when they need it.
We never want any of our estate plans to fail. Which is why we have a system to reach out to clients and review their estate plan every three years, at no additional costs. This is a benefit we provide to all clients who choose us to build their estate plan.
Schedule a 15-minute discovery call to learn more about schedule a Family Wealth Planning Session with estate planning attorney Travis Charles Smith.