Using an Estate Trust to Avoid Probate
A trust is used to protect valuable inheritance assets and quickly settle the estate. Property placed inside the trust can be distributed to designated heirs within a short period of time. Depending on the type of assets, inheritance property placed into the trust may be exempt from inheritance taxation.
Placing estate assets into a trust is the only way to avoid probate. The duration of probate can extend for a few months or a few years, depending on if decedents engage in estate planning strategies prior to death.
Several reasons exist for placing inheritance property into a trust. The first is ease of distribution to heirs. The second is exempting items from taxation. The third is to avoid probate and the fourth is to keep estate matters private.
Decedents’ last will and testament is a matter of public record when the estate must endure the probate process. The information contained in the Will can be used by investors who buy probate property. Those who prefer to retain their privacy should consider placing inheritance property into a trust.
Establishing a trust is a relatively easy process. However, ensuring the trust is properly executed requires assistance from a professional estate planner or attorney. A variety of trusts are available, but the most common include life insurance trusts, testamentary, revocable and irrevocable trusts.
Most people can establish their trust within a day. The first step involves choosing an estate planner to assist through the process. A good place to start is by asking family or friends for a referral. Banks and credit unions often offer estate planning services at discounted rates for customers. Estate planners can also be located in phone directories.
Establishing a trust can also help prevent family disputes surrounding distribution of inheritance property. Death can cause people to become emotionally distraught and act in inappropriate ways. Family members who feel they have been cheated out of valuable property, or those who have been disinherited, often go to extreme lengths to acquire items they feel entitled to. Although placing items into a trust does not provide an ironclad guarantee that prevents heirs from contesting the Will, it does minimize the risk.
When scouting out estate planners, it’s best to work with someone you feel compatible with. Estate planning is a personal task that can sometimes be emotional. After all, you are planning for arrangements of your death and making important decisions regarding who will receive everything you have worked your entire life to acquire.
Estate planners and probate attorneys often offer complimentary consultations to evaluate needs and discuss fees. It’s smart to consult with at least three professionals to determine which is best suited for your needs.
Trusts can be customized to suit your needs. Each type of trust has its own set of unique features, but all are comprised of four basic elements.
1. The person establishing the trust is known as the Grantor
2. Trusts are managed by a Trustee
3. Trusts have a Principal
4. Trusts have Beneficiaries
In order to transfer inheritance assets into a trust, Grantors must create a detailed list of property, along with property appraisals and legal titles for automobiles, real estate, and other titled property.
The principal refers to money used to generate income for heirs. Trustees are allowed to use principal funds for estate-related expenses or investment purposes. If investment products are used to generate dividends, the proceeds must be used for future investments.
Beneficiaries refer to individuals designated to receive inheritance property. Grantors can bequeath property to whomever they desire, but most gift assets to their spouse, children, parents, or siblings.
Trusts are normally reserved for estates valued at $100,000 or more. Individuals whose estates are valued at less can engage in estate planning strategies which allow them to avoid probate. Estate planning is one of the best gifts anyone can leave their loved ones. Working with an estate planner or probate lawyers can ensure you develop an ironclad trust and prevent family disputes.
Learn how to establish a trust or incorporate estate planning strategies to avoid probate from real estate investor and probate liquidator, Simon Volkov. His website includes a comprehensive probate and trusts article library, along with valuable estate planning resources at www.SimonVolkov.com.