29 Dec Assets Held In a Trust Avoid Probate
Every estate planning law firm will advise you to avoid probate when and wherever possible. Phelps LaClair is no exception. We tell our potential clients what having an estate go through probate will entail. There will be court costs, legal fees, and time lost in waiting on a slow-moving legal process. As a second-generation estate planning law firm, we advise our clients to put their assets in a living trust. Why? Because in Arizona, assets held in a trust avoid probate.
When most people think of how to leave their estate to their heirs, the first thing that comes to mind is a will. A will usually assigns specific articles of property and financial accounts. They are assigned to certain people who will inherit portions of the estate. It can also declare guardianship desires and funeral or final disposal desires. However, a stand-alone will must enter probate.
In probate court, a judge determines the validity of the will. He also assigns an executor to carry out the distribution of assets to persons that the probate court recognizes as legitimate heirs. Any claims against the estate by persons named or not named in the will must be settled in probate. As you can imagine, this can open the door to family arguments and division. In addition, the time and effort to defend a will in court can quickly add up. The value of the estate will be diminished by every hour spent working on the case.
A trust, on the other hand, is a legal document that includes everything a will does, but avoids the entire probate process. Assets titled in the name of a revocable living trust at the date of death are not subject to probate administration. This avoids thousands of dollars in executor fees and attorneys’ fees. It also avoids a possible one or two-year delay for your family while the estate assets are tied up in probate.
Other benefits of a living trust include the ability to plan for unforeseen health problems. Advance directives specify which medical treatments you want or don’t want in case of incapacitation by accident or disease. And, you can name a medical power of attorney who will carry out your wishes when you are unable to make those decisions. With a trust you can also name a Successor Trustee. With a durable power of attorney he can make financial decisions and other estate management choices for you.
Other Assets Excluded From Probate
There are other assets that are generally excluded from probate in Arizona. These are usually financial accounts that have beneficiaries already named. Retirement accounts and life insurance policies are prime examples. Bank accounts that qualify as payable on death and real estate with a transfer on death (TOD) deed also avoid probate. Salaries and commissions that are due after death are generally excluded from probate. TOD-registered securities will not need to go through probate.
All Trusts Are Not Created Equal
When you are ready to create an estate plan, you need to find an estate planning law firm that has the knowledge and experience to design a custom plan that will meet your specific needs. While assets held in a trust avoid probate, there a variety of trusts available. Knowing which one(s) will work best for you is why you need a professional.
Phelps LaClair are in our fifth decade of estate planning, having helped thousands of families like yours to preserve wealth. We want to do the same for you. Call us today for a free consultation with no obligation. We will be happy to sit down with you to discuss your situation and present the best possible options for you. Don’t hesitate to call, we are always ready to talk with you.