Pierro, Connor & Associates - Monday, February 03, 2014
Preparing a Will is a great way to begin any estate plan, but for the reasons expressed below it pays for many to take the plan to the next level and establish a Revocable Living Trust as well.
Every Will must be offered for probate and found to be valid by the local Surrogate’s Court before the named executor can be appointed, the debts of the deceased and expenses of the estate paid and the assets distributed. The length and cost of the probate process varies but is almost always significantly lengthier and more expensive than the administration of a Revocable Living Trust.
Some of the costs associated with the probate process, which are either less or unnecessary to the administration of a trust include the following:
Court Fees for the local Surrogate’s Court
Court fees for Ancillary Probate where real property is owned in other states
Attorneys Fees (these are usually significantly less for a trust administration)
Guardian Ad Litem Fees for estates involving minors or incapacitated beneficiaries
Process Server Fees when citations are required because waivers or releases can’t be obtained
Surety Bonds: more likely for intestate estates (where there is no will), contested cases or cases involving heirs who are incapacitated or can’t be located.
Other Advantages of Revocable Trusts Over Wills Include:
Privacy for uncontested cases (Probate Court records are generally open to the public)
Decreased Probability of Litigation (Probate Proceedings require the involvement of heirs at law to commence and releases or an accounting to conclude)
Funds and Property in the Trust can be made available immediately for administration costs and for distribution to beneficiaries. (Probate assets are frozen upon death and not available until the Will is admitted to probate) Financial Institutions, Creditors and other interested parties will speak to a trustee immediately, an executor must be appointed by the court before most people will speak with them.
Trust Administrations are simpler than probate proceedings and generally take less time to conclude.
Revocable Trusts Facilitate Asset Management: If all of the Grantor’s assets are titled into the name of the trust the management of assets can be made easier and more organized during life and upon death when the executors are usually scrounging around for financial information that is at the fingertips or an organized trustee.
Incapacity presents many challenges that can be avoided if properly planned for with a good power of attorney, health care proxy and revocable trust.
Bequests made directly to minors or incapacitated beneficiaries generally require the appointment of a guardian ad litem during probate proceeding and a legal guardian afterward. Funds held in trust avoid these costs and can be administered by the Trustee for the benefit of the beneficiaries.
Assets passing directly to beneficiaries as opposed to assets being held in continued trust are subject to equitable distribution in divorce proceedings to the claims of creditors and to estate taxation at each generation. These problems can be minimized or eliminated with effective trust planning. Wills can create testamentary trusts to address some of these problems but they are established and administered under the supervision of the Court.
Please feel free to contact the Pierro Law Group and schedule a consultation to learn more about the benefits of Revocable Trusts. Also - Join us on March 20, 2014 for the first in our series of 2014 "Third Thursday" free educational workshops where we will be discussing ways to avoid Probate and answering your questions about Revocable Living Trusts. Email firstname.lastname@example.org for more information or to sign up.
By: Philip A. Di Giorgio, Esq.