You should learn a few things about the estate administration process before you make any estate planning decisions. This phase can be time-consuming, risky, and complicated, or it can be smooth and efficient depending on the choices that you make during the planning stage.
Wills and Probate
A lot of people assume that a will is the right asset transfer vehicle to use because the administration process will be simple and straightforward. The executor will prepare the assets for distribution, and the inheritors will receive their bequests in a timely manner, right?
In reality, this is a widely held misconception. If you use a will to state your final wishes, the executor would be required to admit the will to probate, and the court would provide supervision during the administration phase.
It serves a purpose because creditors are given time to come forward seeking payment. There is also a proving of the will during probate, so the court will examine the document in an effort to confirm its validity.
Interested parties can challenge the terms of the will during probate. In some cases, a challenge will be warranted. In others, disgruntled people or opportunistic relatives will come forward to muddy the waters, and this can cause some messy situations.
Probate will take about eight months at minimum, and no inheritances are distributed while it is underway. Complicated cases can take considerably longer, especially if there are disputes.
Probate records can be accessed by anyone, so there is a loss of privacy. Another drawback is the financial part of the equation, because a number of different expenses accumulate while the estate is being probated.
Living Trust Administration
If you use a living trust instead of a simple will, you do not worry about losing control of the assets. This would be a revocable trust, so you would retain the right revocation, and you would act as the trustee while you are alive and well.
In the trust declaration, you would name a trustee to succeed you, and your heirs would be the beneficiaries. The successor trustee can also be given the ability to assume the role in the event of your incapacity.
After you are gone, the distributions to the beneficiaries would not be subject to probate, so the negatives would be avoided. With regard to the distributions, you can instruct the trustee to provide measured distributions over time to prevent reckless spending.
There would be a layer of asset protection because a spendthrift provision would protect the principal from the beneficiary’s creditors. A joint living trust can be established by a married couple, and this can be a very efficient way to plan your estate when certain circumstances exist.
You can name someone that you know personally to act as the trustee of a living trust, and a beneficiary can be also act as the trustee. This can make sense at times, but a trustee that is a layperson is probably not going to know how to proceed immediately after your passing.
There are specific steps that must be taken, and there are legal technicalities. To account for this dynamic, if you work with us to create your living trust, we can be engaged to provide necessary assistance during the trust administration phase.
We highlighted the living trust because it is the most commonly used type of trust, but there are others. Regardless of the nature of the trust, we will be uniquely positioned to provide guidance when the trust is being administered.
We Are Here to Help!
Our doors are open if you are ready to put a plan in place. Even after the plan has been created, we will always be available to provide assistance to your family in the future. Burbank trust administration and probate attorneys at The Oakley Law Group can offer you the help you need when you need it.