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I have a Will. Isn’t that enough?

Although a Will is a necessary part of any estate plan, it may not be enough. A Will does not avoid probate, and in fact, the probate court must become involved in the process of administering your Will. Many people do not want their financial affairs to become a matter of public record, which is part of the probate process. Also, a Will is effective only following your death. If you become mentally or physically incapacitated, your Will provides no protection – you may be forced to submit to the control of the probate court while you are living. This is because it may be necessary for a guardian of your estate (sometimes called a conservatorship) to be named.

What is Probate?

Probate is the process of proving and administering a Will. The probate process makes sure that your debts are paid and your property is distributed according to your Will. If you don’t have a Will, your state law provides one for you. The probate court also may take control if you are unable to manage your own affairs.

Probate sounds important. Why do I want to avoid it?

Privacy – Probate files are open to the public. Your heirs and beneficiaries may be exposed to unscrupulous individuals who hope to profit from their “good fortune.”

Time – Probate may take one to two years or longer to complete. During this time, your heirs may be forced to ask for an allowance from the executor of your estate. If your assets are not liquid, the court may not approve of an allowance.

Expense – Fees and court costs must be paid from your estate. This expense may amount to 4% to 10% of the value of your estate (before debts are paid), reducing the amount for distribution to your heirs.

Control – The probate court, through your executor, has control of your estate. Immediate needs of your family may not be met, and your heirs may become frustrated at the time.

I don’t have much money. Will probate really affect me that much?

You might be surprised to discover what probate could cost your estate. Over 75% of probates in Maricopa County are unsettled after 9 months and costs averaging between 3% to 7% of the estate.

All of my property is owned jointly with my spouse. Doesn’t that avoid probate?

When one owner of jointly owned property dies, the ownership is automatically transferred to the survivor. But at the death of the second owner, the property must naturally be probated. So probate isn’t avoided, it’s just postponed. Joint ownership has some risks, too. As a joint owner, you are not in complete control, since both owners must agree to sell or mortgage the property. Also, the property is exposed to the other owner’s creditors.

Why must the probate court become involved if I am incapacitated?

In order to make any change in respect to your property – a sale or refinancing, for example – and you are incapacitated, someone must sign for you. And unless other arrangements have been made in advance, only the probate court, through it’s agent, may sign for you. Your family may be forced into probate court in order to simply do what is right for you.

How can I avoid these problems?

The law provides an answer to all of the concerns discussed herein. It is called a Revocable Living Trust, and it looks a lot like a will. But a trust avoids probate, and is effective during your lifetime as well as after your death. A properly drafted living trust can simplify all of your estate planning goals.

How does a Revocable Living Trust work?

A living trust becomes the owner of your property. The trust is administered by you as Trustee. If you become unable to act as Trustee, the trust can contain language that automatically names a successor Trustee.

How does a Living Trust avoid Probate?

Since you have transferred ownership of all of your property to the trust, there is nothing for the probate court to control— either during your life or at your death. The trust owns all of your property for your benefit. But you are in control (even if you are not the trustee) since you may revoke the trust at any time.

Is it hard to transfer property to a trust?

The process of transferring your property into a living trust is not difficult at all. Your attorney,banker, financial planner, advisor, or other professional, can help you.

Who should have a Revocable Living Trust?

Nearly anyone can benefit from having a living trust. People with minor children especially may enjoy the comfort of knowing their children will be financially secure through the use of a living trust. But whether young or old, married or single, wealthy or of modest means, a living trust may be useful to your situation.

Who can serve as Trustee of my Revocable Living Trust?

Anyone who is of legal age can be your trustee. Many people choose to name an adult child or relative to serve as Trustee. You may also choose a professional as Trustee, but there is usually a fee associated with a professional. Your choice of Trustee should be carefully considered and discussed with the chosen individual or professional.

Is a Revocable Living Trust expensive?

The cost of a Revocable Living Trust will vary, just as the cost of anything else varies. However, when compared to the costs associated with probate, the expense of a Revocable Living Trust is extremely reasonable.

Who should write my Revocable Living Trust?

A qualified Attorney or legal document preparer can write a Revocable Living Trust. An experienced firm can provide valuable guidance for your individual situation. A trust is a legal document, and only a firm that specializes in creating Revocable Living Trusts can ensure that the document is appropriate for your situation, and conforms to state law. Avoid “do-it-yourself” kits and form books. Only an Attorney is authorized to give you legal advice, and you must receive legal advice in planning and preparing your trust. Your attorney may also suggest other legal documents as part of your estate plan.

Are Revocable Living Trusts new?

Living Trusts have been used for hundreds of years. Bank trust departments, lawyers, financial advisors, and other professionals regularly utilize living trusts for their clients.