The Revocable Living Trust: A Helpful Tool but Not the Panacea for Painlessly Settling Estates

Routinely in my practice I am asked the question, “What can I do to make sure that when I die it won’t be a huge burden on my children to handle my estate?”

Mainly clients are concerned about the dreaded “probate,” the court process required to transfer assets from a person following their death, to their family, friends, and charitable organizations. They’ve heard stories about the huge expense and delay associated with probate, and they definitely want to avoid that. And they are right to be concerned. Probate can be costly, and can mean waiting a year or more to settle a loved one’s estate.

The good news is that there is a surefire way to avoid probate: Set up a trust. When a person sets up a “revocable living trust,” they take the step now to ensure that their loved ones aren’t burdened with having to probate their estate later. Remember that anything owned in your name alone at death requires probate for transfer to others. This is true even if you have a will. A trust on the other hand does something very special that a will does not: by transferring assets to the trust, your trust and not you owns the assets upon your death, and no probate is required. Wonderful!

Still, that’s not the end of the story.

While setting up a trust is an enormously helpful tool for lessening the burden of settling your estate, a trust does not completely eliminate the estate administration headache.

If you name your spouse or child as your “successor trustee,” they will still have the responsibility of properly settling your estate. This is especially true if the trust names multiple family members as beneficiaries, if there are blended families, estranged children, or numerous charitable organizations named as beneficiaries.

Just because you don’t have to go through court to transfer assets doesn’t mean there still aren’t statutory obligations to the beneficiaries to properly administer the trust. Beneficiaries have to receive certain information, expenditures of trust funds have to be accounted for, and taxes have to be done. Always taxes…

If you are interested in setting up a trust, know that you are doing a very helpful thing for your family. But, do let those you’ve named trustee understand that it still requires work. If you are suddenly in the position of becoming a trustee, it can be helpful to seek legal guidance to make sure you are on the right track. We are here to assist you if that’s the case.

Bob Good has practiced law in Jackson County for 23 years, specializing in family law, estate planning and administration and business law. Contact him at his Ashland office at (541) 482-3763.