We have been talking a lot about the “P” word lately.  “P” is for Probate.  We have discussed the reasons why a person might want to avoid probate (cost, time, lack of privacy, etc…).  So now on to the practical matter… how does a person avoid the P word.  Many people look to revocable living trusts to avoid probate.  At its core probate is the process of removing a decedents name from property and assets that person owned when they were alive. So, it follows that if your name is not on any property or assets when you die- there is no need for probate.  Revocable Living Trusts help people to do just that.

A Trust acts as a legal container that holds property for the benefit of the beneficiary of the Trust, who is usually a person, an institution or a charity.  Trusts are legal agreements between three different parties:  The Grantor (sometimes called a Trustmaker or Settlor) who establishes the Trust, the Trustee who administrates the Trust, and the beneficiary, who receives some sort of benefit (usually income) from the Trust.

Imagine a Revocable Living Trust as an “open box.”  You can put assets into the box and you can take assets out of the box.  The box is a alter ego for yourself.  You can manage the assets in the box or appoint someone else to do that for you.  You have total control- just as you would if you owned the assets outright (outside of the trust).  Assets owned by the Trust (most likely managed by you for your benefit) will not have to be probated when you die- because you don’t own them- the Trust does.

Revocable Living Trusts are a great method of avoiding probate and the costs, lack of privacy and time associated with probating an estate.  By using a Revocable Living Trust you can put your assets into your beneficiary’s hands in days instead of months, minimize the cost of transferring the assets, and do so privately.  Next time we will talk about some of the tax advantages of revocable living trusts.