If you are not especially wealthy, you may assume that you should use a last will to arrange for future asset transfers. A last will is the most commonly utilized estate planning document, but many people do not understand all of the facts when it comes to the postmortem process.
Probate
Things aren’t as simple as they may seem to be on the surface when it comes to the use of a last will. When you create a will, you name an executor to act as the estate administrator. The executor cannot distribute assets to the heirs immediately after your passing.
Before anyone can receive inheritances, the will must be probated and closed by the Surrogate’s Court. The executor handles the business of the estate, and the administration of the estate is supervised by the court. During probate the court determines the validity of the will, and challenges could be presented during this process.
Assuming the will is deemed to be valid, the executor will prepare the assets for distribution to the heirs that are named in the last will.
The probate process can be time-consuming, and this time lag can create difficulties for people who are waiting for their inheritances. There are also expenses that accumulate during probate.
Revocable Living Trusts
When you hear about probate you may wonder if it can be avoided. There are various different ways that you can facilitate asset transfers outside of probate. One popular probate avoidance tool is the revocable living trust.
The person creating the trust is called the grantor. The individual or entity that administers the trust is called the trustee, and the people who receive monetary distributions from the trust are the beneficiaries.
As the grantor of the trust, you can act as the trustee and the beneficiary initially, so you don’t lose control of assets that you have conveyed into the trust while you are alive and well.
When you create the trust agreement, you name a successor trustee, and you also name successor beneficiaries. After you pass away, the successor trustee will follow your instructions and distribute assets to the beneficiaries according to your wishes.
The probate process is not a factor when you facilitate asset transfers through the terms of a revocable living trust. This is one of the major benefits.
Another benefit that you gain when you use a revocable living trust is the ability to prepare for possible incapacity late in life. The successor trustee that you name in the trust agreement could be empowered to administer the trust in the event of your incapacitation.
Free Report on Revocable Living Trusts
We have provided a bit of basic information in this post. If you would like to learn more about revocable living trusts, click this link to download our in-depth special report: Rochester NY Living Trust Report.
To learn more, please download our free Revocable Living Trusts in New York here.
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