When you pass on, would you like your heirs to avoid fees to the treasurer, to avoid substantial fees to an attorney or law firm, to avoid lack of privacy and to leave your assets to loved ones protected from most lawsuits?
Of course, the answer is yes.
If you only use a will, then the assets your will governs, which are “probate assets,” will be listed on a form available to the public. If it is $1 million going through probate, the fee to the treasurer is about $1,800 and the fee to the attorney, who might charge 1.5% to 2.0% of the probate assets, could be $15,000 to $20,000.
Let’s also imagine you own a home (real estate) in another state. Then, your out-of-state real estate would have to go through probate in that state and that, of course, could cost more in terms of legal fees and court costs.
So, let us imagine, that you plan only with a will, and all of those fees, costs and lack of privacy do occur (unfortunately), and then your children inherit from you. If they inherit outright and free of trust, they can lose everything they inherit from you to a lawsuit, and that exposes them to federal estate tax in their estate.
So, if your child is married when they inherit free of trust from you, and they then later commingle those funds with their spouse, they can lose much of what they inherit from you to equitable distribution.
What is the solution? Create a revocable living trust. Title the out-of-state real estate and other assets (that would otherwise go through probate) into your RLT. Voila! None of the property goes through probate. Your named successor becomes the trustee upon your incapacity or death and the court does not need to be actively involved.
All the fees to the treasurer and much of the legal fees that would otherwise have been spent, and all the lack of privacy and delay is avoided. People who want to avoid all of the above problems use a revocable living trust and other legal papers to ensure their affairs are private and administration is as easy and less costly as possible.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. mwinnesq.com