When you pass away, you want your assets to go directly to the heirs you choose. But when you only have a will, your inheritance goes through a probate court. Probate can take a lot of time and is open to the public. If you don’t want your heirs to go through that, you can put your assets in trusts.
Trusts avoid probate court. While there are different types of trusts you can create, a trust-based estate plan can speed up and simplify the distribution of your inheritance.
Disadvantages of a will
When you use a will to pass along your inheritance, a probate court reviews the will and distributes the inheritance. This tends to take a long time as the court contacts all beneficiaries and makes sure the distribution happens correctly.
Your will also become viewable to the public through the court. If you have someone who disagrees with your decisions, that person can challenge the will. This can increase the time it takes for your heirs to receive their distribution. A challenge can also mean that part of your inheritance goes to someone you didn’t intend.
Setting up a trust
To avoid the time and the challenges of probate, you can set up trusts for your estate. When you use trusts, you create one or more legal entities that take temporary ownership of your estate. Since a trust is a separate legal entity, it does not go through probate. Typically, you will be the trustee until you pass away. When you set the trust up, you designate someone as a successor trustee. The successor then becomes the trustee and distributes your assets according to rules you wrote into the trust.
Unlike probate, distributing your assets through trusts is private. And since trusts are private, they usually avoid challenges. A trust can distribute much quicker than probate court as well.
Choosing the best plan for you
While trusts are a good way to avoid probate, they may not be right for your estate plan. For example, trusts can be more expensive to set up than wills. Be sure to consult with an attorney when deciding the best plan for you.
If you don’t want your estate tied up in probate court after you pass away, you may want to start a trust to avoid probate.