The most common way that people have traditionally passed their legacies on to their heirs after death is by leaving behind a will. This would seem like a pretty simple and straightforward practice that should enable the transfer of assets without incurring a lot of expense or taking an undue amount of time.
Unfortunately, due to the process of probate, this is not the case.
When you pass away with assets that are still in your name and use a will to state your wishes, the estate must pass through probate. The probate court would determine the validity of the will, and if any interested parties wanted to contest it, their arguments would be heard by the court.
As you might imagine, this can take a lot of time, and your heirs would not receive their inheritances until the probate court closed the estate. But even in cases when there is no one contesting anything, it will take eight months to a year.
And in addition to the time consumption, probate can be expensive, because there are court costs, attorney fees, executor fees, and possible accounting, appraisal, and liquidator fees.
A commonly used estate planning vehicle that enables probate avoidance is the revocable living trust. The way that it works is you convey your assets into the trust, and you name yourself as the trustee and the beneficiary. As a result, you would still have complete control of your property.
In the trust declaration, you name a successor beneficiary or beneficiaries and a successor trustee. When you pass on, the assets in the trust would be distributed to your heirs directly without having to pass through probate. This would save your loved ones those two precious commodities: time and money.
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