What Estate Planning Documents Will Help You Avoid Probate?

 

 

Transcript:

Hi, I’m Jordan Flake. I am a managing partner at Clear Counsel Law Group. A lot of times we get the question: what kind of estate planning documents can help me avoid the probate process? In order to tackle that question, it’s important to understand that probate is the court supervised process of determining where assets go after an individual’s death. When a person passes away, with assets in their own name, we’re in a place of insecurity where we really don’t who gets those assets and under what conditions they get those assets.

That’s when the state law steps in and says, “Okay, if Molly, 87 year old woman, Molly,” I’m thinking of a client of ours, “passes away, and there’s assets just in here name. A house, a bank account. The bank is not just going to give that money to her kids just because they can produce a birth certificate. They need more assurance in order to release Molly’s account to the children.

What do they need? They need a court order saying that these individuals are entitled to this bank account. The process of obtaining that court order is known as the probate process. It is not as simple as it may seem. You have to prove to the court, the word probate actually comes from the same word “to prove,” you have to prove to the court where these assets go and why they should go there. In order to do that, you have to hire an attorney and go through a very long and costly process. A lot of what we do as estate planning attorneys is to ensure that your loved ones are not left, at the time of your passing, in a probate situation.

What documents can bypass the need for probate? The main one that you want to look for, in an estate planning attorney, is a revocable living trust. It sort of operates like a box. You can think of it as a box. You can also think of it as a living legal entity, not a human, but a legal human entity of sorts. Once you place assets into that box, then for purposes of the law, that’s kind of set aside outside of your own name.

Let’s just go back to the example of Molly, whereas she passed away with a bank account in her name, the bank had this confusion about where to send this asset and basically told the loved ones, “Go get a court order saying where this goes.” Let’s take that exact scenario with Molly had seen an estate planning attorney in advance.

Molly puts the assets into a box, into a revocable living trust. The bank account, instead of listing Molly on it, lists her trust. When the survivors go in, at that point, then the bank says, “Oh, this is a trust account. It’s not owned by an individual. What does the trust say to do with this account?” At that point, the bank doesn’t need any kind of court guidance to determine what to do with the assets in the bank account. Instead, they look to the trust, which was signed previously by Molly, and they follow the instructions contained in the trust.

If you think about estate planning and how to avoid probate, it’s just the preemptively declaring in a very formal and official legal sense, declaring to the whole world, what you want done with your assets at the time of your passing. Normally, by putting them into this separate legal entity or box, if you want to think of it like that, that will persist in its validity even after you pass away.

Please come see us at Clear Counsel Law Group if we can either review an existing trust or give you a consultation about your different options in terms of putting your assets into a revocable living trust. Thank you.

 

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