At a recent event, someone asked me, “How do Trusts avoid Probate?”
It’s a great question, and one I hear often.
A Living Trust is a legal entity designed to avoid Probate. Think of it like a wagon: you (the Grantor) create the wagon and place your assets inside it. You name yourself, or someone you trust, as the Trustee, the person who manages those assets while you’re alive and mentally capable.
If the Trustee becomes incapacitated, you’ll need proof of incapacity, typically in the form of two doctor letters, to formally remove them. At that point, the Successor Trustee, the person you named to step in, takes over.
When the original Trustee passes away, the Successor Trustee presents the death certificate and assumes control of the Trust. Because everything is already “in the wagon,” there’s no need to go to court—no Probate.
But here’s the catch:
If you don’t put your assets into the Trust, it doesn’t work.
That’s the most common mistake I see. For example, if your bank account or property is still titled in your name instead of something like “Martha Smith, Trustee of the Martha Smith Living Trust”, that asset might have to go through Probate—even if you created a Trust.
Other reasons a Trust may end up in Probate include:
-The named Successor Trustee has died or was never named
-No one is legally able or willing to step in as Trustee
-The Trustee is suspected of wrongdoing
-Doctors refuse to provide letters stating a Trustee lacks capacity
-Court involvement is expensive and time-consuming.
To avoid this, make sure:
-Your assets are properly titled in your Trust’s name
-You keep your Trust updated
-You choose trustworthy Successor Trustees
If it’s been a while since you reviewed your Trust—or if you’re not sure it’s set up properly—give me a call. I can help you make sure everything is in place, so your loved ones avoid Probate and unnecessary stress.
