By: Matthew C. Smith
Many people begin their estate planning journey by “googling” questions like: “revocable living trust to avoid probate?” or “how to avoid probate with a trust?” If you have ever wondered about this, you’re not alone. Understanding how a revocable trust works—and how it compares to probate—is the first step toward making the right decision for you and your family.
What Is a Revocable Living Trust?
A revocable trust, often called a revocable living trust, essentially functions as your will and it either owns or receives all of your assets upon your death. In a revocable living trust, you set forth all your testamentary decisions for the disposition of your assets at your death, just like you would with a will. Upon death, all assets that you own would already either be in the revocable living trust by reason of your transferring assets to the trust during your life, and/or the revocable living trust would be the beneficiary of the asset(s) upon your death. So, immediately after your death, the Trustee receives all of your assets and then begins to pay bills, distribute assets to the beneficiaries and otherwise carry out your intent, all without having to go through the probate process. Unlike a will, which is filed at your county courthouse, a revocable living trust is not filed or recorded thus keeping your assets and distributions private. The Revocable Living Trust can be amended or revoked at any time during life.
What is Probate?
In Kentucky, probate is the legal process for administering a deceased person’s estate under court supervision. It begins when a petition is filed with the probate court to open the estate, prove the will of the decedent and request the appointment of a personal representative. As part of the process, the will is filed of record with the probate clerk and the petition is published in a local newspaper to notify potential creditors and interested parties. The personal representative is sworn in by a judge and takes legal responsibility for managing the estate, which includes identifying and marshaling assets, notifying creditors, and filing a detailed inventory of the estate within sixty days. Kentucky law requires that the estate remain open for at least six months to allow time for creditors and claims to be addressed. Once the estate’s debts are paid and assets are distributed, the personal representative can close the estate through either an informal or formal settlement, with court approval, ensuring all matters are resolved according to law.
Do Revocable Trusts Avoid Probate?
Yes, if all of your assets are held in the trust after your death. If you create a revocable living trust but do not transfer all of your assets to the trust, whether during your life or by having the trust named as the beneficiary upon your death, it is likely that you will be required to probate those assets that are not held in the trust. If coordinated properly, by placing assets into a revocable trust, or making sure the revocable trust is the beneficiary of your assets at death it skips the probate court altogether.
Revocable Trust vs. Will: Probate Differences
This is the key distinction: a will provides instructions for after death, but it does not shield your estate from probate. A trust, on the other hand, provides instructions for after your death but it can streamline the entire process to avoid probate.
Is a Revocable Living Trust the Best Way to Avoid Probate?
Many people will “google” “is a revocable living trust the best way to avoid probate?” For most individuals, the answer is yes—it is one of the most effective and reliable tools available. That said, every family’s situation is unique. Sometimes, simpler tools like beneficiary designations or transfer-on-death provisions may also help avoid probate. An experienced estate planning attorney can help you determine the best combination for your goals.
This Blog is not legal advice and is not intended to be legal advice. Should you have any questions regarding the subject matter, please contact Matthew C. Smith, Esq., at Ziegler & Schneider, P.S.C., (859) 426-1300, for additional information.