Using Living Trusts to Avoid Probate

Most people agree that it’s wise to avoid going to probate court if at all possible.

Why? Because the probate process has become increasingly expensive and slow: It ties up property for months, often more than a year, and in some states, attorney and court fees can take up to 5% of an estate’s value.

Living trusts were invented specifically to allow people to avoid probate. The advantage of holding your property in trust is that after your death, the trust property is not part of your probate estate. (It is, however, counted as part of your estate for federal estate tax purposes.)

That’s because a trust — not you as an individual — owns the trust property. Property you transfer into a living trust before your death doesn’t go through probate. The successor trustee — the person you appoint to handle the trust after your death — simply transfers ownership to the beneficiaries you named in the trust. In many cases, the whole process takes only a few weeks, and there are no lawyer or court fees to pay. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.