Creating a successful estate plan requires you to integrate a wide variety of needs and goals into one cohesive plan. To do that, a better understanding of the various estate planning tools and strategies is helpful. For example, knowing what the relationship between living trusts and probate is may cause you to rethink how you distribute the majority of your estate assets after you are gone.
What a Last Will and Testament Can — and Can’t — Do for You
A Last Will and Testament is a legal document that communicates your final wishes pertaining to possessions and dependents. Your Will allows you to make both specific and general gifts. Your Will is also where you will appoint someone to be the Executor of your estate. Finally, a Will provides you with the only official opportunity you will have to nominate a Guardian for your minor children in the event one is ever needed after you are gone. One of the most important benefits to executing a Will is that it ensures your estate will not be administered using the state’s intestate succession laws which distribute a decedent’s estate to legal heirs according to priority. While a Will can potentially distribute your entire estate after your death, most people eventually require more than just a Will to achieve all of their estate planning goals. One of the most common reasons people consider switching to a living trust to distribute the majority of their estate is the relationship between living trusts and probate.
While there are a wide variety of benefits to be found in the inclusion of a living trust in your estate plan, probate avoidance is at the top of the list. As a general rule, an estate must go through the legal process known as probate after the owner’s death. The probate process can be both lengthy and expensive. In the State of North Dakota, creditors of the estate have three months after notice of probate is published to file a claim against the estate. That means that probating even a relatively modest and simple estate will usually take a minimum of five or six months. If the estate involves complex assets and/or becomes involved in litigation, it can take over a year to reach the end of the probate process. Assets that are part of the decedent’s probate estate remain out of reach of the intended beneficiaries until the conclusion of probate. If your loved ones are counting on those assets to help cover basic living expenses, the delay can be extremely problematic. Probating an estate can also diminish the value of the estate that is ultimately handed down to loved ones because everyone involved in the probate process, including the Executor, estate planning attorney, accountants, appraisers, and real estate professionals, is entitled to a fee for their services. Once all of the expenses of probate are paid out of the estate assets, the assets that remain are often worth considerably less than they were at the start of the probate process.
Living Trusts and Probate
One of the best ways to avoid the time and expense of probating your estate is to use a living trust to distribute the bulk of your estate. Assets held in any type of trust are considered non-probate assets, which means the assets bypass the probate process altogether. Not only does this save the expense of probate, but it also means that your estate assets can be distributed to the beneficiaries as soon as you wish after your death. A living trust can also be used to protect the inheritance of a minor child who cannot inherit directly from your estate as well as to stagger the distributions of assets for a beneficiary who may not be prepared to handle a lump sum inheritance.
Contact a North Dakota Living Trust Attorney
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about living trusts and probate, or about estate planning in general, contact a North Dakota living trust attorney at German Law by calling 701-738-0060 to schedule an appointment.