The goal of many estate plans is avoiding probate and a living trust is popular because of its flexibility. But, despite the ease of use and flexibility, people often get tripped up because they are totally unaware of what must be done so the trust works as intended.
The Wills, Trusts & Estates Prof Blog recently offered some advice about this important step in "Tips To Estate Planners To Avoid Probate With Living Trusts."
The tips include:
- Trusts can only be used to avoid probate when assets are transferred to the trust. That means that ownership must be transferred from the individual to the trust.
- Some property might be exempt from probate by state laws. Accordingly, it is a good idea to check the laws in your state. For example, if cars are exempt from probate in your state, then there is no need to transfer ownership of them to a trust.
- Retirement accounts do not need to be transferred to the trust. By law they will pass to the named beneficiary. Just make sure that the beneficiary designation is up to date.
- Get advice on trust creation from your estate planning attorney and accountant to ensure all relevant issues are addressed.
An estate planning attorney could be helpful in working through the process.
Reference: Wills, Trusts & Estates Prof Blog (Jan. 9, 2016) "Tips To Estate Planners To Avoid Probate With Living Trusts."