REVOCABLE TRUST VS LAST WILL REASON NO 1
– Today we’re gonna talk about the number one reason I think a revocable living trust is usually a better option than just a last will.
Welcome to Two Minute Tuesday, where I attempt to discuss an estate-planning topic in two minutes or less. Let’s jump right in. We hope you’ve been enjoying this little four part series on revocable trusts versus last will and testaments.
If you’re just joining us for the first time, then I encourage you to watch the other three videos in this series.
The number one reason I believe a revocable living trust centered estate plan is the better option is that you avoid probate. You guys, I’ve said this before, but a vast majority of our probate clients ask us for a trust once they’ve been through the probate process. Once someone has had to go through the process dealing with other family members, creditors, and heirs wanting their money immediately, they realized what a bad experience it can be.
Now, I’ve said in other videos that money changes people. That cousin or nephew that was always so sweet becomes a viper or a pit bull when they find out that they might, they might, inherit some money.
We see this over and over again. Heirs call our office on a regular basis demanding their inheritance, demanding their money because they have bills to pay. And like I’ve said, money changes people. I never say this to them, but I always wonder what would that heir calling our office, what would they have done if their loved one had not passed away?
So, the big four reasons a trust is a better option are one, you avoid guardianship proceedings.
Two, you bypass probate.
Three, you maintain privacy.
And fourth, it provides a layer of protection from court challenges.
Let’s look at each one of these individually. First, when you hear the word probate, we automatically think of after-death proceedings, right? But there’s something called a living probate, and you’ve probably more commonly heard it called a conservatorship or a guardianship proceeding. So, a trust avoids a conservatorship and guardianship proceeding. It does this by allowing you to authorize a person to manage your assets should you become incapacitated and unable to manage your own affairs. Now, this might seem obvious, but last wills only become effective when you die.
That means wills are absolutely useless in avoiding conservatorship and guardianship proceedings during your lifetime. If you’ve ever been part of one of these proceedings, then you know it is a highly emotional process. You literally have to go to court and ask a judge, someone you’ve never met before, in order to care for your loved one and make life decisions for your loved one.
And it does not end there with just that one court appearance. You have to go back and give accountings every so often according to Oklahoma statute. The judge wants to know what’s happening in the case and what’s happening with your loved one.
Luckily in Oklahoma, we have some really great probate judges, but it’s still not a fun process to go through going through a living probate.
The second reason is the ability to bypass probate or property transfers. Property in a revocable living trust which is titled in the name of the trust does not go through the probate process. Transferring property with probate is public. It can be costly and time consuming, sometimes taking even years to resolve. Guys, we worked on a couple of probates last year that cost over $20,000 each. Those probates were really the exception for what we work on, but probate still can easily cost five to $10,000 on a regular basis. Now, in next week’s video, we’re going to go through a step-by-step comparison of the cost for a trust versus probating a last will. So, make sure to hit the subscribe button below so you’ll be notified when that video comes out.
The third reason to avoid probate is that a trust maintains privacy after death. Very simply put, wills are public documents, trusts are not. Anyone, including your nosy neighbors, creditors, and unscrupulous family members can discover the details of your estate if you have a will. Trusts, on the other hand, allow you to maintain privacy. As soon as we file probate on behalf of a client, I can guarantee that within a week, we’ll have three or four solicitations from businesses or people wanting to cash in on the probate process. Now, some of these are legitimate, but if you’re trying to do things by yourself, you could easily cost the estate thousands of extra dollars if you don’t know what you’re doing.
The fourth reason to avoid probate is to protect you from court challenges. When we file a probate, we are providing a forum, it’s a court case, for anyone to come forward and challenge anything in the process. So, all a disgruntled family member needs to do is just show up and complain about something. Their claim could be completely baseless, but we still might have to provide and spend additional time and money disproving their claim against the estate.
Now, someone still could attack a trust, but it’s generally much harder than attacking a will because the trust is not made public at any point and it’s not a court case. So, if someone wants to challenge your trust, then they have to go down to the courthouse, open up a lawsuit, and pay all the fees, the court costs and attorney fees that go along with filing a lawsuit. If someone has to spend their own money then they are a lot less likely to take some sort of action. And guys, we see this all the time when people come to our office. As soon as we go over their out-of-pocket expenses, they usually wanna think about it. They wanna think about challenging that trust, and they’ll get back to us. So, once they have to spend their own money they usually don’t.
So, for all of these reasons, most people want to avoid probate all together, and these reasons are why I believe avoiding probate is the number one reason why a revocable living trust is usually a better option than just having a last will and testament. Well, that’s all for today. Thank you so much for watching. If you enjoyed this video then please hit the like button below, and let us know in the comments what topics you would like me to talk about in the next coming videos. Have a great day and have an awesome week. Thanks again, and we’ll see you next time.