Monday, February 25th, 2013

HOW TO AVOID PROBATE?


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One way of avoiding probate is to a Revocable Living Trust.

Advantages of Revocable Living Trust:

  1.  CONTROL: A revocable living trust provides the flexibility of allowing the grantor(s) to be the trustee during life.  In other words, the grantor(s) can continue to control the assets;
  2.  CHANGEABLE:  A Revocable Trust can be changed or canceled at any point prior to death;
  3. INCAPACITY PLANNING:  A revocable can be used for incapacity planning by having successor trustee or co-trustee take over in the event of incapacity of grantor/trustee;
  4. PROBATE AVOIDANCE, DEATH AND INHERITANCE PLANNING: Upon the death of the grantor(s),  the successor trustee is responsible for executing the instructions of the grantor without court action and privately.  The same as a vice president would take over for a president of a company.  The line of succession would be clearly stated.
  5. ACCESS TO FUNDS OR ASSETS OF TRUST:  The grantor/trustee is allowed to withdraw or deposit  or transfer without limitation.

Disadvantages of a Revocable Living Trust:

  1. NO ASSET PROTECTION:  Since the grantor/trustee has full access, the judgment creditors of the grantor can force collection against the trust.
  2. NOT OUTSIDE OF TAXABLE ESTATE FOR ESTATE TAX PLANNING PURPOSES:  In general, the assets are still considered to be part of the taxable estate of the deceased grantor.

What do you think?