18 May If a Person Has a Revocable Living Trust, What Happens When They Die?
If a Person Has a Revocable Living Trust, What Happens When They Die?
By: Barry E. Haimo, Esq.
May 18, 2015
HAIMO: If a person executes a revocable living trust and all of their property is in the name of the trust, then there is no need for a probate proceeding.
So what does happen after an individual with a revocable living trust dies? The first thing you have to understand is the nature of a revocable living trust.
Understanding Revocable Living Trusts
Simply put, “revocable” means that the person who created it can continue to make changes to it – and even cancel it altogether – while they are still alive. This is in contrast to an irrevocable living trust, which but for few exceptions, is essentially set in stone the moment you create it.
Once the creator of a revocable living trust dies, here’s what happens:
- The trust automatically becomes an irrevocable trust, preventing anyone from making any changes to the trust to protect the creator’s wishes.
- The trustee will be notified, so he or she can begin the process of managing the trust.
- The trustee will then engage in a number of “administrative” tasks, such as transferring the property, acquiring death certificates, notifying the Social Security Administration, taking inventory of assets, contacting beneficiaries and paying any necessary debts.
- If the trust is set up more like a traditional will, with the expressed goal of distributing all of the assets outright to the designated beneficiaries quickly, this process will most likely be completed within 3-6 months depending on the complexity of assets in the trust. If, however, the trust was designed to be ongoing (for example, if the assets are to be held for minor children until they reach the age of adulthood), there will need to be continuous management until the terms of the trust are met and the assets can be completely distributed.
Why Might You Want a Revocable Living Trust?
There are a number of benefits to setting up a revocable living trust.
You can change your mind. As mentioned above, if you’re choosing between a revocable living trust and an irrevocable one, a big consideration should be the fact that the irrevocable trust generally cannot be changed. So, for example, if you set up an irrevocable trust for your wife and then later get divorced, those assets are lost to you unless the trust was carefully crafted to foresee that contingency.
You can skip probate. Probably the biggest reason people put their assets into trusts in general is the ability to bypass guardianship and probate. Probate is the legal process of settling your estate, and it can cost your loved ones thousands of dollars. Moreover, it can be lengthy and stressful, sometimes taking a year or more to complete. It’s also terribly aggravating.
You can keep your assets private. If your assets go through probate, they become public record. If that’s not a very appealing prospect, you can set up a trust. No one will be able to see what’s in the trust unless you want them to.
You can keep your decisions from being contested. Unfortunately, when someone dies it is not uncommon for loved ones to feel like their assets are not being distributed in the way that they actually would have wanted. This can lead to them contesting a will – or trying to fight against – the process in an attempt to change it. While it is possible to contest a trust, it is much harder than contesting a will, especially if the trust is created during life. So if you are worried about someone causing trouble for your beneficiaries, a trust can be a big help.
Want to learn more about revocable living trusts? Get in contact with a knowledgeable Florida estate planning lawyer today.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
YOU ARE NOT OUR CLIENT UNLESS WE EXECUTE A WRITTEN AGREEMENT TO THAT EFFECT. MOREOVER, THE INFORMATION CONTAINED HEREIN IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. EACH SITUATION IS HIGHLY FACT SPECIFIC AND EXCEPTIONS OFTEN EXIST TO GENERAL RULES. DO NOT RELY ON THIS INFORMATION, AS A CONSULTATION TO UNDERSTAND THE FACTS AND THE CLIENT’S NEEDS AND GOALS IS NECESSARY. ULTIMATELY WE MUST BE RETAINED TO PROVIDE LEGAL ADVICE AND REPRESENTATION. THIS INFORMATION IS PROVIDED AS A COURTESY AND, ACCORDINGLY, DOES NOT CONSTITUTE LEGAL ADVICE.