Do I Need a Trust to Avoid Probate?

If you’ve ever been through the probate process after a loved one passed away, then you know just how stressful and frustrating it can be. Lengthy court proceedings, mountains of paperwork, assets tied up for months or even years – it’s a nightmare no one wants to go through again.

Even if you haven’t experienced probate yourself, you’ve probably heard the horror stories. That’s why many people look into creating a trust as part of their estate planning since trusts can allow your assets to be distributed privately outside of probate court. But is a trust absolutely necessary to avoid probate? Or are there other options that can keep your family out of the public eye and outside of court jurisdiction when you’re gone?

What Exactly is Probate?

Probate is the legal process of settling someone’s affairs after they pass away. It involves:

• Presenting the will and filing a petition with the probate court
• Appointing a personal representative to manage the estate
• Identifying and inventorying the deceased’s assets
• Paying any outstanding debts and taxes
• Distributing the remaining assets to the beneficiaries

But while probate can be useful, it’s not necessary for every estate, and in some cases, it can be avoided entirely.

There are many reasons why someone may want to avoid the probate process. Here are the three most common that we hear:

1. Probate is time-consuming, delaying access to inheritance and prolonging the grieving process.
2. It takes money from the estate, with an attorney and other professional fees, court costs, and other expenses.
3. It’s a public process, meaning that the deceased’s assets and beneficiaries become a matter of public record, which some people prefer to keep private.

Now, probate isn’t necessarily all bad – there are simplified processes like summary distribution for smaller estates. But if avoiding probate altogether makes sense for your situation, our attorneys can help you understand all the options available and choose the right method to meet your needs.

How a Trust Helps Avoid Probate

A trust is a legal arrangement where you transfer ownership of your assets to a trustee who manages and distributes those assets according to your stated wishes.

Several types of trusts in Florida, but a living trust (also known as a revocable trust) is the most common type used to avoid probate.

Here’s how it works:

1. You create a living trust and transfer ownership of your assets into the trust.
2. You serve as the trustee and beneficiary of the trust during your lifetime, maintaining control over the assets.
3. Upon your death (or incapacity), the successor trustee (whom you appoint) takes over management of the trust and distributes the assets to the beneficiaries according to your instructions.

Because the trust entity owns the assets rather than you as an individual, they do not need to pass through probate. This option saves time and money and maintains privacy for your beneficiaries.

What Types of Assets Can Be Placed in a Trust to Avoid Probate?

You can place almost any type of asset in a trust, including:

• Real estate, including your primary residence, vacation homes, and investment properties.
• Financial accounts, such as bank accounts, brokerage accounts, and certificates of deposit.
• Personal property, such as vehicles, jewelry, artwork, and collectibles.
• Business interests, including ownership in a corporation, partnership, or LLC.

Transferring these assets into a trust ensures they pass privately and directly to your beneficiaries according to your wishes.

What Assets Will Still Go Through Probate Even With a Trust?

While a trust can help most of your property avoid probate, there are some exceptions:

• Assets you own outside the trust, such as a real property you acquire after creating the trust that you fail to transfer into the entity.
• Assets that name your estate as the beneficiary, such as life insurance policies or retirement accounts.
• Jointly owned assets that do not have the right of survivorship attached, meaning that your share of the asset will still need to go through probate.

An experienced Florida estate planning lawyer can help avoid these issues.

How to Set Up a Trust in Florida

Here are the steps to create a Florida trust if you decide this estate planning tool is suitable for your needs:

1. Decide which assets you want to place in the trust.
2. Choose a trustee to manage the trust (you can serve as the initial trustee).
3. Have an attorney draft the trust agreement, which outlines how the trust will operate and how assets will be distributed.
4. Sign the trust document in front of a notary and two witnesses.
5. Transfer ownership of the selected assets into the name of the trust.

Working with an estate planning law firm throughout this process is important to ensure that you properly draft, execute, and fund your trust and that it accurately reflects your wishes.

Potential Drawbacks of Using a Trust to Avoid Probate

While trusts offer many benefits, there are also some potential drawbacks to consider:

• Trusts have higher upfront costs than wills, as they are more complex to set up and maintain. However, administering assets through a trust rather than through probate is far less expensive.
• Trusts require more ongoing management, such as keeping records of assets and distributions.
• Revocable trusts do not provide 100% protection from creditors in most cases.
• Revocable trusts do not help you avoid estate taxes, although you can use them with other estate tax planning strategies.

Your attorney can help you weigh these potential drawbacks against the benefits of using a trust and determine the best approach for your unique situation.

Other Ways to Avoid Probate in Florida Besides a Trust

While trusts are popular methods to avoid probate, they aren’t the only option.

Other strategies for avoiding probate in Florida include:

• Owning assets jointly with rights of survivorship so that the asset passes directly to the surviving owner.
• Naming beneficiaries on financial accounts and real estate deeds using tools like transfer-on-death and payable-on-death designations.
• Gifting assets to your beneficiaries during your lifetime.

These strategies have pros and cons, and not all will be appropriate for everyone.

An estate planning attorney can help you evaluate your options and choose the best tools for your needs.

Should You Work With an Estate Planning Attorney?

Creating a trust is a complex process with significant legal and financial implications.

While it may be tempting to create trust on your own using online forms or software, doing so can lead to costly mistakes and unintended consequences.

Working with an experienced estate planning attorney offers several key benefits:

• Helps you determine whether a trust suits your specific situation and goals.
• Ensures your trust is properly drafted, executed, and funded, minimizing the risk of legal challenges or unintended results.
• Coordinates your trust with your other estate planning documents, such as your will, powers of attorney, and health care directives.
• Provides ongoing guidance and support as your life circumstances change over time.

Working with a Miami trust attorney gives you peace of mind that your estate plan is comprehensive, legally valid, and aligned with your wishes.

Create a Trust That Protects Your Legacy

Trusts are powerful tools for avoiding probate, maintaining privacy, and ensuring that your assets are distributed according to your wishes.

However, creating a trust is not a one-size-fits-all solution, and working with an experienced attorney is important to determine whether the vehicle is right for your unique needs.

Whether you choose a will, a trust, or a combination of tools, the key is to take action now to protect your legacy and provide for your loved ones.

Schedule a consultation with Alexander Gil, PLLC in Miami, to discuss your options.