Wills or Trusts? Avoiding Probate Court

A simple Will is the easiest type of estate planning tool for you to use and is generally the least expensive.  A detailed Will saves your heirs from the difficult task of dividing up your assets and belongings. However, it does NOT save the heirs from filing with the Probate Court.  When I help my clients with estate planning, one of the greatest benefits I can offer to clients is ease of transition and the ability for their heirs to avoid Probate Court.

Why do you want to avoid Probate Court?

First of all, what is Probate? “Probate” is the generic term used to describe the administration process whereby the court system determines the beneficiaries of those assets left in the deceased’s sole name at the time of death. Certain assets will avoid probate because they have a designated successor owner. A general guideline is any asset that has a listed beneficiary, like life insurance, jointly owned assets, pension plans and IRAs will not go through probate.

But, just because you have a will – it does not mean that you will avoid “probate” – in fact, a will does not protect you from the probate process.  Your will governs the disposition of your assets in your sole name.  In other words, you can dictate who will get your property.  You can also name an executor and if you have young children, a guardian for them.  If you do not have a will, your assets will be disposed of according to the laws of intestacy.  Your will, once filed at the probate court, becomes a “public document” for anyone to review.
There are many reasons why one might wish to avoid probate court; here, I will list a few:

1. Expense

Any court process can be expensive; however, probate court is full of hidden cost and fees.  Your heirs may have to pay filing fees, place a bond to secure the assets, legal fees, and many other hidden costs.

2. Time & Ease of Transition

I believe that the time spent is the biggest inconvenience when it comes to filing with the Probate Court.  Let me give you one example of the difference between using a Will and using a Trust to transfer assets:

TRUST a woman passes away and leaves her home to her daughter via trust.  While the woman is alive, the Trust actually owns her home and she is the beneficiary and Trustee – so she is effectively the owner, but not in name.  When the woman passes away, the Trust still owns her property; however, the daughter is the backup beneficiary.  This means that there is no waiting or paperwork needed to transfer ownership of the home.  The daughter is immediately free as backup Trustee and beneficiary to sell the property or live in it or to do whatever else she pleases.

WILL  For a woman who leaves the house to her daughter via a will, there is no easy transition.  When the woman passes away, the ownership of the home becomes in question – to be resolved by the Will.   The daughter must file an action in the Probate Court.  In the mean time, someone has to pay for the upkeep of the house, condo fees, mortgage payments, gas, heat, electric, etc.  The daughter cannot sell the house without special approval from the Court.  Even if the Court gives her the special approval to sell, she has to wait for the original Will filing to be processed and only then can she request a court date for the judge to hear her motion to sell.  She will likely wait two or three months for that court date, and then after she sees the judge, she has to wait again for the judge’s decision to be mailed to her.  Then, only if the judge says yes – may she put the home on the market for sale.  In the mean time, she has likely paid many thousands of dollars out of pocket, with the house just sitting there unable to be sold.

This is just one example, but there are many more.   Using Trusts allows for an ease of transition that you just do not get with a Will.

3. Privacy

Keep matters private at the time you die.  The trust does not have to be recorded nor publicized anywhere, unlike a will.  People do not have to know how you are disposing of your estate, nor the amount of your assets.  By staying out of probate court, you can keep your affairs private.  Trusts are private documents. Even with a Realty Trust, only the Certificate of Trust needs to be filed with the Registry.  Your schedule of beneficiaries remains private information.

Learn more about different types of Trusts here:

A/B Revocable Trust

Pourover Wills

Irrevocable Trust

Third-Party Special Needs Trust

Realty Trust