In part three of Smith Jadin Johnsons series on probate, this post discusses the scenarios when drafting a revocable trust as a client’s main estate planning device, and subsequently avoiding probate, makes the most sense. Depending on the type of estate, revocable trusts can be the preferred method of asset distribution for estates that are complex and for estates that require control over assets and/or privacy.
Complexity, Control and Privacy
Complex estates that are comprised of various asset types may benefit from being place in trust. If an estate owns multiple parcels of real estate, absent a trust, those parcels would have to be probated in each state in which the parcel lies. Thus, an estate with a homestead in Minnesota, a cabin in Wisconsin, ski chalet in Colorado, and condo in Florida, will have to be probated in four separate states. These probate costs likely outweigh the additional costs of transferring all those parcels to one’s revocable trust. In addition to real estate, estates that include the family business may benefit from a trust as the trust is a convenient device to ensure the family business stays within the family, but is transferred only to future generations upon such generation reaching a certain age or other capability metric.
Clients with large estates may desire to transfer a portion of their assets to their loved ones during their life, but these clients also want to ensure a certain level of control over the assets being distributed to their loved ones. In this case, a trust is a useful tool to make the distributions in a way that benefits the client’s loved ones, but ensures the assets will not be wasted or misapplied.
Finally, unlike wills which go through the public probate process, trusts are private. No one, other than the trustee, and the beneficiaries of the trust, know what assets are held in trust and only those persons know to whom the assets will be distributed. Thus, if keeping your distribution plan private is a concern, then you require a trust.
At Smith Jadin Johnson, not only can we assist in creating the right trust document for you, but we are also available for legal consultation on trust maintenance and administration. If you are considering placing your estate in trust, or already have a trust in place, please give us a call to discuss how we can help.
-Charles Austinson, Attorney @ Smith Jadin Johnson, PLLC