Many wonder if real estate assets are in a revocable trust or letting them go through the probate process. Depending on the size of the estate and the value of the assets, the probate process takes considerable time and money. As a result, heirs and beneficiaries may have to wait a significant period to receive financial resources. This delay could result in your heirs suffering financial hardship.
However, a revocable trust can help individuals plan for their families and help them avoid the probate process. However, certain risks and benefits are associated with creating a revocable trust versus allowing real estate assets to pass through probate.
Our well-trained attorneys have extensive experience helping clients plan for their heirs and safeguarding their real estate assets. If you are trying to determine which option suits your needs, contact our law firm to schedule a free initial consultation to learn more.
Is a Revocable Trust a Better Option Than Probate?
A revocable trust is a far better option than probate as it allows beneficiaries to obtain the property left to them in a timely manner. One of the most significant benefits of a revocable trust is that it allows the grantor the ability to revoke or amend the trust whenever the need arises. For example, a grantor may create a revocable trust and add new family members as time passes.
One of the main questions individuals may ask is how a revocable trust can help to avoid probate. When a living trust is created, the grantor moves assets into the trust which is managed by a trustee. At this point, the assets are no longer in the grantor’s name but are considered to be the property of the trust. As a result, probate is not required, and upon the grantor’s death or through the terms of the trust, assets and real estate property are distributed.
In most instances, a revocable trust does save beneficiaries time and money and allows them to keep their affairs private. However, individuals should allow a well-qualified lawyer to assess their needs before making any legal decisions. Not all estates and their assets are subject to probate in Michigan, especially if they fall under a certain threshold.
How Can a Revocable Trust Help Protect Real Estate Assets?
One of the little-known facts about probate is that once the process is completed, all documents will become public record. When documents are public record, it means that anyone can have access to the information. In many cases, creditors use the information contained in probate records to come after individuals who owe debts but have now inherited them.
However, when assets such as real estate are placed in a trust, the public is not privy to any information regarding the assets that beneficiaries receive.
Additionally, a revocable or living trust can offer beneficiaries a degree of legal protection. Because the terms of the trust are private, it makes it difficult for others to contest how property and other assets are distributed.
Although revocable trusts do not protect real estate property from creditors, they offer the grantor significant advantages when planning for their heirs. For example, suppose the grantor is concerned that an heir may be involved in a bad business deal or a marriage that could lead to a divorce. In these instances, the grantor can structure assets in the trust to protect them from being seized.
What Are the Disadvantages of Using a Revocable Trust For Real Estate Assets?
Even though a revocable trust does offer considerable advantages over probate, there are also drawbacks individuals should be aware of. Some of the most common issues that accompany revocable trust include:
- Assets placed into a revocable trust do not spare the grantor or beneficiaries on estate or income taxes.
- A revocable trust cannot hold real property as a joint tenant with rights of survivorship. A joint tenant with rights of survivorship occurs when a joint tenant dies, and the property is conveyed to two or more people.
- A revocable trust does not offer asset protection. For individuals seeking asset protection, an irrevocable trust offers far more security.
- Assets placed in a revocable trust must be retitled into the trust’s name to avoid probate. Often this requires a great deal of administrative work as financial institutions must be made aware of changes in property ownership.
If you are still undecided if a revocable trust is suitable for your needs, it is best to speak with an experienced attorney who can evaluate your situation and determine the available legal options.
Why Should I Hire Your Law Firm to Help Me With My Estate Planning Needs?
Estate planning is a wonderful way to plan for the future to ensure your final wishes are carried out after you pass away. However, estate planning laws can be overly complex and challenging to try and navigate independently.
For this reason, you must hire a skilled lawyer to help you create a well-crafted estate plan. If you are concerned about how your real estate assets will be passed down to your beneficiaries, an attorney can help you confidently plan for the future.
Our law firm is dedicated to helping clients and their families protect their assets for future generations. When you come to us with your legal needs, we take the time to listen to what is important to you and create a plan that will give you peace of mind.
If you would like to learn more about the benefits of revocable living trust versus probate, contact Estate Planning & Elder Law Services, P.C. of Northville, MI, at 888-663-7407 and ask to schedule a free no-obligation consultation to discuss your case.