Probate is the legal, public, and court process utilized to administer assets upon a person’s passing. In the U.S., all 50 states mandate probate for persons with no estate plan and persons with a will. However, probate may easily be avoided by placing your assets into a trust.
According to a Gallup report, approximately 46% of U.S. adults carry a successive estate planning document such as a trust or a will. The percentage of Americans with estate plans has dropped 5% since 2005. To no surprise, the rate of adults over 65 with estate plans is 76%, with adults between 30 and 49 at a disturbing 36%.
We can take things a step further as families earning more than $100k p/y lead the population with plans at 61%, and the percentage drops below 50% under $100k. Worse, nonwhite families make up a mere 28% of U.S. families with estate plans.
If a deceased person has no estate plan in place -- 54% of U.S. families -- the legal term utilized is “intestate.”
When dying intestate, the deceased person and his family have no control over the distribution of assets. Instead, a probate court will distribute the assets per state law. Probate laws vary from state to state.
Upon a person’s passing, probate is the legal process often required to validate the deceased person’s will (also known as the will’s testator). The will’s executor (named in the will) may carry out the testator’s documented wishes.
An executor is responsible for administering the estate, settling all debts left by the testator, and then distributing the remaining assets to beneficiaries. Executing a will is often a significant unforeseen responsibility.
As a legal and court process, probate involves court hearings and various proceedings. Depending on the deceased’s debts and types of assets, completing a probate process make take months but may even take years to complete. Moreover, probate is a public and documented process, allowing people to challenge a will if one exists.
A long grueling probate process challenges many families’ dynamics, often executed by a sibling, creating significant family tensions and often draining the value of assets that beneficiaries expect to inherit.
In today’s estate planning world, families may easily avoid probate and effectively distribute assets upon a person’s passing.
A trust is a legal agreement established by a grantor, protecting and distributing the grantor’s assets, per the trust terms created by the grantor. Once established, a trust is active, different from a will that activates once the testator has passed.
When a grantor places assets in a trust, the grantor titles the assets to the trust. When a grantor passes, the trust owns the assets rather than the grantor. Thus, the assets in trust avoid probate and distribute following the trust terms. However, if the grantor has assets outside of the trust when passing, those assets will be distributed within his state’s probate laws.
Even better, while a deceased person’s residency dictates probate, a person may establish a trust in a jurisdiction of their choosing. Similar to probate laws varying state by state, every state in the U.S. is a trust jurisdiction. In addition, a handful of states carry advantageous trust laws sought after domestically and internationally.
Nevada is considered a tier 1 trust jurisdiction.
Learn more about the many benefits of establishing your trust in Nevada.
At Crawford Trust, we understand that every family is different and carries individual needs. Our experienced trust officers are happy to reach out and learn more about how we may help you.