Reasons to Consider a Revocable Trust
The primary reason people choose a revocable trust in estate planning is to avoid probate. Even though the initial cost to create a Revocable Trust may be more than the cost of executing a Last Will and Testament, spending the money to do a trust now may save your family money in the long run since trusts avoid the probate process. Probate is the process wherein a Last Will and Testament is admitted to Surrogate’s court. Like any court process, it costs money and can delay the process if an heir is being disinherited.
Out of State Property
If you have real property in more than one state, you may want to put those properties into a revocable trust to avoid having to go through the probate process in each state. The rule is that in each state that you “own dirt” you will need a separate probate, called ancillary probate. This can be lengthy and costly when you own properties in multiple states. Another reason to avoid probate is if you do not have easily identifiable heirs or if you are disinheriting one of your natural heirs. Regardless of who you have named as beneficiary of your Will, notice of probate must be sent to your next of kin. If this includes a daughter that you are disinheriting or if your next of kin are your third cousins whom you have never met, you may not want notice to be sent that your assets are being distributed. You would also want to avoid probate if you have a disabled beneficiary because the Court will have to appoint a lawyer to represent that person’s interests in the probate proceeding. In all of these scenarios it is advisable to avoid probate because it will likely be very time consuming and cost a lot of money.
In the event of your incapacity, a Revocable Trust can provide for a seamless transition for the management of your affairs. The person(s) you have selected as successor or co-Trustee would simply take over the management of those assets titled in the name of the trust, possibly avoiding the need for a Property Management Guardian.
Disinheriting a Natural Heir
If you plan to disinherit an heir, such as child, avoiding probate should be your goal. Should probate be required in order to administer your Estate, even though you have chosen to disinherit a family member, a distribute (anyone who would inherit if you died without a will pursuant to the intestacy statute) will be given notice of the proceeding and an opportunity to challenge your Will. In New York State, you can disinherit your children, but although your wishes will likely be upheld, navigating through the process can be costly and time consuming, resulting in a smaller inheritance and delay for your intended beneficiaries. With a trust, unlike a probate proceeding, there is no notification required when a trust is administered. Your trustee can simply distribute the assets as you have set forth in the trust agreement.