Question of the Day: "Do testamentary trusts avoid probate?"

Answer:  No!  All wills are probated and testamentary trusts are created within wills; thus assets devised in a will to a testamentary trust would have to be probated.  The fact that a testamentary trust has been created has not accomplished any avoidance of probate.

Testamentary trusts serve a useful purpose in that they can be used as a tax-saving tool to divide large estates, and they can be a useful tool to keep persons from receiving an estate in one lump sum.  Testamentary trusts are also useful when beneficiaries are to receive “income only” monies.

If one has an interest in setting up a trust that has all of the advantages of a testamentary trust plus avoid probate, then an exploration of the “living trust” should take place.  Living trusts are also known as revocable trusts, family trusts, and a grantor’s trust.

Living trusts differ from testamentary trusts in that living trusts are established now while you are living, and you go through a personal (probate) proving process of your estate yourself without using the court process.  This process is accomplished by keeping a Schedule “A” or inventory list of the items you have registered to the trust.  You never lose any power or control over any assets that you own in the trust and you, yourself, serve as “trustee” of the trust.

 A common myth about living trusts is that you lose control of your own property or that the trust needs a tax number.  Neither is true, as no tax number is required and you don’t lose any control of the assets.

The decision concerning whether one would want a living trust versus a testamentary trust will probably center around whether one would want his estate to be probated through the court system or whether one would rather bypass the probate system.

This discussion often centers around who the beneficiaries and successor trustees are.  For example, if the successor trustees and beneficiaries are children, then many people desire to avoid probate and leave their entire estate probate-free.

For those persons who had testamentary trusts drawn into their wills before December of 2009, a thorough review of their documents should be analyzed by an attorney, as the many tax changes that have taken place may have necessitated revisions to their documents.

For a thorough discussion of your estate planning needs, you should ask your attorney about trusts for your estate.

To locate experts in your state who can help you with this elder care matter, go to:

Joseph F. Pippen, Jr., Attorney at Law
Law Office of Joseph F. Pippen, Jr. & Associates
Largo, Florida  33771

Member of the national ElderCare Matters Alliance, Florida chapter

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