When setting up an estate plan, most people’s thoughts go straight to drafting their will. While setting up a will is the right choice for many people, it is not the only option for making final arrangements for one’s property. One of the biggest issues with wills is that they are required to go through the probate process. Probate is the legal process by which the courts oversee the distribution of a person’s assets, and it can be public, time-consuming, and expensive. Consequently, many people choose to dispose of their property through trusts, another type of legal device that allows the person’s estate to minimize its interaction with probate or avoid it altogether.
The Probate Process and the Benefits of Avoiding It
The probate process is the way that the legal court system administers and distributes the assets of people after they pass on. It involves filing the person’s will with the court, at which point it becomes a public record. Then, a person chosen either by the court or the testator inventories the person’s property, catalogs it, uses it to pay off any claims against the estate, such as outstanding debts, and then goes about distributing the property in accordance with the person’s wishes.
This process raises a variety of issues. For one, it can take a considerable amount of time, usually at least months. Furthermore, the probate process is public, which means that a lot of private information will find its way into court records. Finally, it makes it easier for creditors with outstanding debts to find and make claims against an estate, which can be a concern for many people. In order to avoid many of these issues, people turn to the creation of trusts. And of course, it is a very expensive process.
What Trusts Are
Trusts are remarkably flexible legal instruments allowed by Ohio law that set up a relationship between a set of people: a grantor, one or more trustees, and one or more beneficiaries. The grantor creates the trust by giving some property, often called the “res”, to a trustee, with specific instructions to use the property for the benefit of the beneficiaries. The trustee then manages the trust’s res using a combination of their own judgment and the settlor’s specific instructions.
How Trusts Avoid Probate
The key thing to understand about how trusts avoid probate is that a person who settles a trust may also be a beneficiary at the same time. Consequently, a person can create a trust that allows them to keep the use of what they need for life, and then instructs the trustee to distribute it according to their wishes after they pass on. However, depending on the exact way the trust is structured, it may be necessary to keep some property in the settlor’s name or to create a will to capture residual property not otherwise placed into the trust.
If you are currently creating an estate plan and have questions about whether a trust is the right legal instrument for you, contact a Youngstown estate planning attorney at the Law Office of John C. Grundy today to learn more about how to create a personalized plan to protect your property and your family.