A trust is an agreement through which assets can be transferred for your own benefit or that of your loved ones upon your passing. A trust has a creator, a trustee and beneficiaries. A trust helps to avoid court involvement in the event of your incapacity or death and is a privately administered process unlike probate. A person can have more than one trust but if it is not for advanced estate planning purposes, it is unlikely that more than one trust will be needed. People do not simply lose control over their assets by transferring them to a trust. They are generally still the sole beneficiary and sole manager of their trust and there is no loss of control or benefits in a trust. A typical revocable trust must have assets in it so that it may be used for estate planning purposes.
A standard revocable trust offers no asset protection whatsoever. Some advanced irrevocable trusts provide asset protection but it is outside the scope of most individual estate plans. However, we would still recommend a trust over a will for an estate plan because of its ease of creation, use and administration. Another major benefit is that it’s a private, non-court involved administration process.
Avoiding Probate With A Trust
Probate, on the other hand, is the court ‘supervised’ process to transfer your assets out of your name to your heirs. The majority of people prefer to avoid the probate process. If all assets are transferred to a trust, then upon the passing of the creator of the trust, there are no assets left in their individual name. Therefore probate is rendered unnecessary. Probate is typically necessary whether you have a will or not. If there are assets in your name after you pass, probate is generally required. This is when setting up a trust pays off. Your appointed trustee immediately starts gathering the assets and paying off any debts. They make the distributions to the eventual beneficiaries all without court involvement. After the administration is completed and the assets have been transferred to the beneficiaries, a trust automatically stops functioning and ceases to be operational.
The Process Of Trust Administration In Arizona
Assets are gathered, debts are paid then distribution is made to the heirs or beneficiaries. Probate requires court supervision whereas the administration of a trust is a private affair. Administration in a trust is less litigious because probate provides an open court procedure to bring a complaint whereas a trust administrations is private. However, this does not mean a beneficiary of a trust cannot bring a complaint, but trust administration is not as compatible with litigation as probate is.
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