Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question:  Can you explain how a living trust avoids the publicity associated with probate?

Answer:  Probate is the process of a court supervising the transfer of assets from a deceased person to the decedent’s heirs.  Because it is a court process, the records are generally public and available to anyone who asks.  Records may include a copy of the decedent’s will, a list of heirs and an inventory of assets that the decedent owned at the time of death.

Probate is necessary when the decedent has substantial valuable probate assets in his or her own name at the time of death.  The process must be followed whether the decedent had a will or not.

Probate can be avoided for those assets that were owned jointly with right of survivorship, for which a valid beneficiary designation existed or for which a valid successor owner was named as required by law.

A living trust is a document, similar to a will, that names successor owners and beneficiaries in the event of the grantor’s death.  If the grantor’s assets are transferred to the trust while the grantor is living, the assets do not need to go through probate at the grantor’s death.  That’s because the trust itself owns the assets—not the decedent.  The trust document dictates the proper manner to be followed for assets to be transferred to the trust beneficiaries.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.