Many folks who set up a living revocable trust still have to go through probate just like those without a trust. How does this happen? Most failures are due to one of three problems:
- The living revocable trust is not written properly.
- An attorney mistakenly drafts a Testamentary Trust. A testamentary trust is created as part of a will, and is probated with it.
- The trust was never funded.
Let's talk about the third problem. To fund a living revocable trust, any assets that require your signature to move must be transferred into the trust. This
includes bank accounts, real estate, and brokerage accounts. They are then owned by the trust. When you die, their owner of those assets didn't, so the trust and its properties do not need to go through probate.
This does not mean you lose control of those assets. As long as you live, you remain the manager or "trustee" of the trust. An appropriately drafted trust document names the new trustee who will take over at your death. This new
"successor trustee" will have full authority over the assets and can manage them without any court, aka probate, interference.
This is a neat legal trick. It will not cost your heirs the extra money or time that going to court for probate would. A living revocable trust works really well, provided you use the trust during your lifetime and follow all of the rules that allow the trust to avoid probate.
