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WA-Probate > Probate Avoidance > Practical Advantages of Living Trusts
Provides Asset Management upon Disability
Allows Clearer Accounting & Avoids Commingling of Separate Property
Avoids the Necessity of a Washington (ie, "Home State") Probate
Avoids the Necessity of a Probate in any Other State in which You Own Real Property
Results in a Quicker and Less Expensive Administration
Provides Increased Privacy for Your Estate Plan and Its Administration
Promotes Greater Security for Your Estate Plan
I. During Life ñ
A. Provides Asset Management upon Disability ñ
Most Living Trusts provide for their creator(s) to be the initial Trustee(s). If there are joint Trustees (co-Trustees), often one will continue to serve as sole Trustee if the other is no longer able to serve. If the sole Trustee is no longer able to serve, a trusted relative, friend, or associate usually becomes the successor Trustee. This succession of Trustees, in the case of a Trustor's onset of any disability, will likely avoid the necessity of the appointment of a Guardian of one's Estate, which might be necessary in the absence of a Living Trust.
This situation, however, is parallel to the situation in which a person, with or without a Living Trust, uses a Durable Power of Attorney for Assets (also known as a Financial Durable Power of Attorney) to provide asset management upon his/her disability. Granted, third parties such as banks, brokers, and title companies are often more willing to transact with a Trustee of a Living Trust than with an Agent under a Durable Power of Attorney; yet asset management upon disability is available in the absence of a Living Trust through a Durable Power so long as it has been provided for before the onset of disability. If no Durable Power has been created, or if created, no Agent is able and willing to serve, then the appointment of a Guardian of one's Estate may be necessary in the absence of a Living Trust.
Remember, too, that a Living Trust can only provide for financial or asset management, and not personal management and care. If personal management and care are required, it may be available through a Durable Power of Attorney for Health Care so long as it has been provided for before the onset of disability; or, lacking that, through the appointment of a Guardian of one's Person.
B. Allows Clearer Accounting & Avoids Commingling of Separate Property ñ
A Living Trust can consist of multiple independent trusts, each of which can be managed by a different Trustee for the benefit of different beneficiaries. So, for example, a husband and wife (eg, "John and Mary") could create the John & Mary Trust, consisting of three independent Trusts during their joint lives:
The John &
Mary Community Trust, for their community property. In this
situation, many couples prefer to have both John and Mary serve as
co-Trustees but with each having the power to bind the Trust alone,
without the consent of the other. As a consequence, for example,
each would have his or her own checkbook for the Community Trust
checking account, for which each could sign checks alone, without
needing the other's signature.
Separate Trust, for his separate property and with him being its
The Mary Separate Trust, for her separate property and with her being its sole Trustee.
This example used a married couple, but a similar arrangement could be used equally well for non-married partners.
A Living Trust provides a flexible framework in which to create multiple independent Trusts, each of which can be tailored to solve the financial circumstances of the parties, allowing them to keep their joint financial dealings joint and their separate financial dealings separate --- as well as providing financial management in the case of disability.
II. At Death ñ
A. Avoids the Necessity of a Washington (ie, "Home State") Probate ñ
So long as none of your property remains titled in your name at death, a Washington ("domiciliary") probate should not be needed to change title of your assets into the names of your Beneficiaries. A Washington probate will be unavoidable, however, if you are a party to a lawsuit at death and if the lawsuit is to be maintained in your name, as either a Plaintiff or a Defendant.
B. Avoids the Necessity of a Probate in any Other State in which You Own Real Property ñ
So long as that property is titled in the name of your Living Trust at death, a non-resident state ("ancillary") probate should not be needed to change title to any real estate (eg, vacation, business, rental, or commercial real property) you own outside of Washington into the names of your Beneficiaries. If you have no such property, this issue is moot. If you do have such property, you should consider creating a Living Trust and transferring your out-of-state real property into it for this reason alone, perhaps just to hold title to your out-of-state real property. Ancillary probates are expensive, time consuming, and easily avoidable.
C. Results in a Quicker and Less Expensive Administration ñ
This is certainly true if you are a California resident. But as a Washington resident, just what are your potential savings in money and time?
will save your estate what is currently the $200 Court filing fee.
You will save your Personal Representative the inconvenience of learning what is involved and doing what is required to open a probate estate and get him/her appointed as your Personal Representative. This will likely amount collectively to at least a day or two of their time, or it could be hired out to a lawyer for probably around $500.
But remember that most of the work will need to done regardless of whether you use a Will or a Living Trust:
assets must be marshaled and inventoried. Chances are that this will
already have been done if you have a Living Trust.
debts must be paid. If debt and creditor issues are issues for you and
your estate, however, it should be easier and cheaper to resolve them
in a probate estate (ie, through the
Probate Creditor's Claim procedure) than with a Living Trust
(ie, through the
Nonprobate Creditor's Claim procedure).
estate tax liability must be resolved. If a federal or Washington estate tax return
is required to be filed for your estate, it should make little difference in
preparing the return or paying any estate tax due whether you use a Will or
a Living Trust.
Your remaining assets will need to be distributed to your beneficiaries, but it should make little difference in distributing them whether you used a Will or a Living Trust.
Practically speaking, many of the "costs" of a probate proceeding result from problems that need to be resolved independent of the probate process:
Assets must be marshaled,
Debts must be paid,
Estate taxes must be resolved,
Property must be ultimately distributed.
As long as:
You have a Will,
Your Will provides for Nonintervention Powers, and
A named Personal Representative is willing and able to serve ---
his/her work following his/her Court appointment will be much the same as if he/she were the Trustee of your Living Trust --- that is just what the Washington legislature intended by their enacting probate Nonintervention Powers ... to turn the administration of a probate estate into that of a Living Trust. In these circumstances, once the Personal Representative is appointed, any advantages in using a Living Trust over a Will become insignificant as regards a "quicker and less expensive estate administration." In fact, under Washington law, a Personal Representative acting under Nonintervention Powers has more flexibility and greater powers over a probate estate than a Trustee has over a Living Trust. RCW 11.100.140
How much are you contemplating paying now to create a Living Trust? $1,500? $2,500? More? How much time are you willing to devote to its administration for the rest of your life? Remember that for its use to actually result in "quicker and less expensive estate administration," it is largely an "all or nothing" deal for an event that may not come to fruition for many, many years. In order to ensure the avoidance of a probate at death, all your assets must then be held by your Living Trust. Meanwhile, you must be scrupulous in titling and administering your assets in the Living Trust. And then, all it takes is one asset, and a probate may be necessary.
D. Provides Increased Privacy for Your Estate Plan and Its Administration ñ
At first blush, a probate proceeding is public, and administering a Living Trust at death is private. Remember, however, that while a Decedent's Will is required to be filed, an Inventory & Appraisement for the estate is no longer required to be filed in a Washington probate. Consequently, what will become available to the public about your assets is the degree to which you describe them in the dispositive provisions of your Will. For example, if your Will says only "I give my entire estate to my spouse if he/she survives me, and if he/she doesn't survive me, then to my children by right of representation," or "I give my entire estate to my Trustee," you have revealed nothing about either your assets or their worth.
If you are concerned about the disclosure of your personal information, your assets, and their value, much of that is already readily available to anyone who is serious about obtaining it:
Birth certificate, marriage license, and other records via county records and licenses,
Real property via county recordation of ownership,
Real property indebtedness via county recordation of security interests,
Vehicles via state registration,
Business and assumed names, incorporations, limited partnership creations, etc. via state registration,
Credit reports available to many (perhaps unethically) at a small price via credit bureaus,
And so forth.
In summary, a probate proceeding may not be as revealing as you suspect, you are largely in control of any disclosure regarding assets in a probate proceeding, much personal and financial information about you is already available to anyone who is serious about finding it and willing to pay the price, and using a Living Trust may not provide the relative privacy that you may otherwise desire.
E. Promotes Greater Security for Your Estate Plan ñ
There is more law on Will contests than Trust contests, Will contests are more popular than Trust contests, and the Courts are more familiar with Will contests than Trust contests. Consequently, Will contests are more favored than Trust contests --- meaning that Will contests favor the contestant-Objectors, while Trust contests favor the defendant-Trustees.
a Will as your estate planning vehicle necessarily means that a probate
proceeding will follow your death, and so the arena for having a Will
contest will necessarily be created, and
As a result of the Court's appointment of your Personal Representative, he/she is required by law to send notice of the appointment and the probate proceeding to all persons interested in your estate, and so it is almost as if they are formally invited to file a Will contest.
Both of these circumstances are absent upon the use of a Living Trust.
If you own property in another state, or if you are concerned about the possibility of a contest surrounding the disposition of your estate at death, you should consider creating a Living Trust and transferring your property into it. Doing so should avoid the necessity of a probate in the other state and decrease the likelihood of a contest at death. Ancillary probates as well as probate contests, whether involving a Will or a Trust, are unusually expensive and time consuming, and contests can, and occasionally do, result in unintended changes to one's estate plans.