The 5 P's of Revocable Living Trusts
While most people have heard of trusts, I don't think it's a stretch to say that many people lack a clear understanding of how trusts work and the benefits they offer estate planning clients. They tend to think of trusts in the context of "trust fund babies" and dynasty trusts used by the ultra-wealthy. But, revocable living trusts offer incredible benefits to all - regardless of the size of your estate - that a Will cannot match. I call these benefits the 5 P's. This post focuses on the first 2 P's: Privacy and Probate Avoidance.
1. Privacy - a Will becomes a public record once it is filed with the courthouse after someone's death. You see this all the time when a celebrity dies. Some reporter goes to the local courthouse, pulls a copy of the celebrity's Will, and blasts to the world what so-and-so did or did not leave to his or her family members. In North Carolina, not only does your Will become public record, but the executor of your estate is also required to file an inventory of your assets - both a description of the asset and the current value. The result is that any one can get their hands on documentation that shows how much money your heirs are to receive and who those particular heirs actually are. In this day and age, that's a terrifying thought. A trust, on the other hand, is not made public. It keeps your private information private.
2. Probate Avoidance - probate is time-consuming and costly. I was down at the courthouse yesterday, and I needed to make an appointment to see a Deputy Clerk. The first opening was April 2. Can you imagine having to wait 5-6 weeks just to get an appointment to start the probate process. In the meantime, bank accounts are frozen and other assets are not freely accessible by those who need to be able to pay for the funeral or the mortgage on the house, or make the car payment? Why put yourself and your family through that misery if it can be at all avoided?
I am going to talk about the last 3 P's in next week's post, so stay tuned!
If you'd like to learn more about revocable living trusts or talk about whether you and your family could benefit from including a revocable living trust in your estate plan, please give us a call at (919) 678-5761.