By Harry J. Lenaburg, Esq.
Many people establish a Revocable Living Trust as a means of avoiding the necessity of the filing of an action in the Probate court by their heirs to distribute their assets. Such a Trust is, as a general rule, one method for avoiding the filing of a probate to settle the estate.
For this to be a successful strategy, however, the Settlor (the person or persons establishing the Trust) must be sure to transfer any real property and assets to the Trust. This requires a deed transferring any real property, which must be properly recorded in the appropriate county, which is the county where the property is.
If the real property is not properly transferred by a recorded deed then the property is not an asset of the Trust, and a probate will, in most cases, be required. Another issue which can arise is due to bank accounts and accounts in other financial institutions that are not established in the name of the Trust. Depending on the dollar amount of the account failure to include these accounts may result in the necessity of a probate. Many financial accounts provide for the designation of a beneficiary who is to receive the account upon the death of the owner or owners of the account.
As a caution, especially in these times of refinancing mortgages, some lenders require that a property in a Trust must be transferred out of the Trust in order to complete the refinance. When the refinance is complete it is essential that the property be once again transferred to the Trust, otherwise it will not be treated as an asset in the Trust, regardless of the fact that it was once in the Trust.
Handled correctly a Revocable Living Trust can help you to avoid the cost, and inconvenience to your heirs of a probate action.
The Law Firm of Jessica M. Cotter, P.L.L.C.
18301 North 79th Avenue, Suite F-168
Glendale, Arizona 85308