Ah, Probate! That word evokes so much meaning for me. Mostly, it is a source of anxiety and uncertainty for everyone involved in one. We help clients administer their family’s estates through probate, and recently it has been a journey of frustrations, so I thought I would address it now with you.

The courts are functioning at limited capacity – 25% of total staff are working in shifts to try to manage the court case overload, so we can appreciate that there is a growing backlog, but what does this mean to families?  Well, first let’s recap what Probate is… and how to AVOID it.

Probate is the court process through which an estate must pass through to obtain authorization to access, manage and sell assets of the estate. Without probate, the “personal representative” (previously called the “executor”) does not have any authority to deal with assets! The first step in the probate process is to file a petition with a will, if there was one, seeking the appointment of the personal representative so that the named or nominated person can shepherd the assets into the estate and manage, sell, and eventually distribute them to the beneficiaries.

When I started my estate planning practice I had a presentation called “The Truth about Estate Planning” that revealed the very disturbing reality that most estate plans do not avoid probate even though people THINK that they will.  This is one of the reasons why we generally do not recommend clients use wills as their primary estate planning document and instead use revocable trusts. Wills generally require probate whereas revocable trusts can avoid probate altogether.

HOWEVER, if the trust is not funded with client’s assets during their lifetime, they do not avoid the probate process. If funding is not completed, then probate may be required, effectively ruining the possibility of avoiding probate (which is why most people create these trusts in the first place!)

I have comforted far too many widows who came to my office whose husbands had paid significant fees elsewhere to create trusts, but then those trusts were not funded and thus required probate. The probate process adds significant expense, time, and headaches for far too many people, and it can and should be avoided!

If you have a trust, then it’s really imperative that you fund the trust. (We provide recommendations to all of our clients on how trusts should be funded, so please review the funding spreadsheet in your binder.)

Funding simply means you have proactively moved the requisite assets into the trust, by renaming the owner from you individually, to the name of your trust. The principle is very straightforward. Retirement plan assets like IRAs, or a 401k, should never be re-titled into the trust, but care must be taken to ensure that beneficiaries are named on these accounts, since these types of accounts pass outside of probate (but a lack of named beneficiaries can potentially bring the assets into probate, creating tax issues in the process!)

We can assist with funding recommendations to make sure the funding is consistent with your estate plan. We can also take care of ALL of your funding, so just reach out, and we will send you more information about how we can handle this for you. Do not procrastinate with funding because it’s an expensive process to undergo probate. 

A funded trust is a FUNCTIONING Trust!

Here’s a link to our website for how we can assist.  https://eckertbyrne.com/practice-areas/funding-assistance/

Best,

Anna Byrne