Probate vs Trust: What Are the Differences?

Less than half of all adults in America have a will or living trust. You may have it in the back of your mind. You probably have it on the to-do list in your head. You just haven’t done it. Does this sound familiar?

If you have lost a loved one and need to administer their final affairs, you may know a little bit about wills, trusts, and probate. Were you named as a trustee? Did you have to go through probate?

Probate vs. trust administration: These are two very different procedures for administering someone’s estate. Keep reading to learn more about the differences between them.

What is Probate?

The probate process involves going through a court proceeding to distribute someone’s assets in accordance with the terms of his or her will.

The probate court ensures that the will is legitimate, not forged or revoked. They also ensure that bills and debts get paid and the remainder goes to the intended beneficiaries.

When you use a probate attorney for these proceedings, plan on paying somewhere between 2% and 4% of the estate value for the fee.

What is a Trust?

When you create a trust with estate planning attorneys, you have a written document that names a trustee. The trustee manages assets while the person is alive and distributes them when the client passes.

You can fund it while you’re still alive or leave it unfunded until your death. If you fund it, you’re changing your status in regards to assets. Your bank accounts, house, and brokerage accounts will no longer belong to you. They will belong to the trustee.

You can be the trustee or you can name a spouse, a child, or a bank as your co-trustee. If you choose to be the sole trustee, then you will name someone to be your successor when you die or if you become disabled.

What’s the Difference?

When someone has an established trust, it provides protection and a pretty straightforward transfer of their assets. It is done privately and is cost-effective. It takes less time and may or may not require help from an attorney.

Because a trust helps you avoid probate, the trustee may distribute assets to the beneficiaries immediately. This is completely private except for the notices and information that go to the beneficiaries.

Probate vs. Trust

When you’re looking at probate vs. trust for your personal situation, it’s a good idea to talk to an estate planner or a lawyer who handles estate administration. They can discuss with you how each option works and help you decide which one is best for you and your family. Look at the pros and cons of each.

Be sure to bookmark our site for easy access to all of our great content. We cover a number of topics like home improvement, entertainment, education, fashion, games, and more.