When it comes time to think about your assets and how to pass them down to loved ones after your life, your first thought might be to create a will. While this can be a sensible option in some cases, many people fail to consider a critical variable: probate.
Probate is the legally mandated court process that analyzes the deceased’s assets and ensures the will is administered appropriately and according to its author’s wishes. That may not sound so bad in theory, but the process has its downsides in practice: Probate can be time-consuming and costly, and because it plays out in court, it technically is public record.
Fortunately, there’s another kind of estate plan that avoids the probate process entirely: a trust administered by a corporate trustee.
The hassles of probate
Probate laws vary from state to state, and the process is often time-consuming, expensive, and public. There are simply too many variables at play, which is why many choose to avoid it where possible.
For instance, if the executor of the will is disorganized or slow to submit materials to the court, the process will be delayed. Probate also affords opportunities for potential beneficiaries to petition the court claiming they’re due part of the inheritance; unfortunately, this can lead to painful family disputes, especially in cases where parts of the will are ambiguous and up for interpretation.
A trust, on the other hand, bypasses probate entirely. How does it manage this? Under a trust, a person grants his or her assets to the trust during their lifetime, and the trust becomes the official owner. Probate is the process of determining the assets of someone who has passed away, but in this scenario, it’s not the individual who holds the assets but the trust, making probate unnecessary.
It’s important to remember that simply creating a trust is not enough. Assets must be formally transferred into the trust—a process called funding the trust — in order to avoid probate.
Why choose a corporate trustee
Just like wills have executors, all trusts must have a named trustee. Technically, anyone can serve as a trustee. But selecting a family member or a close friend as a trustee comes with risks: Trusts are complex legal documents that require discretion and expertise, and if they’re not funded and administered properly, then they may end up subject to probate after all.
By selecting a corporate trustee, you can gain the peace of mind knowing that you have an expert administering your trust: someone who is transparent, who has no conflicts of interest, and whose sole responsibility is to you, the grantor.
What if probate can’t be avoided?
Not all assets can be placed in a trust. (Retirement accounts, active financial accounts, and vehicles are just a few examples.) In this case, you might consider establishing a separate will to cover these assets. But who should you name as the executor?
Much like with a trust, you can name a corporate executor for your will. While you won’t be able to avoid probate entirely, you’ll have the confidence of knowing that a professional who has navigated the probate process many times before with expertise, discretion, and confidence is on your side.
Interested in exploring a corporate trustee or executor?
At Astra Fiduciary Services, we work exclusively as corporate trustees and executors. Our fiduciary work is not just part of what we do; it’s our sole focus. That means we’ve seen firsthand the challenges that can arise with trusts and wills and know how to avoid them. Want to learn more about whether a corporate fiduciary is the right fit for your estate plan? Get in touch with our team today to learn how AFS can make sure your hard-earned wealth ends up where you really want it: with your loved ones.
–
Astra Fiduciary Services, LLC (“AFS”) is affiliated through common ownership and control with Astra Wealth Management, LLC “Astra”. Please see Astra Wealth Management’s Part ADV2A for more information.
