One of the most common reasons people do a trust is so their assets will avoid having to go through probate after they die. What is probate? Probate is court supervised estate administration; it is the court process that oversees the ultimate distribution of your assets. Probate can be a lengthy, stressful and costly process and most people want to make it as easy as possible on their loved ones after they die. In New Hampshire, it takes a minimum of six (6) months from the date the probate court appoints the Executor, Executrix, or Administrator to complete the process, and more often than not, it takes at least a year to finalize a probated estate.
A revocable trust is one of the most common types of trust that can help you reach your goal of making the administration of your assets as easy as possible on your loved ones. A revocable trust acts like a traditional Will in that it states who you want to receive your assets after you die, but the added benefit is that your assets will avoid probate if you properly fund your trust.
Funding your trust means you transfer any and all assets you own into your trust. This generally means you transfer the account or asset from your individual name to the name of your trust. Some of the more common types of assets a person would want to actively transfer into their trust are: bank accounts, brokerage accounts, vehicles, and real estate. In New Hampshire, you do this by completing the required documentation at your bank or brokerage firm, transferring the title to your vehicle at your local Town Hall, and doing a new deed for your real estate. If you do this, those assets will not have to go through probate before they are distributed to the beneficiaries named in your trust. Sometimes it also makes sense to name your trust as the beneficiary of your life insurance policies, annuities, or other retirement accounts such as IRAs or a 401(k)s.
If you do not properly fund your trust, any assets that are owned in your individual name will go through the probate process before being distributed to your beneficiaries.
There are many nuances that go along with a trust and many pitfalls for those who are inexperienced in estate planning so be sure to consult an estate planning attorney to make sure your goals are properly planned and executed.
Andrea Van Iten is an attorney at Hamblett & Kerrigan who focuses her practice in the area of estate planning, including wills, trusts, health and financial powers of attorney, trust and estate administration, as well as small business matters. Attorney Van Iten can be reached at [email protected].