How I learned to stop worrying and love probate, Part 2.
Posted on | December 31, 2008 | No Comments
In the first part of this post, I talked about what probate is about. In this part, I want to talk about some of the problems that can occur when someone tries to avoid probate because they are afraid of it.
Recently, people have been buying trust packages from someone who comes into town and gives seminars about “the dangers of probate or the high cost of probate.” They are trying to sell some alternative package of documents that they claim will allow you to avoid probate. Most of these are trust. Trust, if done properly, are useful, especially if your estate is very large. When people try to put together a prepackaged trust, they almost always do it incorrectly. A trust needs to be created in writing and then funded. That means that your property has to be put in the trust. If you want to avoid probate by putting all of your property in the trust, you have to deed your house to the trust, sign over your car to the trust, transfer all of your bank accounts to the trust, etc. If you don’t make these transfers, then you still have property in your name when you die and that property needs to go through probate. While you can create a trust in your will that doesn’t come into existence until you death, most of the prepackaged trust are created while you are alive.
In Texas, we have homestead laws. That means that your homestead can’t be seized to pay your debts except for limited exceptions. If you deed your homestead to the trust, you loose the homestead exemption unless the trust is set up properly.
Trusts are not a good idea if all you are trying to do is avoid probate. You will end up spending more money creating and managing a trust than you ever will by having an attorney draw up a simple will that will glide through the probate process without any difficulties. So stop worrying and love probate!
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