Revocable Trust Myth #2 - A Revocable Trust Always Avoids Probate

True or false: A Revocable Living Trust will always allow your loved ones to avoid the probate of your estate.

The answer is FALSE. This common myth about Revocable Living Trusts is false for two reasons: (1) A Revocable Living Trust in and of itself can't avoid probate - the trust must be fully funded in order to avoid probate, and (2) Sometimes quirks in state law make probate necessary.

Many people have the misconception that once their Revocable Living Trust is in place, probate will be avoided. This is simply not the case. The next and probably most important step in completing your estate plan is to fund the Revocable Living Trust with your bank and investment accounts, tangible personal property, business interests and real estate, and update the beneficiaries of your life insurance and retirement accounts to coincide with the provisions of the Revocable Living Trust. Otherwise, your unfunded property will need to be probated.

Aside from this, even with a fully funded Revocable Living Trust the laws of the state where you live at the time of your death may require a probate proceeding to cut off creditors' rights, obtain state estate tax waivers, secure a homestead determination for your primary residence, and/or limit the time that a challenge can be made to your Revocable Living Trust. In these situations, however, the probate process should be streamlined and less time consuming than a full probate administration.

Don't be fooled into a false sense of security once you've set up a Revocable Living Trust. Be sure to fund it with your assets and also review it on a regular basis to insure that it still meets your estate planning goals.

• What is Probate?


• When is Probate Necessary?


• What Are the Benefits of a Revocable Living Trust?


• What Does it Mean to Fund a Trust?


• What Happens to Assets Left Out of Your Trust?


• Revocable Trust Myths