Sometimes the Probate Process Might Be Easier
Many people never contemplate their own demise and much to the chagrin of their heirs, fail to execute a will or other estate planning documents. Responsible individuals often do decide to put some estate plans in place and they face a decision as to whether or not they should incorporate revocable living trusts into the estate plans. When assets are placed in these trusts, they avoid the probate process. Probate is necessary to settle the affairs of a deceased person because at its most fundamental level, property simply can’t be owned by a dead person. However, when property is placed in a trust, the death of the trust’s creator doesn’t actually create the need for the ownership change process which takes place when a will goes through the probate process. Prior to the individual’s death, the trust is the owner of the designated property—-upon the trust creator’s death, the trust continues to own the property. The significant change that takes place is that a new trustee—the named successor trustee—becomes the person who has the legal authority to act on the property owned by the trust.
Since the legal profession is in the business of drafting legal documents, they can sometimes be accused of “over-selling” the need for these trusts. Clearly, the creation of a trust is a legal process and attorneys are well compensated for drafting the trust documents. However, there may be some instances where planning to utilize a will and the probate process can make life simpler for the executor of the estate. Local Colorado Springs attorney, Jim Flynn deserves kudos for his objectivity in a recent article discussing this topic in the Colorado Springs Gazette.
Flynn points out that during a probate action, the executor (also known as the personal representative) receives from the court an official document known as the Letters Testamentary. This piece of paper allows the executor to administer the will-makers estate without encountering resistance from financial institutions. Banks, brokerage firms, the Division of Motor Vehicles etc., know that they can take direction from the holder of the Letters Testamentary as he/she goes about the process of settling the deceased person’s affairs. The successor trustee receives no such papers from the court and in some cases may have difficulty convincing various financial stakeholders to follow their direction as the successor trustee. For certain, this can be difficult in the case of a successor trustee who is unable to locate a copy of the trust document.
Flynn further notes that the state of Colorado has made an attempt to address this challenge by adopting a statute that sanctions the use of a document entitled “Certification of Trust”. This enables the successor trustee to accomplish many of the actions that the Letters Testamentary have long facilitated through the probate process. Thus, anyone considering the use of revocable living trusts as an estate planning tool should question the drafting attorneys about this possibility. Since property law varies on a state by state basis, it’s possible that this is not legal practice in the jurisdiction in question.