The New York Times’ “Bucks” Blog has a post up about six common questions about Wills. They have an interesting point about Revocable Trusts:
One of the big reasons people set up revocable trusts, also known as living trusts, is to avoid probate, the court-supervised process to settle a deceased person’s estate. Why? Depending on where you live, probate can be a costly and lengthy process. Attorney, court and other fees often cost up to 5 percent of the value of the estate, Ms. Randolph said. Many Californians choose to use revocable trusts for that reason, she said. Be sure to check the probate laws in your state.
Here’s how the revocable trust works: you put all of your assets into the trust, which remains in your control and can be changed at any time. For the trust to work, you need to retitle all of your assets to the trust (a “pour over” will is also typically used to transfer, or “pour over,” any assets that weren’t in the trust at the time of your death). After you die, a trustee that you name distributes the assets according to your instructions, all while avoiding probate.
Some legal experts say that revocable trusts are more difficult to contest than a will, and they also allow you to keep your affairs private (Wills become part of the public record during probate).
In Pennsylvania, the probate process is relatively inexpensive and fairly simple. Revocable Trusts make the most sense in states (like California or Florida) with expensive and time-consuming probate processes. They may also make sense for some people in other states, like Pennsylvania, that own property located in multiple states, or who don’t want their assets to be made public at their death. But for many people, a Revocable Trust can add a significant administrative hassle, and probate may be necessary if even one asset is not transferred to the Trust.