I have been asked many times-“Why do I need a trust?” There are many reasons to set up a trust during your lifetime. Answer Number 1, which is probably the most common, but not necessarily the most important, is that it can achieve the avoidance of probate.
Many people have a “fear of probate because of all the apocryphal stories regarding the costs of probate and the delays it entails in the administration of estates. Since the advent of independent administration, however, the costs of administering a probate estate have been greatly reduced along with the paperwork and delays involved. But you still have filing fees, publication costs, and notice requirements to known creditors, not to mention attorney’s fees for preparing the necessary court papers to open and close estates, etc…,etc.
Now to the Answer which can be told by relating a true story. Several years ago, I drafted a trust for an elderly couple. I advised them that all of their assets must be transferred to the trust (except for their checking account and other assets of minimal value) in order to effectuate the avoidance of probate. I shepherded the transfers, and they were completed. (In many cases, people establish the trust, but fail to follow up with the transfers of assets, which defeats the purpose). The couple’s family expressed unhappiness about the additional cost of creating the trust and doing the transfers, to which I responded that the overall costs, not to mention the delays of postmortem distributions, would be substantially reduced.
Recently, the husband died and one of the couple’s children called me to inquire regarding the legal and administrative costs that would be incurred. When I told her that as the value of the estate was under the Illinois and federal tax exemptions, that very little had to be done, and that she could handle virtually everything without an attorney. No probate filing fees, attorney’s fees, publication costs, or Notices to Creditors. She was, to say the least, very happy, and I was redeemed.
Stay tuned for Answer No.2
