If you have a revocable living trust, one of the main reasons for choosing this method of estate planning is likely to be to avoid probate.
Trusts need to be funded
So you know you need to fund your trust to be effective. In other words, you know you need to transfer the property to your trust so that the property does not have to go through probate when you die.
Would it surprise you to learn that even if you have a revocable living trust that you intend to fully fund, you still need a will?
At first glance, this may not make much sense, because a revocable living trust is designed to help you avoid probate, while a will is designed to go through probate. But here’s why you need both:
Why would my trust not be funded?
People don’t always fund all of their property in their revocable living trust before they die. There may be a few different reasons for this, for example:
• Sometimes they buy property and just don’t have time to transfer it to their trust before they die;
• Sometimes, for practical reasons, they intentionally leave property (such as motor vehicles) outside of their trust;
• Sometimes they just forget.
What happens when the property is left out?
Whatever the reason, if the property is out of your trust when you die and does not automatically pass to someone else through joint ownership or designation of a beneficiary, then it is subject to probate.
Without a will, property going through probate is distributed according to a formula provided by state law. This means that your property may not go to the beneficiaries of your choice.
The solution
If you have a trust, you also need what is called a Will Over Will. This is a will that directs all of your estate assets to be distributed to your trustee. Once your property is approved, your trustee will distribute it according to the terms of your trust. So even though your set aside property has to go through probate, it eventually ends up where you intended it to be.
