How does my Trust avoid probate? Why is it that a Will needs to be probated through months of administration in the court system, but my family can handle my Trust without that procedure?
A Trust is a Contract.
First and foremost, a trust is a contract. Kansas law has determined that trusts are enforceable agreements. Because they are enforceable agreements, trusts are valid methods to transfer assets presently and upon or after one’s death.
How does a Will work?
Your Will might say that you want everything to go to your spouse. It may continue to say that if your spouse does not survive you, then divide your assets among your children. Granted, it will contain more language than that. But, that is the essence. When you die, your Will is offered to the court for probate. Then it can act on (control) any property that you owned, so long as it did not already pass to someone else. For instance, you may have a bank account or a vehicle that you jointly own. The full phrase is really “joint title with right of survivorship”. This means that upon proof of death of one owner, the property becomes owned by the survivor.
Now, once your Will is offered and accepted for probate, it can direct the distribution of those assets you owned individually. Now your Executor must follow a procedure of administration. Once notice is given to creditors, heirs, devisees and legatees, your estate can pay expenses of administration and claims. Then, your Executor will seek approval to distribute assets as directed in your Will. This is often a 6-month or more process.
So, how is a Trust different?
Again, a Trust is a contract. It is a contract that you enter into with your Trustee. You convey property into your Trust during your life. And, you draft provisions into your Trust so that upon your death, your Trustee has legal authority over that property. Since your Trust already owns your property, the property does not need to be probated at your death, to move it out of your hands.
Your Trust will likely direct that your Trustee pay some taxes and final expenses. Then it may direct that they manage and/or distribute your property according to your directions in the Trust. There are some notice and transparency requirements, but essentially, your Trustee has the authority to distribute your assets per your wishes. It is important to note, your Trustee is obligated to act only as directed in the Trust document, without discretion to vary from the agreement (the Trust).
What really happens, upon death, with a Trust?
Basically, the Trustee needs to take care of a few things, and without involving the court system. The Trustee gives notice to beneficiaries, and takes care of final expenses and taxes. Then the Trustee can, without any court requests or approval, distribute the assets. Again, this is all as directed in the Trust document. The Trustee might, depending upon the language of the trust document, manage assets for a time. The management may last until the Trustee distributes assets to certain people only for certain reasons (like education) or at certain times (like the person reaching their 21st or maybe 30th birthday). Once the Trustee has completed distributions, they terminate the Trust.
How does my Trust avoid probate? So, a Trust is different because it does not require that a court set aside the assets for administration and distribution. Trust assets are already set aside, prepared for management and distribution.