Attorney At Law: What is a revocable trust and how does it...

Attorney At Law: What is a revocable trust and how does it work?

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By Nancy Burner Esq.

Nancy Burner, Esq.

Revocable trusts have become increasingly popular estate planning tools to avoid probate. A  trust allows for the orderly and private administration of your assets at death without court  involvement. 

A revocable trust is a trust that you create during your lifetime designed to give you flexibility and control over your assets. You may act as your own trustee, thereby  maintaining complete control over your assets. Assets can be transferred in and out of the  trust at your discretion and you may change or revoke your trust at any time. 

A revocable trust can hold any asset. Common assets include real property, non-qualified  investment accounts, bank accounts, certificates of deposit, and life insurance policies. Qualified retirement accounts should never be transferred to a revocable trust as it would  cause a taxable event.  

Assets titled in the name of your revocable trust pass to the beneficiaries automatically,  thereby avoiding probate. Likewise, any assets with designated beneficiaries pass directly to  beneficiaries. Assets in your sole name that do not have designated beneficiaries must go  through probate.  

Why do people want to avoid probate? Probate is time consuming and can be expensive. When a person dies with a will, the nominated executor must file a probate petition with  the Surrogate’s Court before having the authority to act. First, the Executor will file the  original will, certified copy of the death certificate and the probate petition in Surrogate’s  Court. Then, notice is given to the decedent’s next-of-kin who would have inherited had  there been no will. The next-of-kin will either sign waivers and consents or be issued a  citation to appear in court to have the opportunity to object to the Executor. 

After  jurisdiction is complete and issues with the will, if any, are addressed, the Surrogate’s Court  will issue a decree granting probate and Letters Testamentary. Only then can the Executor  gather the assets and distribute them according the directives in the will.  

When a person dies without a will (intestate), the process is similar. It is necessary to file an  Administration Petition with the Surrogate’s Court. Here, a close relative of the decedent  applies to become the decedent’s Administrator. As with a probate proceeding, all interested  parties must be given notice and must either sign a waiver or be served with a citation issued by the court. The Court will then issue Letters of Administration appointing them as Administrator.  

By creating and funding a revocable trust, your beneficiaries will avoid having to go through  this probate process. This avoids the attendant costs and delay, which can be substantial if  there is a will contest or hard to find relatives. Additionally, because of the backlog created  by the pandemic and the recent ransomware attack on the Suffolk County government this  past fall, the courts are extremely behind.

Even “straightforward” probate matters take months, even years, to make their way through the court system. This explains why more and more people  are deciding to create revocable trusts so that their spouses and children can inherit their  estate seamlessly, free from court interference. 

Nancy Burner, Esq. is the founder and managing partner at Burner Law Group, P.C with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.