Many estate plans are set up to avoid Missouri probate court. Probate court can complicate things for your beneficiaries and lengthen an already painful process.
One of the better estate planning tools to help avoid probate court is a revocable trust. Trusts of all types can help protect your assets from ending up in probate court and make it easier for you to pass wealth down to your beneficiaries.
How trusts generally work
Trusts allow assets to be directly passed down to beneficiaries without having to go through probate court. This is because once assets are put into a trust agreement, they no longer belong to the person – they belong to the trust.
The person who will manage the trust, usually a family member, legal advisor or family friend, is called the trustee. The person setting up the trust with their money and other assets is called the grantor.
Since items that are in a trust no longer belong to the grantor, they don’t have to pass through probate court and are no longer a part of the person’s estate. So they’re not subject to estate taxes either, another huge benefit to surviving family members.
How to set up a trust
A grantor sets up a trust agreement that lays out the terms and conditions of the trust. In this agreement, they’ll set up the conditions in which their family members – referred to as beneficiaries – can withdraw from the trust.
Sometimes they can set up a trust to only pay out once at the time of their death, or they can set the trust to pay out gradually over the beneficiary’s lifetime. Different types of trusts will have different rules, all determined when setting up the trust.
Can you avoid probate court altogether?
A trust can be an effective way to avoid probate court, but only for assets placed into the trust. For example, if you never moved your house or another bank account into the trust before you died, that asset would still go through probate court.
Some property might also not be eligible to be placed in a trust. Even so, if you’re good at managing and updating your trust as needed, it can greatly reduce the time your family spends in probate court.
