Revocable Trusts 101

Q: What is a revocable trust? Should I include it in my estate plan?

A: 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 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.

Melissa Doris, Esq. is an attorney at Burner Law Group, P.C. focusing her practice areas on Estate Planning, Elder Law and Trusts and Estates. Burner Law Group P.C. serves clients from Manhattan to the east end of Long Island with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.