If you’ve set up a Revocable Living Trust, congratulations! You’re definitely on the right track. But you are only half way there. Many believe because they took the time to create a Trust, their estate will automatically avoid probate. Unfortunately, this is false. The key to probate avoidance is proper asset ownership, including the full funding of your Revocable Living Trust.
What Assets Require Probate?
- Accounts and real estate titled in your sole, individual name [without a payable on death (POD) or transfer on death (TOD) designation]
- Accounts and real estate you own as a tenant in common
- Contract assets naming your estate as beneficiary
What Assets Avoid Probate?
- Accounts and real estate owned as joint tenants with rights of survivorship
- Accounts and real estate owned as tenants by the entirety
- Life insurance
- Retirement accounts, including IRAs, 401(k)s, and annuities
- Life estate property
- Payable on death (POD) and transfer on death (TOD) accounts and, in some states, transfer on death or beneficiary deeds
What’s the Next Step?
Ask a qualified estate planning attorney to confirm that your Revocable Living Trust is fully funded and that all assets are aligned with your estate planning. Proper asset ownership is key to probate avoidance.