Why a Trust Might Still End Up in Probate?
Why a Trust Might Still End Up in Probate
In the world of estate planning, it’s not uncommon to see situations where a trust still ends up in probate. You might think that setting up a trust is enough to keep your estate out of court, but there are cases where probate still comes into play. Let’s explore why this happens and how you can avoid it.
Outstanding Debts or Creditors
If there are outstanding debts or creditor claims, your estate might end up in probate . Creditors can open a probate case to try to get paid, which can pull your trust into the probate process as they seek to recover what they’re owed.
Assets Not Transferred into the Trust
Sometimes people forget to transfer all their assets into their trust. For example, if you acquire a new property or forget to transfer the asset into the name of your trust, that asset might still be in your personal name when you pass away. In these cases, probate proceedings are needed to move the asset into the trust after your death.
We currently have a case where someone passed away with an LLC interest that wasn’t included in their trust. We’re working through probate to get it properly placed into the trust.
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Intentional Exclusions
In some cases, people intentionally leave assets out of their trust. This can be due to complex family situations or personal preferences. For example, someone might set up a trust for their children from a current marriage but leave out assets intended for children from a previous marriage, allowing those assets to be managed through probate instead.
Mistakes During Refinancing or Changes
Mistakes can also occur during refinancing or when assets are moved around. If a property was removed from the trust during refinancing and wasn’t correctly transferred to the trust name, it might still be in the deceased’s name at the time of death. This would require going to court to correct the mistake and transfer the property back into the trust.
How to Avoid These Problems
To prevent your trust from ending up in probate, consider these tips:
If you’re unsure whether your trust is set up to avoid probate or if you’ve made any of these common mistakes, feel free to reach out . We can review your trust and help ensure everything is in order.
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