Trust Administration Vs. Probate Administration

by | Feb 15, 2024 | Uncategorized

Trust Administration Vs. Probate Administration: What is the Difference?

One of the most significant advantages of implementing an estate plan is that your loved ones will avoid a long, drawn-out process.

Are you confused about the best way to transfer assets to your loved ones after you pass away?

You know that it is going to be an upsetting time for your loved ones, so you want to do your best to make the process as smooth as possible. Do you just need to create a will, or is it better to set up a trust? What is probate, and how does it affect the situation?

It is often best to speak to an estate planning attorney to discuss what options suit your individual needs. However, you can use the below information to give you an understanding of what you should consider when making estate planning decisions.

The Difference Between Probate and Trust Administration

The most significant difference between the two types of formal administration is that probates require court supervision, whereas a trust does not. When you leave a will behind, it must be presented to a judge who will supervise the distribution of your estate according to the terms of your will. Obtaining the final court order will allow your beneficiaries to clear title to your estate’s assets (bank/investment accounts, real estate, etc.).

Any assets that are properly titled in the name of your revocable trust will bypass the probate process. Your appointed successor trustee can immediately begin the much shorter process of consolidating and transferring assets to your trust beneficiaries, and they will not need court authorization to do so.

The Advantages of Having an Estate Plan in Place

One of the most significant advantages of implementing an estate plan is that your loved ones will avoid a long, drawn-out process. The probate process usually takes about seven months to one year to complete. The time is substantial because there is a one-month wait to have the initial probate hearing, followed by a mandatory four-month waiting period so that creditors can make claims against the estate. Once the estate is ready to be closed, the administrator will file another petition and the court will set the hearing date for about a month later. If there are any disputes, the process will be significantly delayed.

It is also important to keep in mind that it is much easier to object to a will and delay the probate process because there is already an active court case, so a disgruntled heir can simply show up and object in person. With a trust, the beneficiary or heir will usually have to retain an attorney and pay them to draft and file the legal challenge, which costs thousands of dollars. This can serve as a powerful impediment.

If your assets are in the name of your trust, the process will be much simpler. Your successor trustee will send out a Notification by Trustee in conjunction with Probate Code section 16061.7 to advise beneficiaries and family members of the existence of the trust. They have four months to challenge the trust from the date the notice is mailed, but this waiting period can be waived if all beneficiaries and heirs agree. This option isn’t available in probate court.

Another advantage of trust administration is the cost. Probate statutory fees are calculated as a percentage of the gross estate, and there are additional filing fees, bonding fees, and publication fees. The statutory fees alone far exceed the costs of creating an estate plan – a gross estate of $1,000,000 triggers a statutory probate fee of $23,000 for both the administrator and the attorney (for a total of $46,000). There are no statutory fees for trust administration, and the successor trustee can choose to either pay an attorney at an hourly rate or complete the notice and distribution on their own. Either way, the costs of creating an estate plan and administering the trust is far cheaper than probate.

While there is no specific time frame as to when you should start estate planning, it is better to do so sooner rather than later. If you leave it until you are older or sick, you may not have as much control over your estate, and you might not be able to make certain decisions.

How to Get Started

It can be tough to think about what you’re leaving behind for your loved ones when you pass away. You know it will be a difficult time for them and want to ensure you can make the experience of dealing with your estate as seamless as possible. Everyone has a different situation, which is why it’s best to discuss your options with an estate planning attorney.

Essayli & Brown LLP works with you to provide estate planning options tailored to your circumstances. We prepare all of the required legal documents and assist you in determining what assets to re-title into the name of your trust to avoid probate.

Schedule a free estate planning consultation to find out more about how you can take care of your loved ones during a difficult time.

This article is intended for general informational purposes only. It does not constitute legal or tax advice, and no attorney client relationship is implied or formed by this article. You should always consult with a tax professional or attorney before taking any action. The information on this website is considered LEGAL ADVERTISING under applicable California law and may be considered advertising under your state’s laws and ethical rules. The responsible member for this advertising is D. Andrew Brown of Essayli & Brown LLP.