Advantages of a Living Trust Upon the Death of the Grantor.
Another major advantage of a revocable living trust, if property structured and funded, is the avoidance of probate upon the death of the Grantor. Assets titled in the name of the trust are not subject to probate administration. Consequently, if the Grantor’s assets are not titled in his or her name but rather are titled in the name of the trust, or if titled in the name of the Grantor are made payable to the trustee of the revocable living trust by a properly executed payable on death designation (i.e., non-probate transfer), complying with the Grantor’s directions as to the disposition of his or her property upon his or her death will be relatively easy to accomplish.
a. Delays in continuity and distribution—Unlike the assets in the living trust, when an individual’s assets are subject to probate upon his or her death, no one controls these assets until the probate court appoints a personal representative (e.g., executor, executrix administrator, administratrix, as the case may be). The appointment may not occur immediately and if delayed, a significant loss in the value of the estate may occur if no one has been appointed to dispose of the asset. For example, if the decedent dies and owns a large volatile stock portfolio, the failure to have a manager, even for a period of one month (the typical time for the appointment of a personal representative), could have disastrous consequences. If however, the stock portfolio is held in a revocable trust, there is no delay because the management and administrative powers held by the trustee are not interrupted by the settlor’s death. See Hood, Mylan and O’Sullivan, Closely Held Businesses in Estate Planning (2d Ed.) at 8-6.
Even if the personal representative is quickly appointed after the death of the client, the assets in the decedent’s (deceased client) probate estate may be subject to the probate process for several months or years. Even with the advent of independent administration of an estate, the personal representative generally is subject to more restrictions than would be a successor trustee of a revocable living trust.
In contrast, the successor trustee of a revocable living trust is not subject to the supervision of the probate court, and the funds in the trusts may be paid out to the beneficiaries at a much faster pace than if the assets were subject to probate administration.
b. Avoidance of Excessive Costs and Fees—In many jurisdictions, the amount of the fees charged by the attorney who is hired by the probate estate as well as the fees charged by the personal representative “are determined, in part by the value of the probate assets.” Id. Hood, et. al. Missouri is one of those states. See MO Rev Stat. §473.153 (2000).
If not determined by this method, substantial “legal fees and probate costs will be incurred in complying with the requirements of the probate process” See Hood, et. al. 8-6 to 8-7. Through the use of a revocable living trust, these fees and costs can be minimized and often avoided. While it is true that trustee and attorney fees will be incurred by using a revocable living trust, these fees will likely be much smaller than the costs (executor fees, attorney fees and court costs) incurred in probating an estate.
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