In some states, probate is expensive and burdensome. In my experience, that is not true in middle Tennessee. In those state with lengthy and expensive probate processes, attorneys often advocate using revocable trusts to avoid probate. This requires having a revocable trust document prepared and then transferring all of your assets into the trust during life. This is usually more expensive and time consuming that having a Will prepared.
The reasons you may want to avoid probate by using a revocable trust are the following:
- Privacy. A Will that is filed in Probate Court, becomes a matter of public record. Any member of the public could go to Probate Court and ask to see it. A revocable trust is not filed in Probate Court and is not likely to become part of the public record unless a law suit develops regarding the document.
- Disability planning. Creating and funding a revocable trust is one way to plan for disability. You can transfer all your assets to a revocable trust, designate a successor trustee and direct how you want the trust assets to be used for your benefit in the event that you become disabled.
- Professional asset management. If you lack the knowledge or interest in managing your investment assets yourself, you may want to transfer everything to a revocable trust and name a professional asset manager to manage your investments or real property and make distributions for your benefit.
- Real property outside your home state. If you own a vacation home in another state, you may want to transfer the vacation home to a revocable trust to avoid the necessity of having 2 probate proceedings- one in your home state and one in the state where the vacation home is located.
The cost of probate is different in different states. In some states, executor fees and attorney fees are a percentage of the value of the estate by law. This is not true in Tennessee. Typically attorney fees are charged according to the attorney’s hourly rate and the amount of time worked, not according to the value of the estate. Executor fees may depend on the language of the document or an agreement that can be reached between the executor and the beneficiaries. In some counties, the Probate Court judge must approve the executor and attorney fees.
Tennessee Probate Court fees are nominal (around $300) for an estate that goes through probate smoothly. If the estate becomes embroiled in litigation, attorney fees and court fees can be substantial and the time it takes to resolve the dispute and distribute all the property will be substantially more than in a smooth estate administration process.
Revocable trusts and the avoidance of probate makes sense in some situations but not all. Make sure it makes sense for your situation before choosing that option.