The 1 time I always recommend a Trust based estate plan

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The ONE time I always recommend a Trust based estate plan


Today, I would like to talk a little bit about one time where I always recommend a trust-based estate plan. Typically, there are two flavors of estate plans. The first is a will-based plan, and the second is a trust-based estate plan. These plans are not  mutually exclusive because a lot of times when we do a trust-based estate plan, we also do a will in case there is some property that wasn’t captured by the trust. The will would capture the property and pour it over into the trust.

But the converse isn’t true, if you do a will-based plan, you won’t have a corollary trust. One time that I always recommend a trust-based plan is when the client has property in multiple states. When the owner of real estate passes away and has property in multiple states, say Indiana and Illinois, the Indiana probate court will have no jurisdiction to grant the personal representative the power to sell or otherwise dispose of the Illinois property.

So, the personal representative will have to get authority from the Illinois court to dispose of the property, which will require some type of court proceeding in Illinois. In some states an ancillary probate proceeding will need to be filed, in other states you have to file documents and pay fees with the court, in other states you need to request court approval.

Let me give you a case in point. I’m currently a personal representative on an estate that had property in multiple states. The property was not owned by a trust, which I’ll talk about in a moment. So, I had to sell property in multiple states, and in one state I had to go get approval of the deed from the local county court. In another state, I had to hire a lawyer to open an ancillary probate. The Court had to review the entire court file from the state in which I was appointed personal representative, and give me the legal authority to sell the property in that state,  had to go and open up an ancillary, a state or hire a lawyer in that state to open up an ancillary probate in order for us to get the legal authority to dispose of the property within that state

Because the decedent had a will-based estate plan, there were multiple court expenses and lawyer fees to get the properties sold. This time and expense would not have been necessary if all the properties were placed in a trust. You see if all the properties were titled in the name of the trust, you wouldn’t have to go through the probate court to get approval to sell the property, because the trustee would have the illegal authority under the trust document to go ahead and sell the property.

All you would have to do to show to the underwriting company, the company that’s going to be make the loan, or the title company a copy of the trust document, which has given the trustee the authority to sell the property.

You would be able to sign all the necessary documents and prepare the necessary deed after the property is sold. And then the proceeds would be able to get funneled into the trust without having to go and deal with all these different court procedures. So if you have property in multiple States, it’s usually a very good idea to discuss this with an estate planning lawyer, and you may want to think about putting the properties in a trust because if something happens and you pass away, it’ll be easier for those who you want to have your stuff to dispose of your real property.