Forget Stranger Things season two, did you hear the scary tale about the will admitted to probate? Frightening stuff!
Whether you die intestate (no will), or with a will, your estate must pass through Iowa probate court. One common way to avoid probate is through a revocable living trust.
A trust can sound somewhat elusive. And you may think it’s reserved just for the very wealthy, like that strangle couple that live in the huge, dark mansion on the hill. However, a trust can be incredibly important tool in many situations and provide multiple advantages.
Save Time & Money
One of the major benefit of a trust is that it enables your loved ones and your favorite charities—your beneficiaries—to avoid the time and financial costs of probating a will. This is because, upon death, the property and assets are already distributed to the trust. Otherwise the probate process can take anywhere from several months to a more than a year to complete.
Probate can also be expensive considering fees. Fees and costs can reduce your estate by 4%, or even more. Executor’s fees, and attorney’s fees, are both authorized by Iowa statute to be as high as 2% each, for a total of 4%, and that doesn’t include court costs. While that may not sound like a lot, it can actually equate to a good chunk of money that you would most certainly rather pass along to your heirs or to your fave nonprofit. Far more often than not, the cost of creating a trust is considerably less expensive than the cost of probate would be.
The Case of Frank E. Stein
A simple example. Let’s suppose Frank E. Stein’s estate is worth $2 million. This may sound like a lot, and it is, but consider things like a large, expensive house, or a second home, or a vacation home, or a farm, or a family business, can rather easily push an estate into the multi-millions territory. Again, with Frank’s estate worth $2 million, a “shave” of 4% reduces the estate by $80,000. That’s $80,000 that could have gone to Frank’s favorite charity, The Home for Wayward Bats. A revocable living trust, completed by an estate planning lawyer, would cost only about $2,000.
Finally, I should mention that a revocable living trust offers an additional benefit: privacy. When a will is filed with the Iowa probate court upon death, the will becomes a public record. Trusts, on the other hand, remain private documents. You may not want your friends, neighbors, monsters, and others to know the contents of your will. Like all good mysteries, some things are better left a secret.
Start a Conversation
Considering all the aspects of a trust doesn’t have to feel like a twisty path through a scary forest. I’m more than happy and willing to be your guide. Don’t hesitate to reach out; email me at email@example.com.