I am asked by prospective clients all the time, “Does a trust avoid probate?” The answer is always “It depends on a few things.” Almost everyone responds with “I was told it does! Why not?”
When people ask this, they are generally referring to living trusts. While living trusts can be useful for multiple things, including having someone manage your affairs if you are unable to and disposing of property upon death, frequently living trusts do not, in fact, avoid probate.
A living trust is a ‘vehicle’ that is created, an artificial entity so to speak, that has an independent existence from the creator. The trust has its own “Trustee,” generally the creator, who operates the trust. Upon the incapacity or death of the creator/Trustee, someone new, typically a child or a spouse, is appointed to be the new or 'Successor' Trustee. The Successor Trustee is supposed to manage the property and distribute it to whom the Trust directs.
In order to fund the trust, both real and personal property, are transferred to the Trustee of the trust. This provides the Trustee with the authority to alienate or transfer the property as directed by the trust. I believe this is the root of the misconception most people have.
Probate is the process of transferring the decedents assets, both real and personal property, to beneficiaries. Anything that is titled in the name of the decedent, as a part of the probate process, is transferred to the beneficiaries of the decedent. However, since the trust owns the decedent’s real and personal property, there are no estate assets and nothing to probate… which leads to the misconception that the trust ‘avoids probate.’
So, in theory a living trust should avoid probate. However, under Florida Statute §733.707(3), a living trust is liable for the estate debts of the decedent. This in combination with the 2-year statute of limitation on creditors’ claims (see Florida Statutes §733.710) places liability on a Successor Trustee if they distribute trust assets prior to the expiration of the creditor period. In other words, if someone dies with a living trust, the trust MAY be on the hook for up to 2 years after the decedent dies for any debts or claims against the decedent. However, there is an exception to this: if a probate is brought, and a Notice to Creditors is published in the newspaper, then the period the trust is liable is limited to 3 months after the first date of the publication of the Notice to Creditors.
In conclusion, a living trust may avoid probate, but it depends on the facts.
This article is for general information only and is not intended as and does not constitute legal advice or solicitation of a prospective client. It should not be relied on for legal advice in any particular factual circumstance.